Djou yesterday said the "culture of mismanagement" is so bad that he called for the immediate removal of the top two supervisors at the Liquor Commission: administrator Wallace Weatherwax and chief investigator John Carroll.

"The Honolulu Liquor Commission is unaccountable, it is mismanaged and it is out of control," Djou said. "It is time to clean up and clean out this agency."

But Weatherwax and Carroll said they have no intention of resigning and are working to improve the agency.

"We're part of the solution," Weatherwax said. "I think our goals are all similar."

Carroll said new investigators have been hired and the agency is improving. "We have a plan set up. We're going to go forward," he said.

Commission Chairman Dennis Enomoto has said that the agency is working on fundamental changes to the organization but is dealing with "the challenges of overcoming organization inertia in a government agency."

Djou said he is not accusing either man of criminal misconduct but believes they have been inept as managers.

The City Council commissioned the audit in the wake of a series of federal indictments and convictions of liquor investigators on extortion and other criminal charges.

The agency oversees nearly 1,500 bars, clubs, restaurants and other businesses that sell liquor, investigating complaints that range from stores that sell liquor to minors to charges of gambling, prostitution and drug use in the bars and nightclubs.

Five commissioners appointed by the mayor and confirmed by the City Council oversee the agency, with day-to-day operations directed by the administrator and staff. State law gives the agency its authority while it is administratively attached to the city, which blurs the line of who has authority over its operation.

"There is little accountability of the administrator, the commissioners have become too far removed from their oversight responsibilities, and there is no effective means for personnel-related concerns dealing with the administrator and its management team," Tanaka wrote.

Tanaka said the current managers have talked about changes but made little progress. "Ineffective personnel policies and management, coupled with the negative perception of commission management, has hampered the agency's small but hard-working staff, and also hinders the ability of the commission to effectively achieve its mission," he said.

U.S. District Judge David Ezra called attention to the depth of the problem last week when he said the convictions of eight former inspectors charged with accepting bribes from owners and employees of hostess and strip bars represent "the most open and notorious cases of public corruption I have ever seen."

Weatherwax said the commission and staff are working toward change, especially since the criminal cases were revealed. "We were immediately proactive after the indictments," he said.

Honolulu Mayor Mufi Hannemann said the serious issues raised by the audit need to be addressed. "We recognize that the Liquor Commission has had problems for many years," he said.

Hannemann has now appointed three people to the five-member commission, one of whom was confirmed by the council and is expected to begin serving this month.

"I discussed with my nominees the demands for better oversight of the commission staff as well as the importance of maintaining the highest ethical and legal standards among the staff and the commission," he said.