Scathing ‘audit’ of Hawaii state auditor Les Kondo is met with scathing rebuttal

State Auditor Les Kondo is pushing back more forcefully against a recent critique of his office by an unusual panel that he contends did shoddy, biased and misleading work.

Kondo emailed a nine-page memo to all Hawaii lawmakers Wednesday in which he derides the “audit” of his office prompted by House Speaker Scott Saiki, and alleges that Saiki has been undermining work by the Office of the Auditor.

A special three-member panel led by former city Auditor Edwin Young produced the critical review March 31 for the House of Representatives.

The panel’s 79-page report said Kondo, who was appointed by lawmakers to an eight-year term in 2016, created a dysfunctional workplace that has badly missed audit work deadlines and is ill-suited to lead the office as a lawyer without direct accounting or auditing experience.

Kondo provided quick initial responses for local news outlets when the report was released, and has now let lawmakers know that he views the report as a flaw-ridden product aimed at attacking him without an appropriate opportunity to provide input.

“We are compelled to address the mischaracterizations and untruths about our office and our work in the report issued by Speaker Scott Saiki’s State Auditor Working Group,” Kondo wrote in the memo.

Kondo said panel members — Young, former state Sen. and U.S. Rep. Colleen Hanabusa and former state Budget and Finance Director Wesley Machida, who was a special assistant to Saiki — failed to deliver anything close to a genuine audit of his office.

“The report is primarily a collection of opinions based on selective data, inaccurate assumptions, and unattributed snippets of critical comments from former employees,” Kondo said in the memo. “It is slipshod and riddled with errors and omissions.”

Kondo argued that he wasn’t given an opportunity to review a draft of the report before public release, which is common for audits his office does, and that he was willing to participate in the review if the panel had addressed his concerns about the scope of the work and requests for confidential personnel records and audit files.

Saiki established the panel in January to determine whether the auditor’s office is complying with its mandate under the Hawaii Constitution to conduct audits and certify financial statements of state agencies along with other investigations requested by the Legislature.

The panel’s report said the office under Kondo’s leadership isn’t in compliance because it failed to deliver 10 of 25 performance audits from 2016 to 2019.

Kondo said that of the 10 audits that weren’t done, nine didn’t need to be done because either not enough lawmakers requested the work as required by state law or the request was reversed. Kondo faulted the panel for not verifying the accuracy of the list that he said was gathered by Saiki’s office.

The 10th undone audit focused on the state Office of Hawaiian Affairs. Kondo’s office began this work in 2019 but suspended it because OHA’s board of trustees refused to share unredacted minutes of closed-door executive session discussions having to do with companies the agency formed to hold and manage investments.

The critique of Kondo’s office also said 12 of 15 reports received by the Legislature under Kondo’s leadership were late.

Kondo’s memo said circumstances beyond control of his office often create delays and that the panel made no effort to understand why reports were late.

Kondo also said most of the late reports were delivered only a few days past deadlines, including a performance audit of the state Agribusiness Development Corp. that was delayed by the coronavirus pandemic and delivered two weeks late on Jan. 14.

As for the panel’s claim about dysfunction and bad hiring decisions, Kondo said this is an outrageous claim stemming from former employees.

“It goes without saying that former employees, especially those who were asked to leave the office, may harbor certain frustrations or resentments,” he said in the memo.

Much of the panel’s work was based on interviews with former auditor’s office employees, consultants and contractors.

Kondo refuted an allegation by the panel that he refused to allow current employees to cooperate with the panel.

“At no time was staff ever directed not to cooperate,” he said in the memo.

Kondo suggested that the panel’s “real work” was to undermine him at the behest of Saiki.

Saiki could not be reached for comment Monday.

House Majority Leader Della Au Belatti said she had yet to read Kondo’s rebuttal but planned to review it as part of considering the panel’s report.

According to Kondo, Saiki advised officials in Gov. David Ige’s administration not to automatically cooperate with the auditor’s office, which affected work on a Supplemental Nutrition Assistance Program assessment and a correction officers’ leave audit.

Kondo also claims that Saiki inappropriately pushed for his office to complete the OHA audit.

The panel said Kondo’s office should have finished the audit without executive session minutes. Suspending the OHA audit held up a $3 million allocation to the agency. OHA sued the auditor’s office, and a judge ruled that OHA could withhold the minutes, though the decision didn’t resolve the dispute.

“Unfortunately, the nature of this job is such that not everyone will be happy with our work or our audit findings,” Kondo said in his memo. “This is not the first time, nor will be the last, that this office will come under criticism and attack. And we will do everything we can to preserve the public’s trust in government, vigorously protecting our independence so we can continue working to improve government through unbiased and objective analyses.”