Thursday, February 8, 2001
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Posted on: Thursday, February 8, 2001

OHA board ponders defense to audit accusations

By Yasmin Anwar
Advertiser Staff Writer

OHA trustees who are implicated in a state audit that alleges financial mismanagement and some spending improprieties demanded more time yesterday to defend their positions and set the record straight.

Though state Auditor Marion Higa’s draft report on the Office of Hawaiian Affairs remains confidential until its release later this month, a few details emerged yesterday before trustees resolved in a closed meeting to discuss a response, due Monday.

Launched a year ago, the audit identifies seven major areas of concern, including management of the OHA’s $350 million investment portfolio; the fallout of OHA Administrator Randall Ogata’s 1999 consolidation of 11 OHA departments into four divisions; and how some trustees have used their annual $7,200 personal allowances.

Allegations include:

One trustee spent $1,000 of her trustee allowance on hair grooming.

Though the audit does not name trustees, Rowena Akana yesterday said she repaid the $1,000 as soon as she was admonished for improperly using her trustee allowance.

A former trustee used $8,000 of the allowance on loans to family members.

A former trustee used money from a protocol fund to pay for a beneficiary’s dental work.

Yesterday, Akana and Clayton Hee, who have each headed the nine-member board in the past two years, said they were personally insulted by some of the audit’s allegations. They demanded more time to respond.

Hee said he did not trust OHA Chairwoman Haunani Apoliona to fashion a response that will meet the approval of all nine trustees, and scoffed at the draft copy of a response prepared by staff, Apoliona and trustee Oswald Stender.

"This pathetic document will not be supported by me," he said.

In particular, Hee objected to what he saw as a weak response to the audit’s criticism of the delay in the termination of a longtime OHA money manager who was accused of underperforming and trading outside his manager guidelines.

OHA’s former investment consultant, Morgan Stanley Dean Witter, estimated OHA lost $1.3 million in the three months between the Budget and Finance Committee’s recommendation that the money manager be fired and his actual termination, and a total of $5.9 million from the beginning of the year.

Hee, who was responsible for scheduling the issue on the board agenda, disputes that.

Meanwhile, Ogata yesterday announced that he has been working on his own response to the audit’s criticism of his reorganization, and wants to incorporate that into the final response.

Colette Machado objected to Ogata’s eleventh-hour demand, saying he had plenty of opportunity to add his input during last week’s meetings. However, Apoliona agreed to work with Ogata. The board hopes to approve a response tomorrow.

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