A secretive intelligence unit within the Honolulu Police Department known for its long history of scandal and corruption is undergoing a new transition, according to internal documents obtained by Civil Beat.

Chief Susan Ballard recently reassigned oversight of the Intelligence Enforcement Unit to HPD’s Investigative Bureau, meaning it will no longer be under the direct supervision of Deputy Police Chief John McCarthy and will include more layers of oversight from other commanders within the department.

The directive did not include any explanations for the change.

The move comes after a Civil Beat investigation found that McCarthy had assigned the IEU to conduct surveillance on former Honolulu Medical Examiner Dr. Christopher Happy when he was still working for the city in March 2019.

Questions have been raised about the operation and whether it was a politically motivated abuse of power, especially considering it occurred while Happy was at odds with Honolulu Mayor Kirk Caldwell’s administration over poor work conditions at the city morgue and a growing backlog of autopsy reports.

Happy was one of Caldwell’s only cabinet members who could not be fired outright by the mayor without a hearing before the Honolulu City Council.

Ballard has refused to talk about the operation.

McCarthy, on the other hand, was forced to answer questions from the Honolulu Police Commission earlier this month after Chairwoman Shannon Alivado said the surveillance detail “raises some red flags.”

“We did nothing wrong,” McCarthy told the commissioners. “I stand by the actions that we did. There was no personal vendetta. There was no personal gain by what was done.”

He acknowledged that the department destroyed all the police reports related to the investigation, which he said involved a vague allegation of drug activity that came to him via the mayor’s office.

Neither Ballard or McCarthy responded to Civil Beat’s request for an interview about IEU’s reassignment. Instead, HPD spokeswoman Michelle Yu issued a written statement.

“The IEU works closely with the Narcotics/Vice and Criminal Investigation Divisions, both of which are part of the Investigative Bureau,” Yu said. “The move is intended to make investigations more efficient and effective by making it easier for the unit to share its information and resources with the other divisions.”

For decades, the IEU was known as the Criminal Intelligence Unit. The CIU handled some of the department’s most sensitive investigations related to drugs, terrorism and organized crime, and reported directly to the chief’s office.

Over the years, though, the unit gained a reputation as the chief’s own personal goon squad. Some of its members were also arrested — and in one case killed in a gangland-style execution — after crossing over into criminal conduct.

The most recent CIU controversy involved Ballard’s predecessor, Louis Kealoha, who’s now headed to federal prison after he and his wife, Katherine, a former city prosecutor, used the unit to frame a family member for the theft of their mailbox.

When Ballard was appointed to replace Kealoha in 2017, she promised to reform the unit.

One of her first acts was renaming it the IEU. She also said that the officers assigned to the unit would write police reports so that their actions could be held accountable rather than operating in the shadows.

In December, Ballard testified before a City Council committee about the steps she’s taken to prevent another Kealoha scandal from taking place on her watch in response to the findings of a recent audit focused on officer misconduct.

She admitted that there was little that had been done to prevent another Kealoha-like situation from occurring in the future because the power of the police chief is largely unchecked.

“As far as to stop it again, you’ve just got to make sure that the person you hired is ethical and is doing the right thing because the police chief makes all the decisions for the department,” she told the council committee.

Civil Beat reporter Christina Jedra contributed to this report.