Auditor says Office of Hawaiian Affairs funds pet projects

  • Lisa Cataldo, left, Colette Machado, center, and Dan Ahuna listens to public testimony at an OHA meeting in Kekaha Neighborhood Center on Kauai.(Alden Alayvilla/The Garden Island, file)

HONOLULU — The state agency responsible for improving the well-being of Native Hawaiians spent nearly double the amount on pet projects than on competitive grants, the state auditor said in a report released Tuesday.

Office of Hawaiian Affairs discretionary spending included $1,900 to send someone to a rodeo competition in Las Vegas and $1,000 for a trustee’s son’s medical expenses.

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The agency’s discretionary spending totaled $14 million in fiscal years 2015 and 2016. That’s compared to $7.7 million for competitive grants. Over the same period, the agency withdrew $6 million from its fiscal reserve.

The agency doesn’t rigorously vet and monitor this discretionary spending as its own formal grant process requires, the auditor said. Its administration approves some discretionary spending without the Board of Trustees voting or even knowing about it, the report said.

Agency Chairwoman Colette Machado said in a statement the agency was committed to making changes necessary to best serve Native Hawaiians. She said she already proposed moratoriums on the use of fiscal reserve funds and trustee sponsorships.

“OHA acknowledges the auditor’s findings that we must endeavor to institute and enforce disciplined spending through clearly defined, objective and responsible policies and protocols,” Machado said. “This will better enable OHA to uphold its solemn trust obligations to our beneficiaries.”

Other examples of questionable spending cited by the report included $1,000 for a beneficiary’s rent and $1,000 for another’s funeral-related clothing expenses.

The report asked whether providing funds to an individual Native Hawaiian for personal expenses was consistent with the trustees’ fiduciary duty to many other beneficiaries. The report also asked whether such spending was consistent with state law.

Some of discretionary spending went to community initiatives with broad public support, such as $300,000 to help the Polynesian Voyaging Society’s worldwide canoe expedition.

The auditor’s report indicated the free-wheeling spending was affecting the agency’s broader financial health.

The agency’s fiscal reserves — which according to guidelines established in 2003 are designed to provide funds in the event of emergency — peaked at $23 million in 2006.

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Between 2011 and 2016, the board allowed the annual maximum of $3 million to be withdrawn from the reserves, leading the balance to plummet more than 80 percent from $15 million to $2 million.

The auditor recommended that trustees hold each other accountable for actions “inconsistent with their collective fiduciary duties and responsibilities to trust beneficiaries.” It suggested that the agency consider requiring board approval for all grants and other funding.

  1. Ken Conklin February 14, 2018 5:35 am Reply

    OHA is so corrupt, and so focused on racial entitlement. But the only way to get rid of it is to vote in November in favor of holding a state Constitutional Convention, and then that con-con can abolish OHA.

    The other way to deal with OHA is to fully embrace it. If OHA is successful in getting the Department of Interior to grant federal recognition to a Hawaiian tribe, then the problem is solved. The Hawaiian tribe can be as corrupt and racist as it wishes, and there will never again be any oversight from the state Auditor or the state legislature. “Sovereignty” means an Indian tribe can keep all its finances secret.


    1. Buds4All February 16, 2018 7:24 am Reply

      And not pay Taxes and take Federal funds?


  2. Travis Burgeson February 14, 2018 8:09 am Reply

    Isn’t the State of Hawaii deeply in arrears, hundreds of millions of dollars in arrears, in payments due OHA for revenue from ceded lands? Perhaps resolving that obligation and getting OHA to agree to a sunshine law would put things on a better course. I think “pono” is the Hawaiian term for what I mean. Otherwise, it’s not very surprising that the State would craft a punishing audit addressing a small amount of OHA’s expenditures just at the time the debate about revenue due OHA is heating up.


    1. diverdave February 14, 2018 11:41 am Reply

      OHA currently has assets totaling over $650 Million Dollars. They are NOT short of money, unless you mean all the missing millions of dollars that the audit speaks to over just a two year period.


    2. sonneofmanisrael February 15, 2018 7:59 am Reply

      Hawai’i and money are glued to something other than truth. Hawai’i Homelands gobbled for pet projects. OHA shows more restraint. E Malaga pono means to take care of oneself. It does not mean that the life of the land is perpetrated in righteousness. Motto this, motto that. Aloha.


    3. Buds4All February 16, 2018 7:18 am Reply

      If we see a small amount of criminal activity then I presume there is much more we are not hearing about. They are sweeping it under the rug.


  3. diverdave February 14, 2018 11:35 am Reply

    The audit said: “The Office of Hawaiian Affairs and its trustees have engaged
    in inappropriate spending of millions of dollars over a two-year period.
    During fiscal year 2015 and 2016, OHA spent nearly double as
    much on discretionary disbursements — $14 million — as it did on planned,
    budgeted and properly vetted and monitored grants — $7.7 million, according to
    the audit, and to fund the unplanned expenditures, OHA adjusted its budget by
    $8 million and drew from its reserves to cover most of it. Trustees tripled their individual allowances from about $7,000 to about $22,000 — which are supposed to help fund communication withbeneficiaries — and used them for all kinds of expenses such as travel upgrades and fine dining.
    Often there wasn’t a process to make sure that someone benefiting from the
    trust money was actually Native Hawaiian.
    When we asked trustees about how we verify that it is in fact a Native
    Hawaiian… many trustees told us, ‘I know. I just know,”
    Wow! Talk about no process, and out of control! You can sum this up in one word…
    EMBEZZELMENT.


    1. briala February 14, 2018 11:47 am Reply

      The trustees “I know, I just know” sounds credible for the worst reason — the article makes it seem like many of the disbursements are in fact going to people they know personally (and therefore probably not to the equally or more deserving people without those connections.)


      1. diverdave February 14, 2018 12:11 pm Reply

        Yep. Reminiscent of the Kalakaua Dynasty.


      2. Buds4All February 16, 2018 7:12 am Reply

        if the article makes it sound that way is it the fault of the incompetent writers of WHT? I think they were using it as their piggy bank. They were drawing down the reserves, so why would you do that if you want to preserve an organization? It seems You either get a State or Municipal GOV Job here on the Islands and drain the State/Cities slowly or you get one of these jobs and do it quickly?


  4. Pest Outwest February 15, 2018 5:10 am Reply

    Relax, at this rate in another two years they’ll be out of money and will have to go home and find real jobs. Maybe someday an audit will actually find a Hawaii government agency or non-profit was really doing a good job . . . okay, silly, but one can dream.

    So, who’s going to get fired over this? Oh yeah, no one. Maybe the auditor.


  5. Say What? February 15, 2018 7:15 am Reply

    This is in the grand tradition of “Broken Trust”, the Kamehameha Schools outrage.
    Give a lot of money to those who think they have been oppressed and are privileged by fact of birth, whomever they are, and you will have hands in the cookie jar.


  6. Michael February 15, 2018 11:16 am Reply

    par for the course here in Hawaii Nei …. where nepotism and corruption are embraced as cultural traditions


    1. Buds4All February 16, 2018 7:07 am Reply

      Wish we had a DA and Judge that would start locking people up!


  7. Buds4All February 16, 2018 7:06 am Reply

    “trustees”…being the optimal word here. Rodeo’s in Vegas. Wonder how has relatives on the 9th Island? Paying for medical expenses? Shows Obama Care’s Deductibles are too much! 300K for a boat ride. I know it’s showing the Hawaiian culture to the world, but there are more pressing things here where we live. Its the typical old Hawaiian Fox guarding the coffers…..the relatives get it all.


  8. konakai February 16, 2018 8:55 am Reply

    Hawaiians suffer because of totally unethical and egregious, criminal behavior of appointed stewards in OHA and Kamehameha Schools/Bishop Estate. (80 million dollar settlement for sex abuse scandal). I am curious why there is no mass protests and marches on these institutions by native Hawaiians and their supporters. Seems awfully quiet out there. Is there a double standard about criticizing Hawaiians by other Hawaiians in public?


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