Audit says city City agencies have been slow in carrying out recommended improvements that could prevent another Ewa Villages relocation scandal, according to a report done by in-house auditors of the City Council.
lagging in relocation
rules overhaul
The changes should help to avoid
another Ewa Villages scandalBy Gordon Y.K. Pang
gpang@starbulletin.comIndependent auditor Deloitte & Touche released a report in September 2000 giving eight recommendations after the scam surfaced. Former city housing official Michael Kahapea was convicted of masterminding a scheme that bilked some $5.6 million from a fund set up to pay for the relocation of businesses in the way of the city's Ewa Villages revitalization project.
Ivan Kaisan, legislative auditor for the Office of Council Services, who did a follow-up audit of the Deloitte & Touche report, said at a Budget Committee meeting yesterday that seven of eight recommendations have yet to be completed. That one recommendation was to make direct payments to vendors rather than leaving such responsibility to project managers.
In response, city budget officials said they have made substantial progress since the Council Services report was completed in November. They said a set of revised relocation policies is to be completed next month.
They also noted that Deloitte & Touche, in its own follow-up audit last August, pronounced that the city's internal controls over commercial relocations are now sound.
Kaisan acknowledged progress in closing many of the loopholes. "I guess we had other concerns that went somewhat contradictory to what Deloitte had found."
Among the most critical findings by Kaisan's staff were:
>> Agencies with projects that required forced relocations of residents or businesses do not monitor relocations themselves but instead rely on budget officials. Agencies "did not consistently take an active role in relocations," Kaisan said. "We found that among the managers of recent and ongoing relocation projects, one manager relied completely on Budget & Fiscal and did not visit the project site, while another sometimes relied on secondhand reports from Budget & Fiscal or the contractor."
>> Standard procurement procedures such as purchase orders and bid solicitations are now being followed, but relocation expenditures are not being reviewed.
>> None of eight managers of projects involving relocations received training in both fraud awareness and relocations.
Councilman Duke Bainum said the lack of training to recognize and deal with fraud worries him. Kaisan said that while training sessions were held, relocation project managers from other agencies did not participate.
Bainum said the Department of Budget & Fiscal Services appears to have made improvements, but other agencies have not cooperated. Michael Hansen, who heads the Internal Control Division, said a number of changes have been made by his agency since the Deloitte and OCS reports came out.
City & County of Honolulu
