State Auditor Les Kondo challenged members of a special House Investigative Committee on Monday to specify why he and his office are under investigation following two critical audits of land management practices by two state agencies — but received no response.
“The committee needs to be transparent, to be honest about what the committee is doing,” Kondo said. “What are you investigating and why? … The sneaky, underhanded approach is just not appropriate.
“Let’s put our cards on the table,” he said. “Let’s have an honest discussion about whatever you want to discuss, whatever your concerns may be.”
In response, Committee Chairwoman and House Majority Leader Della Au Bellati (D, Moiliili- Makiki-Tantalus) — a lawyer like Kondo — said “our committee’s purpose is broad and includes … matters related to this series of audits.”
The committee, Bellati said, was “seeking full transparency” regarding the audits and had subpoenaed — or was asking for — information that was “either included or omitted by the audits, including those issues related to policy, mismanagement, malfeasance or fraud.”
It’s the second time in six months that House leaders have gone after Kondo and his office.
In late March Kondo received a scathing 79-page critique, prompted by House Speaker Scott Saiki, that concluded Kondo had created a dysfunctional workplace and is ill-suited to lead an office that missed audit deadlines. In response, Kondo said the report itself was the result of shoddy, biased and misleading work.
At the start of his second appearance before the committee in a week, Kondo on Monday once again was subpoenaed to testify under oath and was repeatedly asked by Bellati whether he understood that he had the right to be represented by legal counsel.
Kondo, who had never been subpoenaed to testify before the House in his five years as state auditor, said a subpoena and legal representation were unnecessary.
“I’m here to talk,” Kondo said. “I would have appeared without a subpoena, as I told you during many of our meetings. It wasn’t necessary to subpoena me or to swear me in.” He added, “I thought this was just a follow-up on the audit recommendations. I don’t understand why you’re suggesting, or offering, that I be represented by legal counsel. … I don’t understand the need for that.”
Bellati offered no explanation, and no committee member has made specific allegations about Kondo or his office that would suggest the need for a House investigation that is expected to stretch into October.
Bellati’s committee is reviewing thousands of documents related to Kondo’s audits of poor land management practices by the Agribusiness Development Corp. this year and the state Department of Land and Natural Resources in 2019. Both audits were ordered by the Legislature.
Following last week’s questioning of DLNR officials regarding their audit, Kondo accused members of the House committee of “trying so obviously to get DLNR officials to support the ridiculous narrative that we had some hidden motive to audit the Land Division’s management of state lands.”
The audit of the Agribusiness Development Corp. found practices so sloppy that an initial request for files of seven of its 83 tenants were produced in “brand-new manila file folders, each containing only a handful of documents. None were complete,” Kondo said. Based on the initial files, auditors then requested the files of the remaining 76 tenants and received only 71.
All of the files were missing common property management documents such as “the tenants’ application to lease the land, board approval to issue a tenant contract, the contract itself, insurance certificates, site inspection reports, things like that,” Kondo said.
All of the files were “haphazardly thrown together, with documents disorganized,” he said. And more than half lacked any evidence that tenants were complying with insurance requirements.
The Legislature created the ADC in 1994 following the collapse of Hawaii’s sugar and pineapple industries and gave it extraordinary powers to turn fallow lands into economic opportunities that remain unrealized today — especially amid demands to diversify Hawaii’s tourism-dependent economy during the COVID-19 pandemic, Kondo said.
“We did not find any evidence that ADC is that aggressive and dynamic leader, that catalyst that the Legislature intended,” he said. “After nearly 30 years after its creation, we found an organization that’s struggling to manage its 4,257 acres of land, all in Central Oahu, and the Waiahole Water System.”
Kondo’s three-hour appearance before the committee Monday grew confrontational and testy at several points, particularly when House Rep. Mark Hashem (D, Hahaione Valley-Aina Haina-Kahala), chairman of the House Agriculture Committee, told Kondo that the audit of ADC was inaccurate because an unidentified member of ADC told Hashem that the agency does have policies, contrary to what the audit said.
“I know ADC has documented policies,” Hashem said. He claimed the audit included “false statements.”
“You’re painting a picture that is obviously not correct,” Hashem told Kondo. “You’re conveying to the public a false sense of, you’re painting a very bad picture of state government. And you’re making ADC and you’re making the rest of the state have a difficult time doing their job.”
Kondo asked Hashem why Hashem would not identify the person making the assertion at the same time that Kondo was testifying under oath and under subpoena. Kondo also repeated his testimony that every sentence in every audit is based on supporting information, which is provided and then verified independently.
“I’m going to tell you that we stand behind the audit,” Kondo said.
Later Hashem apologized. “I just want to say, I’m sorry, Auditor, if I seemed a little hostile in my questions,” Hashem said. “I’m just worried about the credibility of your office to ensure that everything in the audit is correct.”
ADC officials are scheduled to appear before the House Investigative Committee today, followed by a third appearance by Kondo this afternoon. Bellati repeatedly emphasized to Kondo that she would issue another subpoena to have him appear again today under oath.