Five months after the University of Hawaii lost $200,000 in the failed Stevie Wonder fundraising concert and after more than 13 hours of hearings, a Senate committee investigating the debacle says there are still unanswered questions.
The Senate Special Committee on Accountability issued a 32-page report Monday of its findings and recommendations. The recommendations include having state Auditor Marion Higa conduct a financial and management audit of the university system and having the Board of Regents receive training on the state sunshine and open-records laws and on its own policies.
The committee found that "the university’s failure to conduct due diligence on this business transaction placed the university in a vulnerable position to be scammed."
It also blamed a lack of communication between university departments for loss of the money and noted that no one has yet taken responsibility for allowing advance sales of tickets to start without cancellation insurance in place to protect the university.
The committee said former athletic director Jim Donovan, former UH-Manoa Chancellor Virginia Hinshaw and UH President M.R.C. Greenwood share responsibility for failing to provide supervision and failing to make sure checks and balances were in place. It also faulted the administration’s oversight system. The senators also said the Board of Regents failed to provide sufficient management and governance control of the university system.
The report notes that as yet no one has been fired from the university over the concert debacle, although Greenwood has promised there would be consequences.
"We hope the university will take this committee report into serious consideration and begin the process in becoming more transparent and accountable as they move forward and put this unfortunate event behind them," said Sen. Donna Mercado Kim, chairwoman of the committee.
Greenwood was on Hawaii island on a listening tour and had not had a chance to review the report, a statement from UH said Monday.
The report said the committee’s investigation has also raised questions about the university’s use of outside law firms and public relations consultants. The committee wants to know more about the cost of staffing the Office of General Counsel at UH and the amount the university is spending to hire other lawyers, the cost of in-house public relations at the university and the amount UH is spending on outside public relations firms.
The report said the committee still has questions about a $25,000 subcontract the Torkildson, Katz, Moore, Hetherington & Harris law firm has with public relations company Hoakea Communications. Hoakea already has a $25,000 contract with the university through the Research Corporation of the University of Hawaii to provide services to UH.
The university hired Torkildson to redact documents and respond to the committee’s request for information under a contract worth up to $25,000.
Kim (D, Kalihi Valley-Halawa) said the Senate Higher Education Committee will follow up on the accountability committee’s questions and recommendations. Kim is a member of the committee.
Committee Chairman Brian Taniguchi said it’s too early to say what legislation his committee might consider coming out of the hearings.
Kim said lawmakers might look at whether the process to select and even remove regents should be changed.
The report was critical of the board’s lack of transparency and openness in the failed-concert aftermath.
It said the board should have played a more active role in providing answers or explanations to the public about what happened and should have taken a more serious and timely look at the way the administration handled the matter.
The committee also raised concerns about the regents’ independence from the president and the board’s ability to oversee her work.
The regents had no comment on the report.
The 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 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 reassigned 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 UH had 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, is scheduled to enter a plea to a fraud charge in federal court Honolulu on Nov. 30.
The Senate committee report 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 expense of hiring of a search company to hire a new athletic director and costs for a regents’ audit and legal fees.
A regents’ audit released last week blamed poor judgment by athletics 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.
