Labor organization ‘greatly concerned’ about review of United Public Workers financial records

A national labor organization has raised red flags over record keeping and spending by some top staff in the United Public Workers union in Hawaii, citing tens of thousands of dollars in union funds spent on restaurants, airfare and other costs without proper supporting documentation.

Auditors with the national labor organization American Federation of State, County and Municipal Employees became “greatly concerned” after reviewing more than two years of internal financial records for the UPW last year, and even suggested the UPW executive board consider seeking repayment from four staff members of the union.

“There does not appear to be meaningful oversight on how funds are spent and accounted for, and as detailed below, the opportunity for abuse or misuse of union funds exists as a result,” the AFSCME audit department wrote in its review of the UPW finances.

The 25-page report obtained by the Honolulu Star-Advertiser describes nearly $293,000 that was spent on airfare from January 2017 to July 2019, and singled out spending by UPW State Director Dayton Nakanelua on one union credit card that included $26,659 for meals during that period.

“Many charges for meals, which were reported on expense reports were either not supported by a receipt, did not document attendees and union business purpose, or both,” according to the Dec. 19 report by AFSCME.

The UPW has about 13,000 members statewide, and represents unionized county, state and private sector workers.

The audit report makes no mention of any criminal wrongdoing, but UPW members may be particularly alarmed at its findings because of the union’s history. Longtime UPW State Director Gary Rodrigues was convicted in 2002 of conspiracy, embezzling union money, money laundering and health care fraud.

Rodrigues served just over four years in federal prison, and also paid $378,000 in restitution to UPW.

The December audit report said union officials initially failed to provide supporting documentation for thousands of dollars in expenses, but later submitted supporting documentation for some of the costs.

Nakanelua declined to discuss details of the report in an interview today because the audit was supposed to be an internal report that deals with confidential union records. However, Nakanelua said that he personally accepts “sole and full responsibility for the findings and the deficiencies pointed out by the AFSCME audit.”

About half of the concerns raised by the auditor have already been addressed, he said, and the union executive board was presented with the entire audit report in a meeting on Feb. 15.

The report suggested that the board consider seeking some reimbursements from Nakanelua and three other staff members, but Nakanelua said the board decided against that after hearing from the four.

The staff had obtained receipts from a travel agency for expenses that had been questioned by the auditor, and the board concluded those were “legitimate union expenses,” he said.

Nakanelua also said he is planning a series of meetings to brief the membership on the findings of the audit and what is being done about them. “I have, in my view, an obligation to get out to the membership to provide a report to the membership,” he said.