Advertisement - Click to support our sponsors.
Audit: OHA Some Office of Hawaiian Affairs trustees between 1996 and 1999 used their annual allowances to make interest-free personal loans of more than $8,000 to themselves and their families, according to a state audit released today.
funds misused
The state audit shows some
trustees used funds for personal
loans and other interestsBy Pat Omandam
Star-BulletinThat was just one example of questionable fiscal and management practices outlined in the much-anticipated OHA audit.
The trustees who used some of their $7,200 annual allowance for personal loans were not named in the report.
The report on OHA shows one trustee during the same period spent more than $1,000 on beauty salon services, while trustees did not always return unspent annual allowances to OHA, although they are required to do so, said state Auditor Marion M. Higa.
"These trustees appear to have failed to uphold their responsibility of loyalty, and may have instead spent funds for personal needs and interests," Higa said in the audit.
The trustee has since repaid the $1,000 for the salon expenses.
In another example of fiscal mismanagement, the report said trustees in fiscal year 1998-1999 spent $13 million on unplanned expenses -- exceeding OHA's budget by 100 percent.
Overall, Higa's staff discovered the nine-member OHA board has not adequately planned to improve the conditions of Hawaiians and allowed OHA's master and functional plans to remain outdated.
OHA, which made public its official response to a draft of the audit last month, said the agency is far stronger than it was during the first audit in 1990.
The agency said its trust funds increased to $330.7 million in June 2000 from $152.4 million in June 1993.
"We do agree, however, that despite our many successes, there is much yet to be accomplished," said OHA chairwoman Haunani Apoliona.
The 94-page audit also found OHA's reorganization to three functional areas from 10 program divisions two years ago was inadequately planned and resulted in hasty decisions that hurt employee morale, created an exodus of staff, and put staff in positions for which they may not be qualified.
For example, clerical staff were reclassified as evaluation assistants although they did not have a college degree or work experience requirements for the new jobs.
Moreover, not only are staff placed in positions for which they may not be qualified, but there was at least one instance when a job description was written to match the qualifications of a staff member, the report said.
"The board's failure to plan adequately is a recurring obstacle to bettering the conditions of Hawaiians," Higa said.
"Although some trustees have attempted to improve OHA's planning, budgeting, spending and investment policies, there is little assurance that their intentions will be met with success," she said.
The report found OHA could do a better job in its mission to better the conditions for Hawaiians by improving its fiscal management in its Native Hawaiian Revolving Loan Fund.
The audit found a lack of oversight in the grant program, with payments made to recipients without any assurances that Hawaiians are receiving the services for which the grant was made.
OHA staff also did not ensure grant recipients used these funds to service native Hawaiians.
Since these grants come from ceded land revenues, they must be used to benefit those who are of 50 percent or more Hawaiian blood.
The audit found loan officers do not always complete credit checks and financial analyses of recipients.
About 12 of the 13 loan requests were reviewed without assessing whether these loan applicants would be able to repay their combined loan amount of $433,750. Some had inadequate collateral.
Also, loan checks were disbursed without first receiving all the loan closing documents.
"In one case, OHA initially required that a loan applicant obtain life insurance with OHA named as a beneficiary," Higa said. "However, the applicant was denied insurance due to a pre-existing health condition, so OHA waived this requirement and approved the loan."
It also said its home loan program has disbursed $11.5 million to needy Hawaiians in the year 2000.
Apoliona said OHA plans to hire an internal auditor in 2002 to address investment, fiscal management and financial controls issues raised in the audit. It also plans to begin an internal monitoring process for OHA grants and will make changes to how it handles its revolving loan fund to reduce financial losses.
Four other trustees filed their own official response to the audit.
This is the second audit of OHA under a state law that requires the auditor to review OHA every four years. The first was in 1997. Audits on other aspects of the agency were done in 1990 and 1993.
Office of Hawaiian Affairs
