City gets new rules to watch for fraud
By Robbie Dingeman
Advertiser City Hall Writer
A month after the city administration reported little progress with new safeguards designed to prevent another 'Ewa Villages fraud scandal, officials yesterday returned to the City Council to say most of the recommendations have been adopted.
Advertiser library photo
Councilman Duke Bainum, who had raised questions early in the 'Ewa Villages probe, said he was pleasantly surprised by the speedy push to move forward on recommendations made by the auditor Deloitte & Touche on Sept. 26, 2000, regarding the city's commercial relocation projects.
Councilman Duke Bainum wants a follow-up on the 'Ewa Villages investigation.
"There was amazing progress and I congratulate the administration," Bainum said.
City Managing Director Ben Lee told the council's Budget Committee at a briefing yesterday that he and other officials have worked hard to make improvements in the city's financial guidelines to help prevent another embezzlement scandal like 'Ewa Villages.
In the early 1990s, then-city housing official Michael Kahapea and others stole at least $5.8 million in city money used for moving businesses as part of the city's revitalization of plantation-era homes at 'Ewa Villages. Kahapea created phony invoices for moves that never happened, and got kickbacks from companies that received the money. Kahapea is serving a 50-year sentence.
Lee and Mike Hansen, internal auditor with the city Department of Budget and Fiscal Services, said the city has changed policies and procedures and made progress on all eight recommendations made by the private auditor.
That contrasted sharply to last month, when Hansen acknowledged an analysis by the Office of Council Services that only one of the eight recommendations was completed.
Councilman Gary Okino pressed officials for details about when the city staff began performing periodic audits as recommended. Hansen said he is planning to begin them but hasn't yet started.
Lee said more checks and balances have been added to the process to prevent a similar city financial scandal. "I'm not going to let that happen ever again," Lee said.
Bainum said he was encouraged by the improvement and believes safeguards are vital. "As long as you have human beings, you have the potential for corruption," he said.
City officials said the scandal has prompted them to begin fraud awareness training for all city managers and to review all financial procedures.
Since the city has shifted away from building new housing, there are fewer relocations, but officials said some people are moved every year as a result of government projects.
