State Auditor Les Kondo announced Monday that he has suspended an audit of the Office of Hawaiian Affairs’ limited liability companies, after the OHA Board of Trustees refused to turn over complete and unredacted minutes of its meetings.
Last session, the state Legislature directed the Office of the Auditor to conduct a performance audit of OHA and to report its findings and recommendations prior to the convening of the 2020 legislative session, but OHA Trustees refusal to fully cooperate in the audit prevented auditors from completing the task, according to a press release Monday.
The audit was focused on how trustees administered and funded seven LLCs created between 2007 and 2015 to hold OHA assets and allow it to pursue outside business opportunities and higher-risk ventures, the news release said.
“Until the Board of Trustees fully cooperates in the audit, including providing us with complete and unredacted minutes of its executive sessions, we cannot eliminate or reduce that risk to an acceptable level,” Kondo said. “Under such conditions, we are compelled to suspend the audit mandated by the Legislature.”
Last month, an independent financial review of OHA finances by a California-based accounting firm flagged 32 transactions, representing $7.8 million, as potentially fraudulent, wasteful, or abusive, but the scope of the financial review was limited, according to Kondo, who said his is focused specifically on OHA’s LLCs and “will provide a significantly deeper review.
“We determined our inability to access complete records may create a significant risk that our findings, conclusions, and recommendations may be based on improper or incomplete information,” Kondo said. “State law is unambiguous about our authority to examine all OHA records.”