A sweeping criminal investigation into Honolulu rail continues to advance out of sight, city officials say — but the city’s own, separate query into whether any crimes occurred on the project will not proceed as planned.

Honolulu City Council leaders said Tuesday that they’ve scrapped the idea for what some dubbed a “forensic” audit of rail, despite the body’s unanimous vote last year approving such an examination.

The city investigation would have moved past the fiscal waste and mismanagement flagged in previous city and state rail audits to instead focus on potential fraud or malfeasance.

The reversal is largely due to the sudden budget constraints wrought by the pandemic, say Council Chair Ikaika Anderson and Vice Chair Ann Kobayashi. The investigation would have cost between $1 million and $2 million — money that should go to more pressing needs given the economic fallout, they say.

As Kobayashi put it, “money’s tight.”

Honolulu City Council Member Heidi Tsuneyoshi listen to public testimony.

Honolulu City Council Member Heidi Tsuneyoshi at a meeting in 2019. On Wednesday, she voiced concerns that the Council’s leadership canceled plans for a probe into potential rail fraud.

Cory Lum/Civil Beat

Besides, Anderson and Kobayashi added, state and federal authorities are still pressing ahead with their own investigations into the now more than $9 billion transit system — Hawaii’s largest-ever public works project.

The city exam might duplicate those efforts, they said. Furthermore, state and federal authorities could block the city’s contract examiners from accessing any documents that are already part of the criminal probe, according to City Auditor Troy Shimasaki.

The city could potentially spend hundreds of thousands of dollars contracting an outside firm to conduct its audit only to hit a wall when they stray too far into the state and federal jurisdiction, Anderson said Tuesday.

As chair, Anderson has the decision on whether to proceed. The contract would have to go out by June 30 and under state procurement laws it’s now too late to award it, Shimasaki said.

But the move worried North Shore Councilwoman Heidi Tsuneyoshi, who introduced the resolution for the audit last year. The Council had discussed those issues with the overlapping state and federal probes before its unanimous vote, she noted Wednesday.

Tsuneyoshi also held a press briefing Wednesday, webcast from Honolulu Hale, to alert the audit’s supporters as well as the public at large of the change.

“This of course comes as a huge disappointment to me,” Tsuneyoshi said. “I think the public has a right to know what has transpired and why.”

The public has never received a full reckoning of what caused rail’s costs to nearly double since 2012, from $5 billion to more than $9 billion.

With the city’s budget constraints, “it’s more important than ever” for the city to get more answers on what happened and get better control of the project “because we won’t have the money to cover runaway costs,” she said.

The city’s effort would not have been duplicative, she said.

“We specifically want to look for where there are weaknesses within our own city government,” she said.

The city has conducted four audits on rail, including three on the Honolulu Authority for Rapid Transportation’s management of the project. The reports revealed extensive mismanagement, but they found no fraud, according to Shimasaki. If they had, auditors would have been compelled to report that to law enforcement, he said.

Last year, state officials sought to limit their own audit requirements in order to help get out of the way of the federal investigators.

Working From The Shadows

Federal authorities have been asking questions about rail going back to 2017, Tsuneyoshi said Wednesday. They dropped a trio of subpoenas on HART in February 2019.

The orders requested thousands of pages of documents covering numerous angles of the project, including contract procurement, construction, relocation payments and minutes of the HART board’s closed-session meetings.

The two assistant U.S. attorneys who requested the subpoenas subsequently left the Department of Justice, but the probe continued.

The feds served subpoenas on an unspecified number of HART employees later in the year. In October, they demanded information from city officials in Honolulu Hale as well. The city has been tight-lipped on the investigation.

HART rail guideway car photo op Farrington Hwy. 30 may 2017

Workers in Waipahu test the future rail system along Farrington Highway. Federal authorities have been asking questions about the project going back to 2017, according to city leaders.

Cory Lum/Civil Beat

On Wednesday, HART spokesman Bill Brennan said the agency has not received any additional subpoenas, nor is it aware of any more individual employees receiving the orders.

Kobayashi, a longtime rail critic, said she was told in January that the federal investigation into the project was still underway.

“The feds are really moving on this,” she said Tuesday. “They’re digging around.”

Asked for an update Wednesday, both U.S. Attorney spokeswoman Ashley Edwards and state Attorney General’s spokesman Krishna Jayaram declined to confirm the existence of an investigation.

Shimasaki said he met with officials in the U.S. Department of Justice and the state Attorney General’s office last June to discuss the city’s proposed investigation and whether it might conflict with their own probes.

The federal and state officials welcomed the city to proceed, he said, but they also said they might withhold information pertinent to their own investigations.

They declined to share with him the scope of their criminal probes, Shimasaki said.

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