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Sunday, January 05, 2020
OHA Sacrifices $3.2M to Hide Lawyer’s Conflict of Interest?
By Andrew Walden @ 7:23 PM :: 2764 Views :: Ethics, OHA

by Andrew Walden

Is OHA Board attorney Robert Klein covering up his own wrongdoing at the expense of OHA beneficiaries?

Former OHA CEO Kamana’o Crabbe is gone and OHA claims Crabbe’s departure shows the agency is cleaning up.  But the Board lawyer who signed off on everything is still in place.

The Office of Hawaiian Affairs (OHA) is refusing to cooperate with a legislatively-mandated Audit of OHA’s Limited Liability Corporations (LLCs).  HB172, which became Act 37 of 2019, makes release of OHA’s $3,292,290 legislative funding for Fiscal Year 2020-21 contingent on the State Auditor completing “a financial and management audit of limited liability companies created and used by the Office of Hawaiian Affairs.”

For months, State Auditor Les Kondo has been demanding un-redacted copies of OHA Board of Trustees Executive session minutes—a normal procedure in audits of State departments.  On December 30, 2019, Kondo announced he has 'suspended' efforts to audit OHA due to OHA's refusal to cooperate.

According to minutes of a July 18, 2019 Board meeting, Kondo warned Trustees against attempting to withhold executive session minutes from state auditors.  Kondo also pointed out that the Auditor’s office would treat those minutes as confidential and would not release them to state and federal criminal investigators who are also looking at OHA.  Kondo also reminded Trustees that his office has the authority to subpoena the records and that OHA has in the past released executive session minutes to State auditors without concern.

OHA Trustees minutes show Klein advising Trustees on the Auditors request in Executive Session after Kondo’s appearance on July 18 and again on July 25, 2019.  Klein, on behalf of the Board, then penned a July 30, 2019, letter to Kondo refusing to provide unredacted Executive Session minutes. 

Kondo explains:

“…We requested minutes of the executive sessions convened by the Board of Trustees relating to the limited liability companies (LLCs) that were created by OHA or on OHA's behalf; according to Mr. Klein, OHA intends to withhold portions of the minutes containing communications with its attorneys and will provide us with only redacted minutes.…”

Klein’s $3.2M refusal may cover up his own deeds.  It is likely that most if not all LLC-related executive session minutes feature Klein’s personal participation.  When OHA Trustees go into executive session, it is Klein’s involvement which provides the excuse under a standard legal formula often repeated on OHA Trustee agendas:

“Consultation with Board Counsel Robert G. Klein, Esq. re: questions and issues pertaining to the board’s powers, duties, privileges, immunities, and liabilities relating to the State Auditor’s request for confidential and Attorney-Client privileged materials and information, Pursuant to HRS §92-5(a)(4).”

Pull the thread, unravel the sweater.

An auditor demands unredacted copies of executive session minutes in part to evaluate whether a board is misusing executive session to hide criminal activity.  If this is the case, Klein would have a personal motive to hide his involvement in illegally hiding any criminal conspiracies among OHA insiders behind the walls of an ‘executive session’.  Even if OHA insiders are not hiding criminal activity, Klein could have misused his authority to violate requirements of the Hawaii Sunshine Law.  If a lawyer is proven to be facilitating or participating in a fraud hidden behind the attorney client privilege, that privilege evaporates. 

Only an examination of the un-redacted minutes can determine which of the possibilities is the truth.  To prevent that examination and possibly protect himself personally, Klein has advised the OHA Trustees to embark on a course which the Legislature says will cost OHA beneficiaries $3.2M in State funding.

Here are two relevant passages from the Hawaii Rules of Professional Conduct:

Personal Interest Conflicts  -- [10] The lawyer’s own interests should not be permitted to have an adverse effect on representation of a client. For example, if the probity of a lawyer’s own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice….

Nonlitigation Conflicts -- [26]…Relevant factors in determining whether there is significant potential for material limitation include the duration and intimacy of the lawyer’s relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that disagreements will arise, and the likely prejudice to the client from the conflict. The question is often one of proximity and degree….

---30---

Sept 28, 2019: OHA Refuses to Cooperate with Auditor—May Lose Legislative Appropriation to Hide LLC Secrets

Dec 30, 2019: State Auditor Suspends OHA Audit Over Refusal to Release Records

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