POSTED: 12:18 p.m. HST, Nov 19, 2012
LAST UPDATED: 05:07 p.m. HST, Nov 19, 2012
A state Senate committee investigating the failed Stevie Wonder concert blames a lack of communication, oversight and due diligence for the loss of $200,000 in University of Hawaii Athletic Department funds in an alleged scam.
The committee is also recommending that the Legislative Auditor conduct a financial and management audit of the UH system and that the Board of Regents receive training on the state Sunshine Law and on its own policies. It also suggests that the regents consider hiring a master to make sure the recommendations of the Legislative Auditior and a regent's task group report are carried out.
The findings and recommendations are part of the Senate Special Committee on Accountability report, released today. The committee, which is led by Sen. Donna Mercado Kim (D, Kalihi Valley-Halawa), held an informational briefing on its report this afternoon at the State Capitol.
The university released a statement saying UH President M.R.C. Greenwood was traveling and hadn't had a chance to review the report. The Board of Regents had no comment.
The report raised questions about the university's spending to hire outside law firms and public relations firms. It also questioned the cost of contract buyouts for former UH president Evan Dobelle, former head football coach Greg McMackin and former athletic director Herman Frazier.
"The university should not be sending the message that it rewards individuals for failing to achieve the obligations of their contract, failing to meet certain standards, or failing to perform certain jobs satisfactorily," the report said.
It found that university staff "all seemed to believe that it was someone else's responsibility to conduct due diligence and to make sure the university was protected."
Former athletic director Jim Donovan approved the concert, but delegated responsibility and "failed to provide any other oversight," the committee said.
"While each department played a part in trying to help make the concert happen, the key players within the various departments were not communicating with each other to stop the transaction when certain components were not in place, such as the insurance, and they were relying on others to ensure that all the bases were covered, particularly the legitimacy of the players,' the report said.
The report blames Donovan for failing to provide oversight and ensuring that those working under him conducted the necessary due diligence. It also blames former UH-Manoa chancellor Virginia Hinshaw and Greenwood for failing to provide oversight and making sure that checks and balances were in place to ensure the administration's oversight system was adequate and working. And it blames the regents for failing to provide sufficient oversight and governance control.
The regents are also faulted for a lack of openness and for not following board policies over the approval of Donovan's new job in the UH-Manoa chancellor's office as a legal settlement and the approval of a five-year contract for UH-Manoa Chancellor Tom Apple.
The committee also raised concerns about the regents' independence from, and ability to oversee, the UH president.
The Wonder concert saga began in June when university officials announced that the pop star had agreed to an Aug. 18 performance to benefit the UH athletics department. Ticket sales were well under way by July 10 when Donovan announced that there would be no concert after all because Wonder and his representatives had not authorized the event. About 6,000 ticket holders had to be refunded.
The next day, Apple announced that Donovan and Stan Sheriff Center manager Rich Sheriff were placed on indefinite paid administrative leave while an investigation of the canceled concert was conducted. UH officials also explained they had paid $200,000 to a Florida company that purported to be authorized to book the star. Wonder's representatives later contacted UH officials to say they had not authorized the concert or received any payment. Greenwood acknowledged that the university was apparently a victim of fraud.
In August, Sheriff was reinstated and Donovan, whose athletic director's contract was to expire in March, was re-assigned to a new, vaguely defined marketing role in the UH-Manoa chancellor's office. Documents released to the Star-Advertiser under the state's open records law showed that the UH agreed to the deal in return for Donovan agreeing not to sue the school.
The FBI arrested two men this month in connection with the concert scheme. One of the men, Sean Barriero, 44, of Miami, pleaded guilty to a federal charge related to the UH wiring $200,000 to an account with Barriero's Epic Talent in Florida. The other man, Marc Hubbard, 44, was scheduled to enter a plea to a fraud charge in federal court Honolulu on Nov. 30.
The Senate committee report today said the failed concert and its aftermath will cost UH "an estimated $1.1 million at a minimum," including the loss of the $200,000, Donovan's new annual salary of $211,000 for three years, the cost of a search firm to hire a new athletic director, costs of a regents' audit and legal fees. The Senate report's recommendations include:
>> More public discussion by the regents of important issues;
>> Open sessions following its executive session discussions to the maximum extent permitted by law;
>> Better minutes from regents meetings:
>> Allowing public comment as part of the UH president's evaluation;
>> Holding appropriate departments and personnel more accountable for their actions;
>> Annual statement that itemizes how each campus spends the money generated by tuition;
>> A plan of action to improve the negative image of the university from the failed concert and its aftermath, provided that no additional public relations expenses are incurred.
A regents' audit released last week blamed poor judgement by Athletic Department officials for the loss of the money. It recommended tightening fiscal controls, setting up clear policies on the use of the Stan Sheriff Center by outside groups, guidelines on sending funds to escrow accounts and other changes.