Judge rules to keep Hawaii state auditor’s ‘work papers’ confidential

Both state auditor Les Kondo and the chairwoman of a special House committee investigating Kondo’s handling of two critical audits of state land management could claim partial victories after their dispute over subpoenas and “confidential work papers” went to Circuit Court on Wednesday.

Circuit Court Judge Lisa Cataldo ordered Kondo to produce two documents that he originally agreed to hand over to the House Investigative Committee, but granted his request to quash subpoenas for other “confidential work papers” related to audits of the Agribusiness Development Corp. and the Department of Land and Natural Resources’ Special Land and Development Fund.

Left unanswered by Cataldo’s ruling is whether the original House resolution that created the House Investigative Committee to look into the audits also allowed it to investigate Kondo and his office, even though there was no clear directive to do so. The committee has since started looking into reports that Kondo’s office produced on the city’s troubled rail system.

“The court constrained itself to the motion in front of it, which I think is the appropriate thing to do,” said Rep. Della Au Belatti, House majority leader, a lawyer and chairwoman of the House Investigative Committee. “The questions (about scope) in front of this court — as she even stated and the counsel stated — are ‘novel.’ So there are novel questions. … It will affect the ability of future investigative committees to do their work.”

When the committee began meeting Sept. 13, Kondo initially agreed to turn over his office’s “Manual of Guides” that were in use between June 2017 and March 2020 during the audits of the SLDF and ADC, along with copies of contracts with consults KKDLY LLC and Accuity LLP related to both audits.

But Kondo began pushing back against future subpoenas when he realized that the committee was investigating him and his office.

Cataldo on Wednesday ordered Kondo to produce the manual and contracts to the House Investigative Committee by Monday, but granted Kondo’s motion to quash committee subpoenas for what Kondo has called his office’s “confidential work papers,” including requests for:

>> “Total expenditures by cost category for work conducted by KKDLY LLC, including documents of vendors that were paid more than $100,000 in aggregate.”

>> Review of invoices conducted by KKDLY LLC for proper approval, “for compliance with procurement procedures, and for propriety of disbursements … The complete schedule of all accounts with transfers to and from the Special Land and Development Fund prepared by KKDLY LLC … as to whether the transfers served a stated purpose of the Special Land and Development Fund.”

>> “The complete schedule of cash receipts, cash disbursements, transfers, and fund balance for the accounts that comprise the Special Land and Development Fund prepared by KKDLY LLC.”

“Obviously we’re pleased,” Kondo told the Honolulu Star-Advertiser after the hearing. “Judge Cataldo confirmed that our work papers are confidential. We’ve been saying that from the beginning and telling the committee that our work papers are confidential.”

In a follow-up statement, Kondo said that the Legislature ensured “the confidentiality statute in 1996. A legislative committee at the time underscored that ‘the scope and nature of the duties and responsibilities imposed upon the Auditor … are of such critical importance to the state, the Auditor’s working papers should be kept confidential.’

“The Legislative record states that subjecting the Auditor’s working papers to disclosure requirements would ‘seriously impair’ the Auditor’s ability to fulfill mandated responsibilities and statutory duties.”

Belatti told the Star-Advertiser: “The court recognizes and validates the committee’s work by validating the committee’s request for documents.”

At the same, in response to Cataldo’s ruling to quash the other subpoenas, Belatti said, “our legal team is assessing the arguments with respect to working papers. We’re going to wait for their advice. However the committee still has much work to be done and can be done without pursuing that avenue.”

The committee expects to subpoena a dozen or more new and former witnesses, including Kondo for a fourth appearance, Belatti said.

Asked how many pages of documents the committee has subpoenaed and received so far, Belatti said, “I stopped counting at over 30,000.”

After Cataldo’s ruling, Kondo said he hoped that the committee will now return to its stated purpose of investigating the audits’ findings and recommendations, which neither agency has disputed.

“The audit reports provide some really meaningful findings … that both ADC and DLNR’s land division are not doing well,” Kondo said. “It is my hope that this committee will refocus on those audit findings and really try to help DLNR as well as ADC get better and actually achieve their purpose.”

Kondo’s attorney, Richard Naiwieha Wurdeman, who famously represented opponents of the proposed Thirty Meter Telescope atop Mauna Kea, argued the committee’s most recent inquiry into Kondo’s reports on the city’s troubled rail project clearly were not mentioned in the original House resolution, along with any intention of investigating Kondo and his office.

The committee’s probing of reports on rail and the Honolulu Authority for Rapid Transportation, Wurdeman said, “is clearly beyond the ADC and DLNR.”

Belatti has directed all witnesses and committee members — including from the neighbor islands — to appear in person at the state Capitol for hearings and has suggested that hearings could stretch into December.

One of the eight members of the committee — state Rep. Dale Kobayashi (D, Manoa-Punahou-Moiliili) — has openly questioned whether the committee has lost focus by spending a disproportionate amount of time investigating Kondo compared to his findings of DLNR and ADC.

Wednesday’s court hearing was just Kondo’s latest round with House leadership.

Even before he was appointed to an eight-year term as state auditor, beginning May 1, 2016, Kondo was the executive director of the state Ethics Commission and in 2015 drew the wrath of then-House Speaker Joe Souki for new ethics rules for legislators that included limits on gifts they could accept.

Then on March 31, Kondo received a scathing 79-page audit of his office prompted by House Speaker Scott Saiki that concluded that Kondo created a dysfunctional workplace and is ill-suited to lead an office that missed audit deadlines.

Kondo, in turn, said the audit itself was the result of shoddy, biased and misleading work.