`Ano`ai kakou… On July 17, 2012, I asked the State Ethics Commission’s Executive Director to investigate whether a trustee’s vote to approve OHA’s purchase of a property being financed by Bank of Hawaii, for which she also serves as a Director on their board, was a violation of HRS §84-14 – Conflicts of interests, which states that no employee may take any official action directly affecting a business in which the employee has a substantial financial interest. This includes elected state board members, such as OHA trustees.
Despite my numerous attempts to follow-up, nothing happened for ten months. Then, on April 13, 2013, the trustee being investigated announced that she received letter from the Commission stating she did nothing wrong. I never received a response to my original complaint.
Just when I thought this was all going to be brushed under the rug, the Auditor of the State of Hawaii came out with her September 2013 Report No. 13-07 (to see a copy of the report visit the Auditor’s Website at: http://files.hawaii.gov/auditor/Reports/2013/13-07.pdf) and harshly criticized the trustees’ vote to authorize the purchase of the Gentry building.
On pages 20-21 of Report No. 13-07, the State Auditor wrote:
“Trustees’ vote in favor of Gentry acquisition violated OHA investment policy
The Office of Hawaiian Affairs’ Native Hawaiian Trust Fund Investment Policy provides that if a trustee has a personal involvement with any direct investment transaction, or even any perceived conflict of interest, the trustee must disclose the involvement immediately and be recused from both discussions and votes on the transaction.
Contrary to this policy, we found that the board’s decision to purchase the Gentry Pacific Design Center building, a $21.4 million property in Iwilei, hinged on the vote of a trustee who is also a member of the board of directors of the bank that offered the best financing for that acquisition.”
The Auditor concluded that:
“… the trustee’s actions may damage OHA’s reputation and undermine the agency’s credibility with beneficiaries and the public.”
The action also had serious consequences for OHA operations. We were surprised to learn on April 12, 2013 that the loan we got from Bank of Hawaii was not a “secured” loan and that it had to be backed by OHA Trust dollars. OHA’s Hawaii Direct Investment Policy requires that any “recourse” in connection with a loan be counted towards the $25 million maximum allocation. As a result, we can’t make any more investments in Hawaii until the acquisition of OHA’s corporate headquarters is complete.
While I will not comment on the competency of the State Ethics Commission’s investigative staff members, it boggles my mind that after a ten month investigation, they couldn’t find anything wrong with the trustees’ vote to purchase the Gentry building.
I believe the State Ethics Commission’s mishandling of the investigation sends the wrong message to other elected officials who think they can blatantly flout Hawaii’s conflict of interest laws. It also gives the negative perception that the Commission is simply there to protect the status quo instead of aggressively assuring clean ethics in the State of Hawaii.