Draft audit focused on expenses
By Beverly Creamer
Advertiser Education Writer
A draft of the audit that may have been a factor in the firing of Evan Dobelle as University of Hawa'i president reveals a sloppy and confusing mix of personal, university, and University of Hawai'i Foundation business. But auditors in the draft document pass no judgment on whether the issues they flagged would constitute "cause" for dismissal.
The final version of the audit was part of the ousted president's third-year evaluation. It is thought to be a key part of the decision-making as the UH Board of Regents weighed whether to fire Dobelle, which they announced they did "for cause" on Tuesday.
Neither the draft document nor the final audit, both of which were prepared by Deloitte & Touche, has been released publicly. The draft says auditors were engaged solely to help regents evaluate whether specific expenses complied with policies and procedures.
Dobelle's office submitted a written response to questions raised in the draft audit, but he said yesterday he has not seen or been given a copy of the final audit.
"I have no idea what the final audit alleges or is concerned about," Dobelle said.
Telephone messages concerning the audit left yesterday for Regent Vice Chairwoman Kitty Lagareta were returned by Barry Marr, a private attorney who said he had been retained by the board. "Because it hasn't been released (to the public), it would be inappropriate to comment on the audit," Marr said.
Marr wouldn't say whether there were differences between the draft and final audit.
Lagareta told The Advertiser Friday that concern about how Dobelle managed money from a special protocol fund was among the factors that led to the regents' unanimous decision.
The protocol fund — made available to Dobelle from non-taxpayer dollars — is one of the usual perks of a university president and is provided by the foundation to support activities in fund-raising. Former UH president Kenneth Mortimer had a similar $150,000 fund for his discretionary use. Dobelle's began at that level and was increased to $200,000 annually during his second and third years as president.
The regents have long been critical of Dobelle for what they described in his second-year evaluation as "a cavalier and irresponsible attitude towards public funds and fiscal management."
His office said in his written response to the draft that he had already begun instituting tighter controls on the fund, the paperwork for which has been overseen in four separate offices during his tenure.
"I was never directly involved (in answering questions from auditors)," Dobelle said. "The auditors never dealt with us. They never dealt with me — ever — which I always thought was rather odd ... that they would never want to know from me." Dobelle said information from his office for the audit came at the request of the foundation.
Airfares upgraded
According to details from the draft, in his first two years as president, Dobelle charged 16 airfare upgrades for people other than himself to the protocol fund, amounting to $38,174. The draft audit categorized those charges as "disallowed and questionable."
The upgrades, primarily for other university personnel, were part of about $97,000 in charges over the past three years that were flagged in the audit.
Dobelle said he felt it was within his discretion to offer upgrades on travel, especially for several older members of his team who would accompany him.
Of one trip, he said, "We were going to eight countries in 18 days and I felt they should be upgraded. "
For that trip, which came early in his administration, business class and first-class travel was provided to staff on a goodwill tour to meet alumni and establish relations with educational institutions throughout Asia.
"It's nothing more complicated than that. I can't imagine any other president of any other billion dollar corporation would do anything less. That's absolutely business protocol and I followed it. They were on the ground working from the time we got in until night. It was hardly a luxury trip."
The Deloitte & Touche draft notes that "additional costs resulting from upgrades to business or first class, personal side trips or stopovers must be paid by the traveler."
Auditors in the draft also pointed to a lack of clear procedures in some areas. For instance, the bulk of Dobelle's out-of-state travel was not approved in advance; however, auditors note that procedures do not address who should approve the president's out-of-state travel. In some cases, it is indicated that Dobelle signed his own personal leave forms.
Bill King, chief financial officer for the foundation, which administers the protocol fund out of earnings and other non-taxpayer dollars, told The Advertiser the spending guidelines for the fund include an ambiguous clause that allows spending on: professional and spousal travel, entertainment at College Hill, club dues, protocol monies for senior administrators, among other things.
"The purpose established is very broad and general and the guidance we use is for the benefit of the university," said King. "When we see a comment like 'among other things,' it gives us a fair amount of latitude for things that are expenditures for the benefit of the university."
Confusing system
The draft audit points to an often confusing system of spending and repayment involving Dobelle's personal credit cards, travel and restaurant expenses, and the way reimbursements were made.
Auditors said there were approximately $97,000 worth of "disallowed and questionable charges" (including the travel upgrades) made to the protocol fund over three years. Among them:
• A $1,000 donation made to the Honolulu Symphony for "Support Youth Education." The written response from Dobelle's office indicates he repaid the money.
• $10,000 paid to Elizabeth "Betsy" Sloane to assess the foundation five months before she was hired as its new president.
Dobelle said he hired Sloane to do the assessment long before she became a candidate for its presidency. In supporting his contract with Sloane, Dobelle said the foundation "understood that I wanted someone to come in and consult" and give the board and the president an oral report. "They (the foundation) didn't want (Sloane's report) in writing," he said. "That creates a paper trail that could have been injurious to people's reputation."
• $45,000 paid to the Boston survey firm Opinion Dynamics Corp. for two marketing surveys. The surveys were not available, said auditors, and were not properly bid.
Dobelle said the firm performed two surveys, one to look at community priorities for the university and the second to set priorities for the foundation's centennial campaign. When he first arrived, he said he understood he could let contracts as long as they were under $100,000, but that was changed by the board about a year ago to contracts up to $25,000. The foundation, which paid the bill, however, has separate rules for contracts, and requires justification for sole sourcing.
• $4,130 paid to send Dobelle's wife, Kit, to a conference at the University of Massachusetts, Amherst, representing her husband.
Under the Dobelles' contract, she was considered a "non-compensated employee" and Dobelle said the trip was made as a university representative.
Credit card bills
During three years in the presidency, there were three different arrangements for handling of personal and protocol fund expenses charged on Dobelle's personal credit card, according to the draft audit.
• At one point Dobelle paid the entire credit-card bill and requested reimbursement from the foundation for the business portion.
• During another period, the foundation paid the entire credit-card bill and requested reimbursement from Dobelle for the personal portion.
• During another period, most recently from March 2003 through February 2004, the foundation made payments only for business charges and Dobelle made separate payments for personal charges.
Over the three years, $46,500 in personal charges were paid by the foundation and later reimbursed by Dobelle, the draft audit shows.
Dobelle said that when he returned from trips, he turned receipts over to staff to process, and paid reimbursements as soon as he was asked. While auditors note that reimbursements sometimes took a year to complete, Dobelle said at times he was owed money for long periods, as well.
King said there was no consistent policy for reimbursements.
"At the very beginning he submitted his business expenses and we paid those. He put them on his personal credit card and we paid them. We review them, and assuming all the documentation is in order, we pay them."
King said there were times when documents were missing and submissions were kicked back to Dobelle's office for further records, with questions such as 'You didn't list all the attendees and you don't have enough information about the purpose.'
"Nothing big," said King. "Not from our perspective.
"He's paid us back everything. I think we're all caught up."
That system was changed to one "that has caused a lot of concern," King said.
"We would get his credit-card statement — he would send it to us along with his spreadsheet which indicated all the charges — and he would indicate whether it was business or personal. We would make the entire payment, whether business or personal, and then get a check from him for personal."
The audit notes that in some instances, repayments dragged on for extended periods, but King said whenever the foundation had the paperwork complete and asked Dobelle for reimbursement, it came immediately.
"Evan was good about it — 'Tell me what to pay and I'll pay it,' " said King.
Dobelle also said his assistant, Kristin Blanchfield, kept a sheaf of personal checks he had already signed so she could make immediate payment when requested by the foundation.
"The administrative side could be cumbersome at times," said King. "Evan would travel a lot so his folks upstairs were trying to figure out the precise business purpose of this trip and would give us a check and we would verify it.
"Trying to separate business from personal and make sure we were all on the same page and recognize which was business and personal in some cases took a long time. There was one that took a year before we got it squared away.
"He gave us a check at one point in time and there were still a couple of items outstanding, so the check was sent back to him until we could get it squared away."
King said the current method used for repayment is the one that "has worked a lot easier."
"Basically we get the credit card statement and, like before, he lists all the items and indicates whether they're business or personal. He provides the purpose, who the attendees were, the classic stuff you would provide, and then we'd pay the credit-card company just the business piece," he said.
Documentation
The draft also noted:
• Some leave forms were submitted after leave was taken.
• Airline tickets were often purchased just a few days before travel, which prevented finding the lowest possible fare as required.
• Travel forms did not always have the required fiscal officer signatures.
• Payments were made by the foundation without adequate supporting documentation. (The president said he was told by staff that all documents except one were located. Confusion occurred because documents were in four separate offices.)
• The audit pointed to a lack of adequate documentation for some expenditures, including $5,974 in hotel charges, $5,691 for a variety of other travel charges, including meals, and $9,100 in undocumented per diem charges.
"We presumed the credit-card bill was sufficient," said Dobelle. "It would show a restaurant, and then you would attach to it who was there and the purpose. From what I understand from Kristin (Blanchfield) that's what we had done for three years."
Dobelle said Blanchfield told the auditors that if they wanted all the individual chits from restaurants which were not part of the documentation, she could recover them from First Hawaiian Bank.
"She called First Hawaiian and they said they could have these receipts in 30 days," said Dobelle, "but they (the auditors) never requested it."
Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.
