(Editor's Note: News outlets have been given a copy but none has seen fit to publish the AFSCME audit or trial report. HFP has not been able to get a copy. Today the Star-Adv is releasing a few more tid-bits.)
UPDATE: AFSCME Letter to UPW Members
United Public Workers’ Dayton Nakanelua removed as state director for alleged ‘abuse and misuse of funds’
Star-Adv May 2, 2020: .... The trial decision also cited Nakanelua’s decision to co-sign a $165,605 check to Hawaii Productions Associates as a “50% first installment” for a documentary film on UPW, a check that UPW President James Wataru refused to sign because he did not believe the payment had been budgeted or properly authorized by the union’s state executive board….
Last year’s audit found Endo received reimbursement for thousands of dollars in charges made on a personal credit card that lacked sufficient documentation “or even a clear purpose,” such as $3,003.14 for a 27-inch iMac computer and thousands of dollars in gift cards, according to Saunders’ letter to union members….
Wataru and former UPW Secretary-Treasurer Gerald Aqui were reprimanded for following procedures set out in an outdated 1984 union executive committee policy on political campaign contributions that did not comply with the UPW constitution.
Wataru was also reprimanded for signing off on expense reimbursements without the approval of Nakanelua, but the trial decision concluded none of those expenses benefited Wataru personally. Aqui, who has resigned, was also reprimanded for approving expense reports without the proper documentation.
Clifford “Chip” Uwaine, executive assistant to Nakanelua, was reprimanded for a technical violation of the union constitution for failing to submit expense reports for direct-billed hotel and flight charges, and UPW Oahu Division Director Loyna Kamakeeaina was found not guilty of all charges against her.
Both the trial and AFSCME audit were triggered by charges filed by union member Alton Nosaka last year and this year against Nakanelua and other union officials….
read … United Public Workers’ Dayton Nakanelua removed as state director for alleged ‘abuse and misuse of funds’
AFSCME Audit of Hawaii Affiliate Reveals Suspicious Spending
by Carl Horowitz, NPLC, April 28, 2020
The reputation of United Public Workers, never all that favorable, has taken another hit. This February, an internal audit prepared by the parent union, the American Federation of State, County and Municipal Employees (AFSCME), concluded that officials of the 13,000-member Hawaii affiliate spent nearly $300,000 (and possibly more) on unauthorized purposes over a two-and-half-year period. The 25-page report, a copy of which was obtained by the Honolulu Star-Advertiser, stated: “There does not appear to be meaningful oversight on how funds are spent and accounted for, and…the opportunity for abuse of misuse of union funds exists as a result.” The audit did not accuse any one person of criminal wrongdoing. Union officials, in response, have vowed to meet AFSCME transparency standards.
Hawaii has been the site of an unusual number of recent union corruption cases in federal court. Raymond Fujii, former head of a contractors’ association and a Painters union charity, was sentenced in 2016 for ripping off a combined nearly $1.5 million from these entities. Last August, Brian Ahakuelo, former business manager of International Brotherhood of Electrical Workers Local 1260, plus a pair of family members, were indicted on 70 counts of conspiracy, money laundering, wire fraud and embezzlement connected to the disappearance of $1.4 million in union funds. And this January, Nathan Lum, a former senior official with International Longshore and Warehouse Union Local 142, was indicted in 2018 for tax fraud and identity theft totaling more than $300,000; he later pleaded guilty, and received a 30-month prison sentence.
United Public Workers, also known as AFSCME Local 646, has a history of corruption as well. And the central figure here is its longtime former head, Gary Rodrigues. Back in 2002, Rodrigues and his daughter, Robin Sabatini, were convicted by a Honolulu federal trial jury on dozens of criminal charges, including mail fraud, money laundering and embezzlement, related to the disappearance of union funds. Far from accepting the verdict, the pair went all the way to the U.S. Supreme Court in an unsuccessful attempt to get their conviction overturned. The evidence against them was overwhelming, even if the elder Rodrigues, described by one observer as “greedy, autocratic, vindictive and tyrannical,” refused to face the facts. He received a four-year prison sentence, and along with his daughter, was ordered to pay $378,000 in restitution. He also was required to pay a $50,000 fine.
Apparently, United Public Workers leadership has accountability problems of its own. Based on information from unnamed union members, AFSCME headquarters in Washington, D.C. last year conducted a full-scale audit of the Hawaii union’s finances. The confidential report was dated December 19, 2019 and released to the executive board on February 15. Shortly afterward, the contents were leaked to the Star-Advertiser. Reviewing documents for the period January 2017-July 2019, the report cited tens of thousands of dollars in union funds spent on restaurants, lodging, airfare and other expenses without proper documentation. “Many charges for meals, which were reported on expense reports, were either not supported by a receipt, did not document attendees and union business purpose, or both,” noted the audit. Questionable airfare expenses totaled $293,000. More alarmingly, the union spent a whopping $5.6 million on legal fees, though details were not available.
While the AFSCME report cited staffing problems and an outdated system as partly responsible for all this, it also pointed a finger at UPW State Director Dayton Nakanelua, who rolled up $26,659 in charges on a union credit card. Nakanelua told the Star-Advertiser that he accepts “sole and full responsibility for the findings and the deficiencies pointed out by the AFSCME audit.” As stated above, the report did not accuse anyone, including Nakanelua, of criminal wrongdoing. But given the red flags that it raised, indictments could happen by the end of the year.
FURTHER READING
Judge Orders Hawaii Father, Daughter to Serve Sentences
Hawaii Boss Sues Former Union; Says He’s Not Liable for Debt
Hawaii IBEW Boss, Family Members Indicted for $1.4M in Thefts
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National Union AFSCME Places UPW, Local 646, Under Administratorship “to Restore Integrity and Transparency for Members”
Move comes after severe financial and other mismanagement by UPW leadership
News Release from AFSCME, May 1, 2020
WASHINGTON – Today, the American Federation of State, County and Municipal Employees (AFSCME), the national union for UPW, Local 646, placed UPW under administratorship “to restore integrity and transparency for members.” This means the national union has assumed responsibility for the day-to-day affairs of UPW, including the continued representation of UPW members in the workplace.
AFSCME national president Lee Saunders has named AFSCME Area Field Services Director Liz Ho as UPW Administrator.
The action stems from an AFSCME International Union audit and the findings of AFSCME’s Judicial Panel and International Executive Board Trial Officers that UPW suffered from deficient financial management, including the opportunity for serious abuse and misuse of member dues money.
The Trial Officers issued a decision yesterday that removed UPW State Director Dayton Nakanelua and UPW Administrator of Fiscal and Membership Services Jeanne Endo from their respective positions.
In 2019, AFSCME conducted a review of UPW’s policies, minutes, financial statements and accounting records between 2017 and 2019. The review was conducted to ensure that the overall management of UPW met the high standards its members and the AFSCME Financial Standards Code require.
The audit found that “[T]here does not appear to be meaningful oversight on how funds are spent or accounted for.” The review found abuse and misuse of union funds and the existence of questionable perks and benefits. TRUSTA, UPW’s independent accounting firm, sent a letter to UPW late last year confirming AFSCME’s concerns regarding the lack of fiscal controls.
In a letter sent today to UPW’s 13,000 members, Saunders explained that in late 2019, Nakanelua acknowledged and agreed to remedy many of these findings, but he still has not taken appropriate action. Saunders announced that he has tapped Ho to assume responsibility for the day-to-day operations of the local.
“Liz Ho has a long history of tireless work on behalf of Hawaii’s public service workers,” Saunders said. “There is no one better to restore the high standards you should expect from your union.”
“I’m eager to get to work getting UPW’s financial house in order and rebuilding trust among its members,” said Ho.
Saunders also assured UPW members that, “There will be no interruption in member services. Union representatives will continue to help resolve job-related issues, and we will continue to advocate on behalf of all UPW members.” Saunders further noted, “This is especially important given the public health and economic challenges created by the pandemic, where Hawaii public service workers are on the front lines of the crisis.”
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AFSCME’s 1.4 million members provide the vital services that make America happen. With members in communities across the nation, serving in hundreds of different occupations — from nurses to corrections officers, child care providers to sanitation workers — AFSCME advocates for fairness in the workplace, excellence in public services and freedom and opportunity for all working families.