City Council leaders quash HART forensic audit

City Councilwoman Heidi Tsuneyoshi is calling out Council Chairman Ikaika Anderson and Vice Chairwoman Ann Koba­yashi for refusing to proceed with contracting for an independent forensic audit of the agency charged with building Honolulu’s troubled, 20-mile rail line.

Residents across the state will be paying for the project for generations, Tsuneyoshi said. “I think the public has a right to know why we won’t be moving forward on this action,” she said at a teleconference Wednesday.

“Unfortunately, the fate of the forensic audit is that it won’t be moving forward per the discretionary decision by Council Chair Anderson and Vice Chair Kobayashi,” Tsuneyoshi said

Because the $2 million set aside to hire a forensic auditor is set to lapse at the end of the month and was not reinserted into the Council’s budget for the 2021 fiscal year that begins July 1, it’s a near certainty that the audit of the Honolulu Authority for Rapid Transportation won’t happen. HART is tasked with building the 21-station East Kapolei-to-Ala Moana project.

Anderson, in response, said it may be duplicative and likely difficult to conduct such an audit because a federal investigation into the project is still underway.

The Council in March 2019 passed Resolution 19-29, which instructs its Office of the City Auditor to hire a contractor through a competitive bidding process to conduct a forensic audit of the project, which has ballooned to a now estimated $9.2 billion. HART’s own web site still has a page referring to the $5.2 billion price tag from 2012, the year construction began.

Acting City Auditor Troy Shimasaki submitted a draft Request for Proposals to Anderson’s office in November. Anderson on Wednesday confirmed it has remained at his desk unsigned.

The resolution was approved 7-0, with Anderson and Councilman Ron Menor not present.

Tsuneyoshi said the economic climate caused by the impacts of COVID-19 will mean less revenues for the project from state general excise and hotel room taxes. That makes an audit even more imperative “for transparency and accountability,” she said.

After her press conference, Tsuneyoshi said that she approached Anderson about moving forward with the audit “at least a handful of times” and was not given a definitive answer until Tuesday, when she met with the chairman and Kobayashi with Shimasaki also present.

Anderson said “Council leadership does not believe that spending $1 million-plus in city taxpayers’ monies is a justified expenditure of taxpayer dollars when the federal government is already investigating HART looking for corruption, graft and fraud.”

Shimasaki has told Council members that documents the contracted auditor would need for an audit or investigation would not be made available if already subpoenaed by federal investigators, he said.

“That could possibly result in a non-thorough audit” Anderson said. “It’s not that we don’t want to do this, but we based this on what we’ve been told by the city auditor.”

Kobayashi noted that she’s consistently been among the main critics of the project but “I don’t like to see something paid for twice.”

The problems created by COVID-19 actually make it more important the city divert the money to other uses, she said. “There are lots of other needs now.”

Shimasaki said, “Our stance has always been we’ll do whatever the Council wants us to do.”

He said he met with officials from both the Department of Justice and the state Department of the Attorney General shortly after the resolution was adopted, but that they would not disclose what they are investigating.

Shimasaki also pointed out that while the resolution calls for a forensic audit, what’s being sought by Council members falls more into the broader category of an investigation into wrongdoing. “Because audits don’t necessarily look for fraud, audits you usually already know something is going on and you’re trying to find out more about it, versus trying to identify it.”

State and city auditors have done a number of audits of HART and rail that found, among other things, lack of proper controls and a smattering of instances of inefficiency, incompetence or errors in judgment due largely to inexperience that cost the project money. But they could not conclude if those were widespread. Nor could the audits conclude there was fraud or criminal conduct. Current HART CEO Andrew Robbins said those issues occurred before he took over in 2017.