Where is the promised audit for fraud, waste and abuse?

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Keli‘i Akina, Ph.D., Trustee, At-LargeIt’s been over two years since the Office of Hawaiian Affairs Board of Trustees unanimously approved an independent audit of OHA and its limited liability companies for fraud, waste and abuse. $500,000 was appropriated and a top national financial services firm was engaged.

To date, not even a progress report has been provided to the public despite ample time and resources having been dedicated to complete the task. And now the OHA Trustees have voted 8 to 1 (I was the lone NO vote) to stretch the audit’s completion date to December 2019. That will be almost three years since the audit was approved, and will bypass the ending of the CEO’s current contract. What’s going on?

Excuses, Excuses…

One excuse given for extending the deadline for the audit is that OHA’s time and resources were constrained by events like the state Auditor’s report released in February 2018, the Attorney General’s investigation into OHA, and the November 2018 election. But the fact is, an organization the size of OHA has the resources to comply with the audit. It is my opinion that the Board of Trustees failed to compel the organization to do so.

Another excuse is that there’s no need for this audit, due to the many other audits OHA undergoes on a regular basis. However, the independent audit was created to dig deeper than these routine audits, to ferret out fraud, waste and abuse in OHA’s and the LLCs’ procurement practices and contracts. No other audit of OHA is as comprehensive as the independent audit was designed to be, not even that of the State Auditor.

A third excuse for the delay is obstacles in auditing the OHA-owned LLCs, despite the fact that the OHA Board ordered the LLCs to comply. The problem? One can only guess, as a cloak of secrecy has covered any deliberation on this matter.

Cloud of Concern

Whatever the reason for the delay, OHA’s failure to complete the independent audit has generated a cloud of concern. The state Attorney General has been investigating OHA, and state lawmakers have introduced resolutions and attached language to OHA’s own proposed budget and public lands trust legislation, requiring an audit of the OHA LLCs.

Crisis of Credibility

OHA has been mired in an ongoing crisis of credibility, and the delay in completing the audit is further damaging OHA’s reputation. In 2015, OHA commissioned a scientific survey conducted by SMS Research. Among those surveyed, OHA ranked least favorable among Hawaiian-serving institutions. Perceptions of poor management and failure to represent the Hawaiian people effectively were the top rationales for the low ranking.

Action by OHA Trustees is Needed

The expiration of the current CEO’s contract in July will present an opportunity Trustees must take seriously. Trustees must perform their due diligence to select a CEO candidate eminently capable of restoring OHA’s credibility. This person must be qualified and motivated to guarantee the completion of the audit without interference or further delay.

Trustees must also assert the political courage amongst themselves to complete the independent audit, and declare that “the buck stops here.” Doing so is the only way to get an accurate and complete picture of the agency’s financial condition. And that is essential to bettering the conditions of OHA’s beneficiaries, our ultimate purpose.

Finally, OHA must create a culture of transparency. The agency should welcome the scrutiny of a thorough review, rather than delay it. And all beneficiaries should be watching closely to help ensure the audit is not delayed again or hindered by weak excuses.

Toward this end, E Hana Kākou!/Let’s Work Together!