OHA turmoil: Trustee Akina says CEO must go, trustees must repay

The recent scathing state audit of the Office of Hawaiian Affairs demonstrates one thing. It is time to hold the OHA trustees accountable, and compel them to remove the current CEO.

Although the state audit reveals that OHA’s CEO is personally responsible for the misspending of millions of dollars, the trustees who allow him to remain in place are now just as complicit.

The trustees’ failure to act decisively to remove the CEO is a dereliction of our fiduciary duty to protect the trust, and could expose OHA to further financial losses. As in the corporate world, one of the most significant roles of the OHA board is to hire or fire its chief executive officer. The time for firing the current CEO is long overdue, and that is now confirmed by the findings of the state auditor.

After months of rigorous examination of OHA grants, sponsorships and spending in fiscal years 2015 and 2016, the state audit identified gross financial mismanagement and inappropriate spending.

According to the auditor, there were numerous instances where the CEO ignored grants staff recommendations, effectively overriding processes put in place to ensure fairness and impartiality. Although only $7 million of Native Hawaiian trust funds were awarded by OHA in accordance with strict internal policies and controls, more than $14 million — twice as much — flowed out of OHA through loosely-administered, noncompetitive methods.

The state auditor also found that in fiscal year 2015, the CEO exceeded his discretionary sponsorship budget of $65,000 to award a total amount of $285,499. Similarly, in 2016, the CEO exceeded his discretionary sponsorship budget of $100,000, and funds expended totaled $210,700.

While the findings of the state audit are egregious, they are merely the tip of the iceberg and validate the need for a more comprehensive, independent audit. For example, the state auditor raised questions about, but did not investigate, OHA’s limited liability companies (LLCs) for which OHA’s CEO is a manager. Similarly, the auditor noticed uncorrected patterns of inappropriate spending identified in a previous audit, but had the resources only to sample expenditures within a two-year timeframe.

As chairman of the OHA board’s Audit Advisory Committee, I helped initiate an independent audit that will go beyond the state audit by specifically looking for fraud, waste and abuse. The independent audit will engage a highly qualified firm to examine five years of OHA spending, including a thorough investigation into OHA’s LLCs. The need to conduct this independent audit without delay or interference is one more reason the CEO must be removed immediately.

It is worth repeating that, while the CEO is at fault for inappropriate spending, OHA’s board of trustees is ultimately responsible. Not only must the trustees remove the CEO, we must also lead the way, by demonstrating integrity in our own discretionary spending. Accordingly, those trustees personally responsible for misusing their trustee allowances should reimburse the trust immediately. Financial accountability and integrity must begin at the top.

Keli‘i Akina is a trustee at-large for the Office of Hawaiian Affairs.