Audit finds pCard misuse not widespread

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Misuse of county credit cards is not widespread in Hawaii County government, but is confined to Mayor Billy Kenoi’s office and one other department, according to an audit report released Friday by Legislative Auditor Bonnie Nims.

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Misuse of county credit cards is not widespread in Hawaii County government, but is confined to Mayor Billy Kenoi’s office and one other department, according to an audit report released Friday by Legislative Auditor Bonnie Nims.

The audit found 164 transactions totaling $29,961 that did not follow county policy, had a questionable public purpose and may have violated state law. In the 2014 calendar year, the county used approximately 236 purchasing cards spending $1.15 million.

Auditors recommend in the 27-page report the County Council update the county code to more closely follow state purchasing law. In addition, county administration should update pCard policy and procedures to make them more clear, treat all employees and departments fairly and equitably, strengthen monitoring practices to ensure expenditures are “for a legitimate public purpose and demonstrate a clear benefit to the county and taxpayers,” and use available technology from the card issuer to improve monitoring practices.

“In general the Finance Department and the county are doing an exceptional job managing their pCard use,” Nims told West Hawaii Today on Friday, adding the audit points out areas of improvement so that “any further intentional or unintentional misuse can be deterred or detected timely.”

County Managing Director Wally Lau, in a response to the audit, said the administration will follow the rules.

“While we do not agree with all of the assertions and conclusions contained in the report, we fully support the audit recommendations and are working toward implementation of all the recommendations with the Department of Finance,” Lau said in his response.

Nim’s findings echo investigative reports over the past several months by West Hawaii Today and the Hawaii Tribune-Herald, which found Kenoi, his executive assistants and the county Department of Liquor Control routinely used their pCards for personal purchases, questionable purchases or to buy liquor.

Kenoi’s pCard use drew statewide attention when the newspapers revealed he’d used it to run up pricey tabs at two Honolulu hostess bars and to buy an expensive surfboard and bicycle. Although he paid those charges back, other personal and campaign purchases were not paid back so promptly and led to a criminal investigation by the state attorney general. The investigation is still ongoing.

“It appears that the mayor’s office was not always held to the same requirements as other departments,” the audit said.

The audit said that Kenoi’s record-keeping was so bad that there were no receipts or explanations for many of the charges.

“Although the county was fully reimbursed for these purchases, the associated costs were initially charged against the county’s pCard,” the audit report said. “Use of the pCard for personal purchases is not in accordance with the Hawaii State Constitution, Article 7, Section 4 that requires public money to be used for a public purpose. In addition, both the state and county pCard policy strictly prohibit personal use of the pCard.”

Kenoi usually reimbursed the county for personal charges within a month or so, but he paid back another $7,500 of the almost $130,000 in charges on his pCard after the story broke in late March. In all, Kenoi has paid back about $30,000 of his pCard charges.

Kenoi’s eight executive assistants have racked up $142,886 since 2009. Of that, $9,086 was reimbursed. The charges were typically for travel and lodging for themselves and others, meals, meeting refreshments, and gifts for dignitaries or awards, according to his staff.

But several charges caught the auditor’s eye. A $1,270 pCard expenditure by Executive Assistant Charmaine Shigemura to send a local boy to a California surfing competition in 2012, was called questionable, as was $652 by Executive Assistant Karen Teshima to treat dignitaries from the U.S. Conference of Mayors to a helicopter tour in July 2014 and Executive Assistant Clarysse Nunokawa’s purchase of $348.03 worth of wine at Tamura’s Fine Wine store in Honolulu for omiyage, or gifts, for legislative visits in April 2014.

Nims said she wasn’t aware of a way for taxpayers to be reimbursed, unless the council or administration took further action.

Liquor Control Director Gerald Takase’s 19 personal purchases worth $6,278 were the highest for a single official.

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He said the charges were primarily for a corporate Hawaiian Airlines account, where he allowed others in his department to use his card as a way of accruing more frequent flyer miles. Those miles translated into benefits to the county such as free check-in bags, no-cost flight changes and standby preferences. But Takase has now opted to use his personal credit card and get reimbursed instead.

The audit praised Civil Defense, Human Resources, Prosecuting Attorney’s Office, the County Council and Clerk’s Office for having exemplary records and using their pCards correctly.

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