by Andrew Walden

Sheer terror.

With their grab for HTA tourism marketing contracts in the balance, the panicky reaction by leaders of the Council for Native Hawaiian Advancement (CNHA) to the Star-Advertiser's Sept 22, 2022, revelations about CNHA malfeasance with Office of Hawaiian Affairs (OHA) COVID money makes a lot more sense when we connect the dots.

The Star-­Advertiser, Sept 22, 2022, reports:

“(the Office of Hawaiian Affairs) told CNHA on July 23, 2020, that it had found 37 noncompliant recipients in a random survey of 50 grant applicants….”

That’s 74% bogus payments.  But OHA documents obtained via an Hawai’i Free Press UIPA request show CNHA consumed only $700K before terminating the balance of the $1.6M OHA contract.

So why the panic?

CNHA’s $700K OHA malfeasance is connected to CNHA’s grab for an HTA multiyear US Mainland marketing contract worth $34M in the first two years alone.

The Hawaii State Auditor, September, 2022, reports: HTA’s oversight is lax, and its internal controls are deficient.  HTA should be a perfect match for CNHA, but first they have to get past the bid rigging allegations at the center of protests by the losing bidder, Hawaii Visitor and Convention Bureau.

CNHA’s $1.6M OHA contract, first awarded in November, 2019, then proposed to be expanded by another $2.2M by vote of Trustees May 8, 2020, was the first step in a massive expansion of CNHA funds via COVID expenditures.  And, thanks to cronies controlling HTA, CNHA hopes to pivot from COVID to HTA contracting, now that the epidemic appears to be winding down.

And CNHA’s growth is founded on an operation which couldn’t even meet OHA’s murky ethical standards. 

Let that sink in for a moment.

Civil Beat, July 17, 2022 explains:

“The Council for Native Hawaiian Advancement went from landing grants and contributions worth just over $1 million in 2018 to $70 million in 2021.

… as the coronavirus pandemic hit, and CNHA stepped up to play a role helping manage relief funds – grants and contributions rose to just under $10.9 million. By 2021, the council reported $70.4 million in government grants and contracts….   

COVID Been Very Very Good to Me

What did CNHA do that even OHA couldn’t stomach? 

OHA’s 2nd CNHA Contract Monitoring Report, July 23, 2020, shows that, pre-COVID, CNHA was 100% non-compliant.  But under COVID emergency rules, 56% of CNHA disbursements suddenly became compliant.  In essence, Governor David Ige’s March 4, 2020, COVID Emergency Proclamation legalized over half of CNHA’s corruption. 

What about the other 44%?  “Certain people were getting grants over and over again, not allowing new people to come in and get grants,” former OHA Trustee Rowena Akana, October 5, 2022, told Hawaii News Now.

Here is the rundown from OHA’s internal audit (p82):

a. Payment was issued for a bill with no outstanding balance. Balance on bill was zero for May 1, 2020. Payment issued by CNHA was made on 5/12/20.

b. Rental agreement missing pages that identify landlord and rent amount.

c. Documentation provided was unreadable- applicant IDs paystubs etc.

d. Addresses on documents all differ-Intake application address, physical mailing address, service address on bills to be paid differ.

e. Bill was in a household members name with no income verification, ID documentation, or documentation to prove that individual resided in the same household as applicant.

f. The applicant is on the lease and the household member listed who is responsible to pay the bill is on the lease but has a different mailing address than the applicant. Is listed as a household member on the intake application but there is no verification documentation: no ID, no Native Hawaiian verification or income verification documents.

g. No Hardship: Income increased not decreased

h. The payment disbursed was identified as rent, but the payment was for utilities

i. Missing income documents – only one paystub, need one month verification of income.

j. The intake application stated, ‘not recommended to pay’, but payment was issued.

1. Missing income documents to support claim of self-employment- used 1099 for January 2020. No secondary verification via checking accounts or other documentation.

2. Father of the applicant is the landlord- There is no documentation of proof for rent payments (receipts, bank statement etc.).

3. Applicant was employed for 20 hours or less per week. Income supported by paystubs. The bill was for more than the applicant earned monthly. No income documentation to verify additional documentation or household members to justify payment

Profitable Nonprofit

After a decade of bumbling along in the six to seven digit income range, CNHA’s sudden leap to $10M and then $70M begins with the OHA contract blowing up in CNHA’s face. 

The Star-Advertiser, September 22, 2022 reports:

Documents show that an OHA review found CNHA noncompliant in 2020 in its handling of Emergency Financial Assistance Program funds, which morphed into COVID-19 relief. According to public records obtained by the Honolulu Star-­Advertiser, OHA told CNHA on July 23, 2020, that it had found 37 noncompliant recipients in a random survey of 50 grant applicants — representing 20% of 256 total disbursements….

But, for CNHA, the failed OHA contract became the model for COVID contracting with the City and County of Honolulu and DHHL.  In a February 8, 2021 letter (p155) terminating CNHA’s OHA contract, CNHA President and CEO J. Kuhio Lewis writes:

”Despite the unfortunate circumstances necessitating the termination of this contract with OHA, CNHA’s resolve to kākoʻo and kōkua our community during these unprecedented times is greater than ever and we will continue to provide emergency financial assistance via other community partnerships and programs at an even greater level.”

Lewis wasn’t blowing smoke.  An audit report filed with CNHA’s 990 for FY 2020 explains:

During the year ended September 30, 2020, CNHA signed an agreement with the City and County of Honolulu to provide … up to $15 million to disburse to qualified households through December 30, 2020. The funds were provided to the City and County of Honolulu through the Coronavirus Relief Fund established by the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Just as the OHA contract was falling apart, the COVID spigot opened wide.  The State procurement website shows $58.2M for CNHA from six contracts:

• February 5, 2021: $2.4M COVID Emergency Rental Assistance contract with DHHL
• April 26, 2021: $10M COVID Emergency Rental Assistance contract with DHHL
• June 7, 2021: $5M COVID Emergency Rental Assistance contract with DHHL
• August 31, 2021: $5M COVID Emergency Rental Assistance contract with DHHL
• September 1, 2021: $6.5M COVID Homeowner Assistance contract with DHHL
• December 10, 2021: $29.3M COVID Homeowner Assistance contract with HHFDC covering City and County of Honolulu

CNHA’s website tells anybody looking for money from the cancelled OHA ‘Kuhiau’ program: “The Kahiau program has reached its current processing capacity.  We are waiting on the Office of Hawaiian Affairs to allocate additional funding.  If you are a Honolulu resident, please apply to our Hoʻāla Assistance Program.”   Hoʻāla Assistance Program is the name given to CNHA’s Honolulu-funded COVID cash giveaway.

​Both the DHHL and HHFDC programs are praised for spending lots of money very quickly.  The Star-Advertiser, September 22, 2022, reports:

William J. Aila Jr., who is chair of the Hawaiian Homes Commission, said in an email, “DHHL is very pleased with the work that CNHA has provided to the department in managing millions of dollars in federal funds intended to serve the native Hawaiian community.”

Honolulu Mayor Rick Blangiardi supported CNHA’s proposal for the HTA U.S. tourism contract. Blangiardi said in a letter of support, “We have had tremendous success working with Kuhio Lewis and CNHA in providing emergency financial assistance (Rent & Utility Relief) to Oahu’s residents facing unprecedented hardship due to the COVID-­19 pandemic.

The US Department of the Treasury, September 14, 2021, likewise praises Honolulu and DHHL COVID spending for its ‘high spend rates’:

On the island of Oahu, residents have access to ERA programs run by the City and County of Honolulu, and native Hawaiians also have access to programs managed by the Department of Hawaiian Home Lands, which provides assistance to native Hawaiians across the state. The nonprofit organizations running these programs have worked together to simplify the application the process and provide additional “one-on-one” and culturally competent support to meet local needs.  They have also proactively engaged with other nonprofit organization providing human services resulting in more integrated continuum of care for those in need of ERA benefits. These coordinated services have supported high spend rates on ERA funds for both grantee programs run by the City and County of Honolulu and the Department of Hawaiian Home Lands

In its 990s, CNHA describes itself as a ‘Community Development Financial Institution.’  The US Department of the Treasury explains, “CDFIs can be banks, credit unions, loan funds, microloan funds, or venture capital providers.” 

Yet somehow, when it comes to shoveling money out the door, the CNHA pseudo-bank couldn’t handle basic paperwork.  At OHA this was a problem.  For DHHL and the City and County of Honolulu it was seen as a positive.  At HTA it will be a cornucopia.

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PDF: OHA-CNHA Contract UIPA Documents