United Public Workers’ Dayton Nakanelua removed as state director for alleged ‘abuse and misuse of funds’

Longtime United Public Workers union leader Dayton Nakanelua has been removed as state director after a scathing audit last year faulted the union leadership for poor oversight and record keeping of spending by union officials.

Auditors from the national labor organization American Federation of State, County and Municipal Employees last year reported they they were “greatly concerned” after reviewing more than two years of internal financial records for the UPW Local 646, and suggested the UPW executive board might seek repayment from four staff members of the union.

American Federation of State, County and Municipal Employees President Lee Saunders announced Nakanelua and UPW Administrator of Fiscal and Membership Services Jeanne Endo were removed from their positions pursuant to an AFSCME trial decision issued Thursday.

“As national union president and according to the AFSCME Constitution, it is my responsibility to ensure that our union is being run with transparency and integrity at every level – and to take action when an emergency exists,” Saunders wrote in a letter posted on the UPW State President’s Facebook page today. “Unfortunately, that was the case with UPW.”

Saunders added that “As a member of UPW, you have a right to transparency, and you should have full faith that your dues money is being managed wisely. As president of AFSCME, I will not stand for anyone breaking this trust.”

Saunders named Liz Ho administrator of the union local, giving her responsibility for the day-to-day affairs of UPW. The union represents about 13,000 state, county and private blue collar workers as well as corrections officers, nurses and others.

The audit made no mention of any criminal wrongdoing, but UPW was famously entangled years ago in the criminal investigation of politically connected, longtime UPW State Director Gary Rodrigues, who also served on the state Judicial Selection Commission.

Rodrigues was convicted in 2002 of conspiracy, embezzling union money, money laundering and health care fraud. Rodrigues served more than four years in federal prison and also paid $378,000 in restitution to the union.

In Nakanelua’s case, Saunders cited “abuse and misuse of union funds,” including $21,840 in charges on UPW credit cards made by Nakanelua and others that lacked proper documentation.

The audit last year singled out spending by Nakanelua on one union credit card that included $26,659 for meals during the two-year audit period.

The trial decision also cited Nakanelua’s decision to co-sign a $165,605 check to Hawaii Productions Associates as a “50% first installment” for a documentary film on UPW, a check that UPW President James Wataru refused to sign because he did not believe the payment had been budgeted or properly authorized by the union’s state executive board.

The state director is responsible for all financial matters of the union, but “there does not appear to be meaningful oversight on how UPW funds are spent or accounted for,” the trial decision concluded. “The opportunity for abuse or misuse of union funds existed as a result, and it has occurred.”

The decision concluded Nakanelua violated the national constitution, and declared he would be removed from office and prohibited from holding any union office for four years.

Last year’s audit found Endo received reimbursement for thousands of dollars in charges made on a personal credit card that lacked sufficient documentation “or even a clear purpose,” such as $3,003.14 for a 27-inch iMac computer and thousands of dollars in gift cards, according to Saunders’ letter to union members.

Saunders said in his letter Endo was removed because she engaged in a “wholesale failure to manage UPW’s finances,” including mishandling cash, failing to retain and file receipts, failing to file expense reports on a timely basis and paying bills without the necessary documentation.

Wataru and former UPW Secretary-Treasurer Gerald Aqui were reprimanded for following procedures set out in an outdated 1984 union executive committee policy on political campaign contributions that did not comply with the UPW constitution.

Wataru was also reprimanded for signing off on expense reimbursements without the approval of Nakanelua, but the trial decision concluded none of those expenses benefited Wataru personally. Aqui, who has resigned, was also reprimanded for approving expense reports without the proper documentation.

Clifford “Chip” Uwaine, executive assistant to Nakanelua, was reprimanded for a technical violation of the union constitution for failing to submit expense reports for direct-billed hotel and flight charges, and UPW Oahu Division Director Loyna Kamakeeaina was found not guilty of all charges against her.

Both the trial and AFSCME audit were triggered by charges filed by union member Alton Nosaka last year and this year against Nakanelua and other union officials. Nosaka declined to comment today on Nakanelua’s removal, and Nakanelua did not respond to a request for comment.