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Taking the High Road

Tuesday, April 15th, 2008

By: TRUSTEE ROWENA AKANA

Source: April 2008 Ka Wai Ola o OHA Column

‘Ano‘ai käkou… I would like to take a moment to pay tribute to the beloved Aunty Genoa Keawe, a genuinely warm and gentle person that was truly one of Hawai‘i’s greatest treasures. All of Hawai‘i wishes you Godspeed.

OHA UPDATES

Since my December KWO column about the mass exodus of OHA employees, the “lock-down” security measures taken by the leadership to track employee whereabouts, and the low morale, etc., I have been locked in a war of words with Chairperson Apoliona’s chief of staff, Mrs. Winona Rubin, who placed a full-page ad in our January issue of the OHA newspaper trying to negate my comments. The ad was so ridiculous that I chose to answer it with a full-page ad of my own in the February issue (that many people said they never received through the mail) that went directly to the heart of my accusations. I asked Mrs. Rubin to explain the following: 

  • Perhaps Mrs. Rubin can explain in detail, the expenses for legal advice from attorneys who have not been able to deliver in any success in moving federal legislation forward.
  • Perhaps Mrs. Rubin can justify why there was no evaluation done on their performance before extending their contract for the past three years?
  • Perhaps Mrs. Rubin can justify all of the millions of trust dollars spent on our Kau Inoa registration done on the mainland where OHA spent money on nonprofit groups and others to sign up people, and paid for each person they signed up. There has been no accurate account distributed to OHA Trustees who have requested this information, estimated to be about $10 a signature for mainland registrations, which cannot possibly justify the millions of dollars that we have spent trying to collect those signatures.
  • Perhaps Mrs. Rubin can explain why for the past two years more effort has been spent getting signatures on the continent instead of focusing on Hawai‘i, where 80 percent of the Hawaiian population reside.
  • Perhaps Mrs. Rubin can explain why Haunani Apoliona’s sister has been put in charge of the mainland registrations and flying first class each time.
  • Perhaps Mrs. Rubin can explain how Chairperson Apoliona’s sister received a charge card from OHA and accumulated $10,000 in charges before the card was taken away.
  • Perhaps Mrs. Rubin can explain how, when the charge card was taken away from the Chair’s sister, she continued to charge expenses for travel, receptions and various other charges on her personal charge account, then was allowed to submit for reimbursement for those charges even though in some instances she had no receipts.
  • Perhaps Mrs. Rubin can explain why this employee was not fired for these egregious actions. If she were not the Chair’s sister, would she have been fired?

Instead of a serious response, Mrs. Rubin chose to place another childlike and amateurish ad in the March issue of the Ka Wai Ola which was filled with colorful cartoons. Her ad also misleadingly displayed the OHA logo and implies that OHA sanctioned the ad. Mrs. Rubin has, to this day, never seriously addressed any of the concerns I raised. It is because of her adolescent attitude that I decided to take the high road and not dignify her ad with another response. However, I remain steadfast in my convictions that OHA has some serious internal problems that need to be addressed.

I was also surprised that Trustee Walter Heen devoted his entire February column in the Ka Wai Ola to justify how OHA awards grants to organizations that really shouldn’t be getting them. OHA has been subsidizing the state Department of Education with educational programs since 1993, even though they already receive more than half of the state budget. We need to be advocating for our beneficiaries as state law requires. It’s time we made the DOE accountable for their neglect of their kuleana.

Heen also disagrees with my claim that certain nonprofits are savvier and better staffed than Native Hawaiian nonprofits and therefore are able to capture more OHA grants. I see the same organizations coming back to OHA for money year after year, while small nonprofits are left behind. I believe as the senior member of the Board, serving 18 consecutive years, I have the historical and institutional memory that can bear my comments out. 

On Jan. 18, 2008, OHA’s leadership and the governor announced that they had reached a $200 million settlement to our dispute with the state over ceded land revenues that remained to be paid to OHA from 1978 to 2008. 

I raised several questions with our leadership regarding OHA’s proposed legislation to remove sections 4, 5 and 6 from Article XII of the state Constitution, which spoke to OHA’s 20 percent pro rata share of ceded land revenues and rights to natural resources and minerals, and replacing the language with a guarantee of at least $15.1 million going forward into the future. 

I also asked if this meant that we would lose all rights to minerals and natural resources in the future. The answer was NO??? But if you read the committee report for the settlement bill, HB 266 HD2, it specifically provides that the property conveyed by the bill to OHA does NOT include the minerals or surface or ground water rights! The state retains all of these rights!!!

I also brought up inflation and whether $15.1 million would be sufficient even five years from now? As the U.S. dollar continues to decline, what will a dollar really be worth? While OHA’s attorneys have tried to assure us that this is an OK deal, there has been no real explanation for not factoring in inflation to the $15.1 million going forward or the fact that the leases of ceded lands will be re-evaluated over time.

The fact that this is an election year for Chair Apoliona leads me to believe that this settlement agreement is being rushed through the Legislature in an attempt to give her a “leg up” for her upcoming re-election. It finally took the Legislature passing a concurrent resolution to force OHA to take the agreement out into the community for public input. Otherwise, it would have only been decided by OHA’s leadership, the governor’s administration and the Legislature. I believe that there is still time to let your legislators know your mana‘o regarding the settlement bill.

THE EXODUS OF MORE EMPLOYEES CONTINUES…

  • As I write this column, OHA’s division officer in charge of grants has suddenly quit without a reason being given and without even a goodbye.  Oddly enough, Trustees Apoliona and Stender seemed happy about the change.

CENSORSHIP & MISCHIEF

  • I am currently investigating widespread reports from beneficiaries that they have not received their February issue of the Ka Wai Ola. Please call my office at 594-1860 if you have not received your copy and I will have one sent to you right away. This issue contains my controversial column that is critical of OHA’s settlement deal with the state, which may be seen as threatening to the passage of OHA’s settlement bill.
  • Beneficiaries have informed me that their letters to the Ka Wai Ola editor that criticized Mrs. Rubin for her negative ads were not published. While this is of no surprise to me, it is a confirmation that only what the leadership wants published gets published.

These tireless game being played by OHA’s leadership may delay information flowing from our office to the beneficiaries, but the truth will always come out in the end. And as time goes by, it only reaffirms the comments I made in my December ’07 column about the excessive security, “lock-down” mentality and why there continues to be an exodus of OHA personnel.

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Nothing but excuses…

Friday, February 15th, 2008

By: TRUSTEE ROWENA AKANA

Source: February 2008 Ka Wai Ola o OHA Column

`Ano`ai kakou…  As those of you who read my columns religiously are aware, because of the article I wrote in December of 2007 criticizing the OHA Chairperson Haunani Apoliona’s leadership of OHA, I was pressured by five of my colleagues to resign as vice-chair of the budget committee.

The other thing that occurred was a paid article written by Mrs. Winona Rubin in our January 2008 Ka Wai Ola newspaper in which she tried to discredit my criticisms.  While I could go down the list of her ridiculous excuses and disqualify and negate everything that she said, it would only end up being a waste of your time.  Let me simply say that Mrs. Rubin is in a great deal of conflict of interest and everything that she said in her ad should be looked at in that light.

First off, Mrs. Rubin is the chief-of-staff for Chairperson Apoliona.  Before that, she was her administrative aide.  Before that, she was her boss at Alu Like, Inc.  They have had a very close relationship for over 30 years.  Her biased opinion should be viewed as just that, biased.

What I would like to know is why Haunani Apoliona cannot speak for herself.  After all, I personally hold her responsible for all of the turmoil that is going on inside of OHA: the Low morale, turn-over of employees, favoritism, nepotism, and distrust among employees.  Mrs. Rubin should stop embarrassing herself with her poor excuses and provide all of us with real answers.

  • Perhaps Mrs. Rubin can explain, in detail, the expenses thus far for the legal advice from the attorneys we hired who have not been able to deliver in any success in moving our federal legislation forward.
  • Perhaps Mrs. Rubin can justify why there was no evaluation of their performance before Chairperson Apoliona recommended that their contract be extended for a third time.
  • Perhaps Mrs. Rubin can justify all of the millions of dollars spent on the continent for Kau Inoa registrations, done by non profits and others, to register Hawaiians and paid as much as $10.00 for each application.
  • Perhaps Mrs. Rubin can explain why, for the past two years, more effort has been spent getting signatures on the continent instead of focusing on our own state where 80% of the Hawaiian population resides.
  • Perhaps Mrs. Rubin can explain why Chairperson Apoliona’s sister has been put in charge of mainland registrations and flies first-class each time she travels.
  • Perhaps Mrs. Rubin can explain how Chairperson Apoliona’s sister was able to obtain an OHA charge card for $10,000 when not even Trustees have charge cards.
  • Perhaps Mrs. Rubin can explain why, when Chairperson Apoliona’s sister maxed out the charge card, she was allowed to continue making purchases with her own credit card and have OHA reimburse her in the 5 figure range and still counting for hotel, air fare, receptions, car rentals, etc., even when in some instances there were no receipts, and in some cases the travel was not authorized.
  • Perhaps Mrs. Rubin can explain why Chairperson Apoliona’s sister was not fired for these egregious actions using Native Hawaiian Trust Funds.  Would she have been fired if she were not the Chairperson’s sister?
  • To date, no grand total of expenditures have been given to Trustees regarding the Kau Inoa registrations, or the total amount OHA spent on Federal legislation.

Finally, if Mrs. Rubin wants positive things to occur at OHA in 2008 she needs to begin with addressing some of more pressing internal issues within OHA and be honest in her assessment and not blinded by conflicts of interest.

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OHA’s spending is out-of-control

Tuesday, January 15th, 2008

By: TRUSTEE ROWENA AKANA

Source: January 2008 Ka Wai Ola o OHA Column

`Ano`ai kakou…  In the last 5 years, OHA’s total operating budget has doubled to $41,094,798 million (Fiscal Year 2008).  Since 2006, the $15.1 million OHA gets from the state for our share of the ceded land revenues goes directly into our operating budget instead of being invested in the Native Hawaiian Trust Fund.  With the crisis situation our people face regarding health, education and housing, the trustees felt that more resources need to be put to use now to help our beneficiaries.

Doubling our budget has meant that OHA has much more money to spend on grants to aid our beneficiaries.  However, the trustees have been irresponsible for continuing to approve grants that should be called into question.  For example, trustees approved a grant to support the state Department of Education (DOE).  On November 1, 2007, an $88,584 grant was approved to support Pauoa Elementary School’s program to improve literacy, critical thinking and comprehensive skills for grades K-5.  This may sound all well and good, but isn’t it the DOE’s kuleana to fund the program?  The same could be said of the $66,334 grant to the University of Hawaii at Hilo to support the expansion of their astronomy center.  Shouldn’t the state be funding this?  The state already receives 20% of the ceded land revenues for public schools and public educational institutions, as described in section 5(f) of the Admissions Act.  Shouldn’t that be enough of a contribution to education by our people?  Maybe what OHA should be doing is to consider a lawsuit against the DOE for not carrying out their responsibilities.  After all, there should be some accountability for all of the funds that they receive.  The state should not be taking another bite at our apple.  Our mission is clear – we are here to serve our beneficiaries. 

Even the federal government is coming to OHA for money.  The trustees recently approved a $100,000 grant to help the Kaloko-Honokohau National Historic Park restore its fishpond.  Shouldn’t the National Parks Service by paying for this?

Having more grant money has also attracted some slick nonprofits to come to OHA and suck our grant funds with a big straw.  These professional organizations know how to fill out forms quickly and have the staff workers needed to make application deadlines.  I believe they are preventing truly needy, but less technically savvy, Hawaiian organizations from receiving their fair share of assistance.  For example, OHA gave the nonprofit Partners in Development Foundation $100,000 on November 1, 2007 to assist homeless children and another $99,968 on December 6, 2007 to help foster families.  This nonprofit knows how to sell their programs.  For example, they stressed that they were the only nonprofit organization that specifically targets Native Hawaiian foster children.  How could the trustees possibly turn them down at the board table?

The blame for this rests partially with OHA’s administrative staff.  The trustees depend on our administrative staff to do the leg work to make sure that the nonprofits are truly worthy of our beneficiaries’ money, but they keep dropping the ball.  For example, I keep seeing the same organizations coming back to OHA for grant funding year after year, even though our grant policy is to fund programs that are self-sufficient and projects that are “one-shot” proposals.  Our grants are not supposed to be used to keep organizations going.

Our grants department has constantly promised to fix our grant policy, but nothing is ever done.  In the past, OHA required all nonprofits to provide matching funds from other organization.  OHA would then match other contributions dollar-for-dollar.  Now our administration is breaking its own rules by allowing “in-kind” matches with no dollar matches.  Nonprofits are now saying their own staff workers’ salaries are part of the matching funds.  For example, the Alaka’ina Foundation’s $58,067 grant and Street Beat, Inc.’s $100,000 grant were both approved with in-kind matches of their own workers’ salaries – they didn’t get any matching money from other organizations!

The biggest problem with our current grant policy is that we do not require that a follow-up evaluation be done of each grant we approve.  OHA should at least be evaluating the nonprofits who receive massive grants of over $100,000 to make sure our beneficiaries’ money was properly spent, especially for organizations that are repeat requestors.  How hard is it to follow-up with the nonprofits to make sure that the Hawaiians they said would be served were actually served?  Strict grant control rules should apply for all grantees.  At the very least, no grant should be approved that has (1) no real dollar matching fund amounts, (2) no sustainability, and (3) are repeat grant requesters, which obviously proves that they cannot sustain their programs.  Again, this problem rests with the trustees and not just the administrative staff.  As long as the trustees are comfortable with having no rules – none will be applied.  It is just another example of irresponsibility.

I have been assured by our administration that changes will be made and presented to the trustees before the next grant cycle (lets see).  I will continue to follow-up with them and keep you informed. 

On another note: Thank you for your positive responses regarding my December 2007 column.  However, I have received some negative responses from some of my colleagues, which I expected.  HAUOLI MAKA HIKI HOU!

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It’s a matter of trust…

Saturday, December 15th, 2007

By: TRUSTEE ROWENA AKANA

Source: December 2007 Ka Wai Ola o OHA Column

‘Ano‘ai käkou…  It is no secret that OHA has had a staff retention crisis for the past several years – 36 position vacancies this year alone.  It seems like all of our most experienced and capable staff have left and gone to DHHL, Kamehameha Schools, and other greener pastures.  This has to stop.  OHA’s mission is too important and far-reaching to constantly have to start over with new staff.  OHA needs to change at a fundamental level, and I say we should start by restoring the most basic ingredient of any relationship — trust.  How do we do that?  It’s really simple actually.

The leadership needs to rethink its current security procedures.  Each OHA staff person will soon be given individual ID cards that could potentially track him or her as they enter and leave any OHA workspace.  Heaven help you if you enter a trustee’s office without permission! All OHA staff members have also been fingerprinted to authenticate that they are indeed the person signing into and out of work.  Everyone knows it is their managers’ responsibility to make sure that their staff members are reporting to work on time.  The finger printing system only proves that there has been a failure at OHA’s management level.  The message that the current leadership is sending our staff is this – “We don’t trust any of you, just like we don’t trust some of the trustees.”  My question continues to be, “What could they possibly be doing to make themselves so paranoid that they don’t even trust their own staff or fellow trustees (other than 2 or 3 “inner circle” trustees).”  OHA can now be likened to a “lockdown” security compound.

If you want people to be trustworthy, you should first give them your trust.  As the administrator himself has said in the past, “we are all family.”  I agree with that wholeheartedly and I truly wish that this will eventually occur.  Unfortunately, the lack of trust reveals that, at present, we are a very dysfunctional family.

Currently, all OHA staff is discouraged from speaking with a trustee directly and all written communications must go through the administrator first.  This causes trustees to wait for up to 3-4 months to get any requested fiscal information.  All of the trustees are also beneficiaries who should never be denied access to OHA personnel or be forced to wait so long for an answer.

About Trust:  The board leadership has passed a new policy that forces a trustee to get the permission of all nine trustees to release or discuss any information shared in executive session.  Our old policy allowed a majority (5) of trustees to release any confidential information if it is appropriate.  This bylaw has served OHA without incident for the past 27 years.  The sudden change makes me wonder, “What is the current Chairperson doing that she fears is not pono?”  The new bylaw goes against basic trust law.  For example, a trustee would not be able to say anything if other trustees are making bad decisions behind the closed doors of executive session.  Hawaii Revised Statutes (HRS) 554A-6 requires a dissenting trustee to express their opposition or they would be liable for any damages caused by the co-trustees’ decisions.  How can a trustee do that if he or she is gagged by the new policy?

Case in point, at our last Board meeting on Lanai, the Chair’s agenda listed two items to be discussed in executive session using HRS 92-5(a)(4):  “Agenda Item VI., B. Legal Advisory by Board Counsel and Deputy Administrator regarding the board’s responsibilities and obligations under OHA Contract #1820 with Zell and Cox, Law, P.C. to ensure the provision of continued legal services to OHA.” and “Agenda Item VI., C. Legal Advisory by Board Counsel and Deputy Administrator regarding the board’s responsibilities and obligations under OHA Contract #1612 with Patton Boggs, LLC to ensure the provision of continued legal services to OHA.”  There was a discussion on these confidential matters, but then a motion to renew the two contracts with “x” amount of dollars, etc. was suddenly proposed.  Trustees were not given a copy of the motion in advance and an action item for this matter should have been included in the Trustees’ folders.  This should have been taken up in open session because contracts are not confidential.  But if that were done in an open session, then beneficiaries would know how much is being spent on our lobbying efforts.  This should not be a secret.  Everyone knows the board is supporting federal recognition legislation. 

This is the 4th time that this board has used the HRS 92-5(a)(4) executive session law to keep an action secret.  No materials regarding the action are provided to trustees ahead of time and they are instead presented on a chalkboard or in a slide show.  Then the vote is called.  This way, there is no paper trail of the action and the executive session minutes are not released to anyone.

While I recognize that certain parts of our records must remain confidential because of privacy issues, etc., there is no need to keep our entire discussion confidential.  We should consider ideas like blackening out the confidential information and releasing the non-confidential portion of our documents to the public, just like the federal government does.  Building a nation will require elected leaders to be forthright and strong, fair and transparent.  Who will have faith in a nation being built by people hiding behind the law and afraid to tell the people the truth about what they are doing?

I would like to stress that I am not against spending our funds to lobby for the passage of federal recognition.  At present, being federally recognized is the best way to protect our assets and future entitlements from lawsuits.  What I do object to is the secretive process that the leadership is using, which is neither upfront nor forthright.  As a trustee for OHA, it is my fiduciary responsibility to know exactly how much of the trust is being spent and for what purpose.  It is a responsibility I take seriously and I will continue my inquires until I can finally get straight answers.

In my opinion, the responsibility for this huge mess rests squarely on the current Chairman’s shoulders.  There is absolutely no way for a dissenting trustee to have any impact at board meetings.  It all started five years ago when she combined the five subject matter committees into only two, thus eliminating three committee chairmen and leaving the remaining two committees under the control of her two most trusted trustees, thereby consolidating her power.  After gaining total control over the board committees, she started using legal opinions to help her enforce her will at the board table to justify her actions and give her almost absolute control over all board discussions and stifling any dissenting views of other trustees and even certain beneficiaries.

Some, may consider these actions clever.  But is it?

Mathew 10:26

“For there is nothing covered, that shall not be revealed; and hid, that shall not be known.”

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Posted in OHA

Setting priorities and developing a plan should be our goal for 2006

Sunday, January 15th, 2006

By: OHA Trustee Rowena Akana

Source: Ka Wai Ola o OHA, January 2006

‘Ano’ai kakou… In her State of OHA speech this past December, Trustee Apoliona highlighted what OHA has done for our beneficiaries in 2005. She proudly stated that OHA handed out millions of dollars in grant money, defended itself against lawsuits, and worked vigorously to pass the Hawaiian Federal Recognition (Akaka) bill. While she may feel that this is all well and good, I would like to offer my views.

OHA has completely changed from just a few years ago. Instead of a proactive agency with a variety of programs to help our beneficiaries, OHA now operates more like a charitable foundation that just hands out grants. While the grants that were awarded last year did go to worthwhile causes, I can’t help but feel that OHA is just passing the buck. I’m not saying that OHA should or could do everything, but I do believe that OHA can do much more for our beneficiaries in terms of programs and services. We have nine trustees and over a hundred staff members who are eager to make a difference. The problem is that OHA doesn’t seem to promote initiative.

Currently, we just wait for problems to come to us and then throw money at it. Just look at the words that Apoliona used to describe what OHA has done in the past year: We “awarded” grants, we “maintained” programs, we “distributed” funds, we “responded” to requests, and we “defended” against lawsuits. When is OHA going to start building or creating something?

Many of our people are forced to live on the beach because of the lack of affordable houses and rentals. OHA should be setting up programs to help our homeless beneficiaries get into shelters and transitional housing. What’s happened to OHA’s housing division? Apoliona’s speech mentions the OHA 103 Home Loan program administered by First Hawaiian Bank and Bank of Hawaii but OHA has done nothing to improve the program after both banks told us a year-and-a-half ago that only a few people have taken advantage of the program. I should also mention that you can’t just distribute a bunch of business loans and call it “economic development.”

The biggest problem with handing out grants to deal with long-term problems is that grant monies eventually run out and services get cut. That’s why we need on-going programs that are properly funded and monitored by the trustees. So why isn’t OHA developing any new programs? It should be obvious to anyone who was listening to Trustee Apoliona’s speech – that OHA focused more on lobbying Congress than on anything else.

One issue shouldn’t be allowed to overshadow everything else we do. Perhaps it is time for OHA to start seriously rethink its priorities, vision, and strategy for the future. I supported the previous versions of the Akaka bill, warts and all, because I believed that it would help us form a strong Hawaiian nation. I still think that federal recognition is crucial for us to begin the process of nationhood.

However, over the past year, Republican Senators and members of the administration have managed to change our bill significantly and we haven’t gotten anywhere with the White House. All of this happened despite the hundreds of thousands of dollars that we have paid to a powerful and well-connected Washington D.C. lobbying firm to get the bill passed. My personal opinion is that we may need to wait for a friendlier administration to take office before the bill goes anywhere.

Handing out millions of dollars in grants is just a band-aid solution to the many problems that we need to address in a serious manner. Developing good programs won’t be quick or easy, but they will do much more to serve the needs of our beneficiaries over the long haul. Setting priorities and developing a plan to meet those priorities is desperately needed at OHA. This should be our goal for 2006.

Imua e Hawai’i nei…

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Auditor’s report: OHA needs an outside consultant to watch over money mangers

Friday, July 15th, 2005

By: OHA Trustee Rowena Akana

Source: Ka Wai Ola o OHA, July 2005

‘Ano’ai kakou… On January 16, 2003 the Board of Trustees voted to hire two investment companies, Goldman Sachs and Frank Russell, to handle all of OHA’s investment decisions. I abstained from the vote because I felt that it would be dangerous for the Board of Trustees to give up their direct oversight over the Native Hawaiian Trust Fund.

I had further doubts after I read the contracts OHA’s administration signed with Goldman & Russell. Our past contracts specifically stated that OHA, its trustees, and employees would be protected from all actions, suits, claims, damages, and expenses that arise out of a contractor’s errors, omissions, or acts. As you may recall, I wrote in my August 2003 article that since the contracts OHA signed with Goldman and Russell had no such language, OHA trustees are liable for any mistakes that they make, even though we don’t have any direct control over investment decisions.

In March of 2003, OHA hired R.V. Khuns & Associates, Inc. to come up with recommendations for OHA’s Investment Policy. One of their recommendations was that the Board should hire a separate and independent consultant to monitor both Goldman and Russell. I strongly fought for this when it was discussed at the Board table. Unfortunately, the budget committee rejected the idea.

While the budget committee may have disagreed with R.V. Khuns & Associates’ recommendation, State Auditor Marion Higa supported the idea of an independent consultant in her April 2005 audit of OHA. Here are a few of her findings:

(1) OHA has failed to create an independent function to oversee investment advisors. According to the auditor, basic things such as performance reporting, ensuring compliance with guidelines, and risk management were not being done because OHA doesn’t know how. The auditor wrote that OHA doesn’t have enough knowledge, experience, and expertise when it comes to overseeing investments. She stressed that OHA needs to hire someone (either in-house or an outside consultant) with experience in institutional investment oversight to make up for this deficiency.

(2) OHA’s lack of a standard report format has resulted in inconsistent reporting by the advisors. The auditor wrote that OHA did not create a standard format for Goldman and Russell to report how they were investing our money. The auditor said that this was because OHA did not know what information it needed to properly evaluate them. The auditor also pointed out that it was fundamentally flawed to depend on Goldman and Russell to decide what should be reported. Goldman and Russell are just as liable as OHA trustees for any losses (that come from not following OHA’s investment policy) so why would they report any violations to OHA? To solve this problem, the auditor recommended that OHA consider hiring outside experts to design the performance reports.

(3) Investment advisor compliance with certain guidelines cannot be verified. According to the auditor, OHA can barely make sure that Goldman and Russell are following OHA’s investment policy because we aren’t getting enough information from them. OHA doesn’t even have the computer software needed to screen important information. The auditor recommended that, for OHA’s protection, both Goldman and Russell should be required to sign a disclosure statement, on a regular basis, saying that they are following OHA’s investment policy. I believe her recommendation is added confirmation that the contracts our administration signed with Goldman and Russell did not contain proper safeguards for OHA.

I hope this proves, once and for all, that OHA needs an independent consultant to watch over our two investment managers.

Imua Hawaii Nei…

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Posted in Legal, OHA

Auditor’s report: OHA’s money-managers come at a high cost

Wednesday, June 15th, 2005

By: OHA Trustee Rowena Akana

Source: Ka Wai Ola o OHA, June 2005

‘Ano’ai kakou… On January 16, 2003 the Board  hired Goldman Sachs and Frank Russell to serve as OHA’s two financial managers. Each company was given half of OHA’s Native Hawaiian Trust Fund, which at the time amounted to $125,000,000.

In my March 2004 article, I wrote that while both companies made about the same amount of money for us, there was a glaring difference in what they charged us for their services. Frank Russell charged OHA $64,663 for their first quarter of service in 2003, while Goldman Sachs charged us $74,998 – a difference of $10,335. In the second quarter, Frank Russell charged us $200,712 for their services, while Goldman Sachs charged us $244,255 – a difference of $43,543.

While some people may argue that the $53,543 more Goldman Sachs charged OHA (for the 1st & 2nd Quarters) was not a significant amount, I argued that we could have helped many needy beneficiaries with that money.

Not long after my article was published, Goldman Sachs reviewed their fee schedule, and gave OHA an annual savings of $50,000. I can’t say for certain whether my complaints had any impact on their decision, but I was pleased that Goldman Sachs quickly matched Frank Russell’s lower fees.

While OHA’s leadership at the time may have disagreed with me about how high the fees were, I finally felt some vindication when State Auditor Marion Higa came out with her April 2005 audit of OHA. Not surprisingly, she backed up what I had been saying all along. Here are a few findings from her audit:

1. Frank Russell averaged 0.57 percent in fees, in total, for all traditional assets managed, excluding real estate. Goldman Sachs averaged 0.74 percent of the assets it managed, excluding real estate and hedge funds.

2. The average investment management fee paid by all reporting funds (1,032 reporting funds in 2002) was 0.274 percent in 2002. Smaller funds (such as the Native Hawaiian trust fund) with assets below $500 million had higher average fees of 0.351 percent. OHA pays an average fee for investment management and oversight for the trust fund of 0.65 percent.

3. The “manager-of-managers” strategy employed by OHA has led to higher fees than fees incurred by its peers. In addition, OHA’s use of investment advisors to select investment managers, perform due diligence, and monitor the investment managers, has the effect of increasing the total fee, since the total fee represents more than just investment management fees. In other words, we paid less fees under our old financial management plan.

4. If OHA’s passive assets were in line with its peer median, fees would be reduced by 11 basis points, saving OHA more than $300,000 annually.

5. OHA has begun to review the investment management fees being paid, realizing that Goldman Sachs represents a premium cost for its services.

The auditor recommended that OHA continue to evaluate the returns it receives, net of the fees paid, and explore alternative means of investing portions of its portfolio – all of which I will continue to do on behalf of our beneficiaries.

The auditor also noted that OHA should recognize the inherent conflict of interest within the existing manager-of-managers structure and conduct its own evaluation of whether their investments fulfill OHA’s fiduciary duties and achieve prudent investor standards. Due to space constraints, I will have to take this issue up in another month’s column. Stay tuned.

Imua Hawaii Nei…

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Posted in Legal, OHA

OHA proposal is censorship

Friday, May 6th, 2005

By: Trustee Rowena Akana

Source: Letters to the Editor, The Honolulu Advertiser, Posted on: Friday, May 6, 2005

As anyone who has consistently read my monthly OHA newsletter columns knows, I never shy away from telling beneficiaries the truth about what is going on at the Office of Hawaiian Affairs. However, that may soon come to an end.

On March 15, the Assets & Resource Management Committee held a workshop to review proposed changes to OHA’s board of trustees policy manual. Most of the proposed changes were not earth-shattering, except for the following proposed language that was added to the Ka Wai Ola editorial policy: “No libelous or defamatory material will be published. Questions on libel and/or defamation will be resolved in consultation with the editor of the Ka Wai Ola, the public information officer, and OHA’s in-house counsel.”

If this policy passes, our newsletter might not just get one but two new censors — not to mention a slap-in-the-face to free speech.

OHA currently has a policy in place that ensures all articles are written responsibly and meet the standards of good taste. Trustees have never needed a censor since we are all personally liable for our comments. Each of us can be sued individually for any slanderous or libelous remarks. Any of us could be taken to court if we were to write something that wasn’t true.

To my knowledge, no trustee has ever been sued for public comments in our newsletter.

Giving two members of OHA’s administrative staff the power to censor trustees will, for all intents and purposes, give that power to the chair. First of all, the chair of the board has enormous power and influence over all staff, not to mention their boss, the administrator. The chair could easily make their work life miserable if they dared defiance. I know of several staff members who have already left because they fell into disfavor.

It is simple for any chair to control the flow of information to trustees once he or she has had enough time to place his or her “people” into important OHA staff positions. If and when a dissenting trustee receives any information requested, it is only months later and with the crucial information missing. This amounts to an ongoing “silent censorship” within OHA. Therefore, there is really no need for an additional policy to make sure that only glowing accomplishments appear in our newsletter.

The trustees’ monthly columns are one of the few remaining opportunities we have to communicate honestly with our beneficiaries. If this policy passes, dissent will be silenced, and all you will ever hear is how wonderful things are going. OHA’s newsletter will simply be reduced to a propaganda rag.

Freedom of communication is crucial for a healthy democracy. Instead of putting up barriers, we should be tearing them down. It is impossible for all people at all times to agree on the value of all ideas. However, how can we grow as an organization if there is no room for dissent?

Restricting what our beneficiaries can or cannot read is simply unacceptable. It amounts to a dictatorship and will only lead to political and intellectual repression. It will force our people to consider only a narrow view.

Censorship is an assault on the rights of all of us. We must fight with all our strength for the freedom to read, to see, to know and to think for ourselves.

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Building a consensus with Board members eliminates mistrust

Wednesday, December 15th, 2004

By: OHA Trustee Rowena Akana

Source: Ka Wai Ola o OHA, December 2004

‘Ano’ai kakou… OHA’s spending policy was recently changed and now all of the Ceded Land revenues we get from the state will go straight into our operating budget. In other words, instead of depositing our income into a savings account, we’ll be putting it straight into our checking account to spend. OHA’s budget chairman wanted to find a way to get OHA to spend more money, so he called a committee meeting on August 18, 2004 and had high-powered experts do a presentation to the Board. These experts argued that the OHA’s spending policy favored future beneficiaries over current beneficiaries by allowing Ceded Land revenues to grow in the Trust. They explained that we were unfairly saving the money for future beneficiaries and not spending enough on today’s beneficiaries.

The presentation worked and on September 15, 2004, the Board passed a new spending policy. Now the $9,446,922 in Ceded Land revenues OHA will get from the state in 2005 will be spent and not saved. Theoretically, OHA should now be able to fund many new programs and help many more beneficiaries with that money.

Unfortunately, not all of the money is going directly to our beneficiaries. It appears leadership will use some of the $9.45 million to cover massive budget short-falls, which mostly included lawyers’ fees and costs relating to our lobbyist for the federal recognition campaign.

As you can imagine, the Trustees had many questions about what exactly the $9.45 million was going to be spent on. These questions finally forced the budget chair to hold a workshop on October 12th & 13th. Even after the two-day workshop, not all of the Trustees were convinced that the $9.45 million was being spent for its intended purpose – helping our beneficiaries. Despite our concerns, the revised Budget finally passed with the minimum required six-votes on November 1, 2004.

Budget workshops should be made mandatory to avoid problems like this in the future. Past budget committee chairs always held workshops before bringing a new budget to the Board. Workshops would give Trustees the time needed to have their questions answered in detail before they had to vote in committee. Right now, all of OHA’s committee chairs distribute materials for their meetings just a few days in advance. This hardly gives Trustees enough time to meet with administrative staff and ask questions, much less receive the answers we need to make prudent decisions.

The current regime could have shown true leadership if they had spent the time necessary to justify their proposal to spend the $9.45 million instead of hiring an attorney and high powered presenters to make their case and rush it through for a vote. Building a consensus with Board members eliminates mistrust and in the end, everyone is more comfortable with the decision they made, decisions based on current information and not hype artists.

I pray that the New Year will bring constructive and meaningful change, despite the fact that the Board remains unchanged after the November election. It is my hope that we will no longer need to engage in political gymnastics to get things done. We shouldn’t have to duel with leadership in order to make sure we are working in the best interest of our beneficiaries.

If leadership can work towards building a consensus and abandons its “win-at-all-cost” mentality, I feel that a more positive and productive Board will emerge. Perhaps my sentiments can best be summed up by St. Paul, who in a letter to Timothy wrote:

“We know the law is good if one uses it lawfully, realizing the fact that law is not made for a righteous man, but those who are lawless, the ungodly, the immoral, liars… and whatever else that is contrary to sound teaching.”
- Timothy, 1st Verse

Have a happy and safe holidays and God bless!

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Apoliona uses staff to publicly attack a fellow Trustee

Monday, November 15th, 2004

By: TRUSTEE ROWENA AKANA

Source: November 2004 Ka Wai Ola o OHA Article

`Ano`ai kakou…  In late September, I received an advance copy of a letter from Chairman Haunani Apoliona’s administrative aide that is supposed to appear in this month’s newsletter.  The letter attacks my October 2004 article in which I brought up questionable expenditures and decisions made by her supervisor.

For the record, as an OHA Trustee, I am required to call attention to Apoliona’s questionable actions as Chairman.  According to Hawaii Revised Statues 554A-5:

“…a dissenting trustee is not liable for the consequences of an act in which the trustee joins at the direction of the majority of the trustees, if the trustee expressed a dissent in writing to any of the cotrustees…”

In my opinion, Apoliona has abused her position as Chairman.  Unfortunately, Apoliona is either self-delusional or suffering from self-denial.  No one is perfect, yet she continues to portray her leadership as flawless.  I’ve heard about accentuating the positive, but give me a break.  How many new OHA programs can she point to that has occurred in the last two years?  Our existing programs are in shambles from neglect.

One really has to ask what we are doing for our beneficiaries besides lobbying for Federal Recognition.  While it is important for Hawaiians to be officially recognized by the federal government, our people have other, more pressing needs in health care, housing, and education.

I made every effort to get answers to my questions and concerns through the proper channels.  I have many memos to OHA’s administration and staff asking for answers on how our beneficiaries’ money is being spent.  If you read the budget today, you could swear that all OHA is paying for are lawyers’ fees.  The frustrating part is that Apoliona only uses double-speak and rarely gives any clear answers.

So now, it seems, the only means I have to get to the bottom of Apoliona’s shenanigans is to openly call her on it.  Instead of responding to my concerns, Apoliona chooses to ignore them and, through her administrative aide, attempts to indirectly bully me into silence.  But this is nothing new.  Just look at a small sampling of Apoliona’s past involvement in misdeeds:

  • Sending an e-mail to all OHA staff to evaluate the previous administrator in an effort to discredit and humiliate him and force him to resign;
  • Forwarding confidential memos to the media to discredit fellow trustees. 
  • Leaking a confidential and uncertified recording of a former trustee’s conversation at a community meeting to the media in order to ruin her reputation;
  • Slandering a former state department head; and
  • Harassing competent and capable administrative staff until they were finally forced to leave.

As far as I’m concerned, as long as Apoliona endorses a policy that allows OHA staff members to publicly discredit any Trustee or administrative staff who disagrees with her, OHA will be plagued with internal strife that will continue to cause morale problems and dissention for both staff and trustees.  Behavior such as this cannot be consider constructive or pono.

As for the issues I brought up in my last article, I am ready, willing, and able to publicly debate Apoliona anywhere and at anytime.  Imua e Hawai’i nei…

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