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Sunday, December 5, 2021
OHA Report: Graft is ‘Courageous and Commendable’
By Andrew Walden @ 3:50 AM :: 2081 Views :: Kauai County, Ethics, OHA

by Andrew Walden

It’s Back to the Graftin’ Again at the Office of Hawaiian Affairs (OHA).

With all eyes on COVID, transparency laws suspended by Governor Ige’s Emergency Orders, and the State Auditor under attack by House Speaker Saiki and his minions, OHA is nearing a two year round-trip from the Dec 4, 2019 expose of 38 ‘Red Flags’ for OHA waste, fraud and corruption contained in the now-famous ‘Independent Audit of OHA and its LLCs’ conducted by mainland accounting firm CliftonLarsonAllen (CLA).

OHA insiders have been beavering away.

OHA Trustees voted to change OHA’s LLC Managers to three non-OHA employees, effective April 1, 2021, via Action Item RM #21-01.  This is likely a fatuous attempt to justify a future claim that OHAs LLCs are not State agencies even though that argument has already been crushed in Court.  The LLCs are a 'cultural' resource for providing juicy six-figure sinecures for the 'community' of OHA insiders.  

The next step was to create a ‘Permitted interaction Group’ (PIG) headed by Trustee Keola Lindsey who, of course, has an obvious conflict of interest--his uncle Robert Lindsey was Chair of the Board of Trustees and ousted OHA CEO Kamanao Crabbe’s chief supporter for much of period covered by the CLA audit.  (p94)  Robert Lindsey is directly implicated in awarding a $435K contract to UH Law Prof Kamana Beamer cited in the CLA audit report. 

The PIG, of course, did not include the Audit’s chief proponent, Trustee Keli’i Akina.

The PIG then decided on a follow-up report and specifically excluded CLA from bidding, using a fraudulent rationale which should invalidate the entire bidding process.  Footnote 12 on page 95 of the PIG report to the OHA Trustees RM Committee November 16, 2021, states: “As the report of the previous contractor CliftonLarsonAllen (CLA) is the subject of the follow up review, CLA is not eligible to respond to this RFP.” (p95)

“False!”

The akamai reader can be forgiven for jumping out of his seat.  

Of course the purpose of a REAL audit follow-up report would be to investigate OHA’s implementation of the 2019 audit recommendations, not to investigate the audit report itself--and the previous auditing firm would be most qualified. 

But this is not real.  This is OHA.

OHA’s intent is exactly what is stated in Footnote 12, “the report of the previous contractor CliftonLarsonAllen (CLA) is the subject of the follow up review….”  This wording is repeated in the RFP. (p339)

In other words, OHA’s RFP is seeking a new ‘Auditor’ willing to take OHA money to generate a report that will condemn the CLA Audit as “inflammatory statements” (p197) and “lies” (p193).

OHA “RFP NO. BOT-2022-009 follow up contract and disbursement review of the CLA-OAH & LLCs contract and disbursement review report dated December 4, 2019” states:

“(OHA) Administration…focused on (38) transactions flagged by CLA as possible fraud, waste, and abuse in both the OHA and the LLCs…. (OHA) Administration did not render a determinative opinion as to whether any of the 38 items constituted fraud, waste, or abuse. These 38 items are now the subject matter and scope of this RFP.”

In other words, the job of the accounting firm hired by OHA is debunk any suggestion that the 38 items show any wrongdoing at all.  And conduct a ‘Disbursement Review?’  Of OHA’s ‘disbursements’ for CLA’s services?

Obviously the contractor is expected to accuse CLA of overcharging OHA for the audit as a smokescreen.  Local accounting firms willing to degrade themselves in this manner prosper by a proven willingness to cover up for the powers that be, thus improving their qualifications for future ‘audit’ services in the Hawaii public and nonprofit sector market. 

The RFP offers extensive instructions on making sections of the RIP report ‘confidential’ (p346) thus easing any concern a contractor might have about losing his license or going to prison for fraudulently certifying OHA as fraud-free.  OHA’s frauds and criminality can be reported in the confidential sections for insiders to use as a guide to their golden future.  This ‘confidential’ section can then be held over OHA’s head in case anybody later gets any funny ideas about  throwing the auditor under the bus. 

Far fetched?

Bidders should be reminded that one of OHA’s former financial advisors, PKF Pacific, fell apart after its CEO was arrested at Honolulu Airport, April 5, 2015.  Patrick Oki is now serving a 20-year sentence for theft, forgery and money laundering.

The bid window closed November 8, 2021, and, according to OHA, two responses were received.

Then ‘R. I. P.’

That’s the message from the November 16, 2021, OHA Trustees Committee on Resource Management.  On pages 88 to 431 of the Board Packet is an item titled “Recommendations Implementation Report” (RIP) -- if adopted by Trustees, this would be the basis for OHA’s response to the damning exposure of OHA waste fraud and corruption.

In spite of being in the 'Board Packet', RIP was not discussed or voted on at the meeting--but it tells us OHA insiders are as greedy and secretive as ever.  

Before launching in to an item-by item response to the 38 ‘Red Flags’, it begins with this ‘disclaimer’ -- “The document is intended for the sole use of OHA Trustees, Counsel, Administration, and Staff. Its contents may not be reproduced, reprinted or distributed (either electronically or via hard copy) in whole or in part without the express written permission of Administration.” -- p88

OHA’s Red Flag responses contained in Appendix C and D of the Board Packet (p162-198) should be understood as instructions to the RIP audit contractor. 

Every single ‘Red Flag’ issue is labelled “Closed” by OHA.  Typical justifications include “Contract monitor is no longer employed with OHA” -- an excuse used as response to 20 separate findings.  Other common justifications:  ‘Executive Session’ and ‘attorney client privilege’ which are where OHA insiders apparently think they can hide illegal procurements. 

OHA responses reveal several of the Red Flag items are expenditures for text which ended up as chapters of Crabbe's not-so-famous ‘Mana’ book -- these total over $425,000 (Appendix C items 8, 19 & 20).

The RIP report labors through threadbare excuses for the $3M wasted on Kakaako Makai ‘planning’ which went nowhere.  They dutifully intone that giving money to businesses run by Crabbe cronies is “stimulating Native Hawaiian entrepreneurship” when in fact it is the opposite.  The authors trudge through Robert Lindsey’s $435K Beamer contract, without noting the obvious conflict of interest this creates for Trustee Keola Lindsey, who as chair of the PIG is the lead author of this report. 

Challenged for hiring McCorriston lawyers three times under exempt procurements, OHA has this argument: “HAR §3-120-4, Ex. A, No. 5. exempts the purchase of insurance, to include insurance broker services. OHA's insurance broker helps the agency obtain appropriate insurance coverage for OHA's assets and activities. For OHA's POL/EPL policy, the insurance carrier has an approved panel of counsel and/or the agency can obtain a Choice of Counsel endorsement.”

But when the RIP PIG gets to the Makaweli Poi Mill they stop pretending to be serious or professional.  Key passages include these recitals which OHA apparently expects the RIP contractor to blame the victims of OHA’s poi mill scams for “spreading lies in the community about OHA”.

After grifting nearly $1M via the poi mill and secretly buying the mill for an OHA employee, OHA now wants an audit reviewer to write:

“OHA, Hi‘ilei Aloha LLC, and Hi‘ipoi LLC should be commended for enduring the struggles of owning a Poi Mill, a difficult business anywhere, and persevering to find a methodology that would work. It took courage to constantly consider other possibilities in the face of hostility.”

Then the authors attack CLA:

CLA overlooks OHA’s mission to better the conditions of Native Hawaiians; Hi‘ilei’s mission to preserve and educate on Hawaiian cultural practices; and the capacity-building program’s mission to help Native Hawaiian businesses as outlined in detail above. This disbursement to SLK was for the same purposes: to help the Mill survive and preserve it as a cultural and economic resource for the community, as initially directed by OHA Trustees when the Mill was first acquired.

If the relationship between Crabbe, Perry, and Arquette is only that they know each other in the Hawaiian community and sit on the same nonprofit board(s), that displays a lack of knowledge and needs to be reconsidered. In the small community of Hawai‘i, many people know each other and many people sit on the same boards. The Hawaiian community is even smaller, with a population of less than 300,000 living in Hawai‘i. People are bound to know each other. That alone should not be a basis for presuming a conflict of interest, fraud, waste, or abuse. There should be evidence before inflammatory statements such as this are made.

In other words graft and self-dealing at OHA are ‘courageous and commendable’ and any suggestions to the contrary are ‘inflammatory lies.’

Who will degrade themselves to write this for OHA?

---30---

OHA Trustees Committee on Resource Management, November 16, 2021,  AGENDA  BOARD PACKET

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