State audit questions OHA’s free-wheeling discretionary purchases

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 Collette 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.

Between 2011 and 2016, the board allowed the annual maximum of $3 million to be withdrawn from the reserves, leading the balance to plummet more than 80 percent from $15 million to $2 million.

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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.

Robert Lindsey, who represents Hawaii Island on OHA’s Board of Trustees, didn’t respond to requests for comment from the Tribune-Herald by deadline.

  1. Ken Conklin February 14, 2018 5:36 am

    OHA is corrupt, and 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.


  2. Keoni Yamada February 14, 2018 5:46 am

    OHA is a traditional Hawaiian cultural practitioner.
    Some of our alii pigs are more equal than others.
    That’s considered traditional gathering rights.
    Bring back the Kapu, too !


  3. thebamboo February 14, 2018 6:09 am

    ……is for good men to do nothing.


  4. diverdave February 14, 2018 11:43 am

    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 with beneficiaries — 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.


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