Ka Wai Ola - Office of Hawaiian Affairs, Volume 30, Number 12, 1 December 2013 — State Ethics Commission bungled investigation [ARTICLE+ILLUSTRATION]

State Ethics Commission bungled investigation

/A no'ai kakou /\ On July 17, 2012, I asked the State /^^^ Ethics Commis- / \sion'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 whieh she also serves as a director on their board, was a violation of HRS §84-14 - Conflicts of interests, whieh states that no employee may take any

official action directly affecting a business in whieh the employee has a substantial hnaneial interest. This includes elected state board members, such as OHA trustees. Despite my numerous attempts to follow up, nothing happened for 10 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 eame 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 infavor of Gentry acquisition violated OHA investnient policy "The Offlce of Hawaiian Ajfairs' Native Hawaiian Trust Fund Investment Poīicy provides that ifa trustee has a personal imolvement with any direct im>estment transaction, or e\>en any perceived conflict ofinterest, the trusteemust disclose the im>olvement immediatefy 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 ofa trustee who is also a member of the board of directors of the bank that ojfered 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 eonneehon with a loan be counted toward the $25 million maximum alloeahon. 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 eompetency of the State Ethics Commission's investigative staff members, it boggles my mind that after a 10-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 ean 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 elean ethics in the State of Hawaii. Aloha Ke Akua. ■ lnterested in Hawaiian issues and OHA? Please visit my website at www.rowena akana.org for more information or e-mail me at rowenaa@oha.org.

Rūwena Akana TrustEE, At-largE