State audit claims Office of Hawaiian Affairs misspent millions ‘with little restraint’

The mission of the Office of Hawaiian Affairs is to improve the well-being of Native Hawaiians, but a newly released audit says the office and its trustees have misused millions of dollars.

The Office of the Auditor reviewed spending for fiscal years 2015 and 2016, and called into question many of OHA’s expenditures:

“In FY2015 and FY2016, OHA spent nearly double as much on discretionary disbursements ($14 million) as it did on planned, budgeted, and properly publicized, vetted, and monitored grants ($7.7 million). To fund these unplanned expenditures, OHA realigned its budget (by $8 million) and drew from its Fiscal Reserve ($6 million). We found that OHA has spent with little restraint, using Native Hawaiian Trust Fund moneys to pay for such things as the retirement benefits for a former trustee ($56,300), political donations, an international conservation convention ($500,000), as well as a beneficiary’s rent ($1,000), another beneficiary’s funeral-related clothing expenses ($1,000), and a trustee’s personal legal expenses ($1,500).”

The problem, the audit claims, is that “OHA’s vague rules guiding its discretionary spending are broadly interpreted, arbitrarily enforced, and at times, disregarded.”

For example, one trustee circulated a memo to fellow board members, soliciting donations for the recipient to attend a Las Vegas rodeo competition. In another example, a trustee donated OHA funds to a community leadership program that the trustee’s spouse had been a participant of just three months prior.

Click here to view the full audit and spending breakdowns.

OHA chair Colette Machado issued the following statement in response:

“The Office of Hawaiian Affairs (OHA) thanks the state Auditor for its diligent work in developing its Final Audit, which was released today. OHA is proud of our substantial contributions to the Lāhui and to all Hawaiʻi since the agency was established in 1980.  Our advocacy and funding have helped to protect Native Hawaiian rights, preserve traditional cultural practices, and advance the socio-economic well-being of our beneficiaries.

We appreciate that this audit is intended to help OHA improve so that we can better fulfill our mandate of bettering the conditions of Native Hawaiians. We fully understand that the daunting challenges our beneficiaries face – as well as our sweeping mandate – require our commitment to continuous improvement and progress.  We know we must do better.

OHA acknowledges the Auditor’s findings that we must endeavor to institute and enforce disciplined spending through clearly defined, objective and responsible policies and protocols.  This will better enable OHA to uphold its solemn trust obligations to our beneficiaries.  OHA will review and give serious consideration to the Auditor’s recommendations, some of which are already being addressed by OHA.

Given the seriousness of several of the Auditor’s findings, I have already proposed that the Board immediately adopt moratoriums on the use of Fiscal Reserve funds as well on the use of Trustee Sponsorships and other agency Sponsorships until the Board approves amendments that address concerns relating to those policies.

Again, OHA is committed to the change necessary to best serve our people.”

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