Members of a House investigative committee are probing a public agriculture corporation for its apparent lack of progress in turning a profit on former sugar and pineapple lands, as well as having no clear plans or policies on how to make that happen.
Meanwhile, the same committee is also investigating how State Auditor Les Kondo’s office came to those conclusions in a report published earlier this year.
That report on the Agribusiness Development Corp. found that the agency created by the Legislature was deficient in several key areas. It has bought more than 22,000 acres since its inception in 1994, but has done little to develop those lands and lacks the plans necessary to manage them.
On Monday, State Auditor Les Kondo told the committee that he was surprised his office also appears to be caught in the House’s probe of government entities. The panel of lawmakers is also investigating a state land agency.
In his view, a review of his office should be outside the House committee’s scope. He thinks the committee’s questioning is an extension of an investigation into his office made by House Speaker Scott Saiki earlier this year.
“I hope the committee will drop the pretense,” Kondo said. “Let’s put our cards on the table. Let’s have an honest discussion of whatever you want to discuss, whatever your concerns may be.”
House Majority Leader Della Au Belatti, the chairwoman of the committee who has asked the most probing questions of Kondo’s office, disagreed with his assessment, and said that the purview of the committee is broad enough to include investigating the auditor.
Belatti continued with questions on how Kondo’s office performed the audit, often diving into the minutiae of government accounting standards and audit practices.
Rep. Mark Hashem asked why the audit stated that the ADC lacks policies and procedures to manage its lands. Hashem said his office received documents outlining those policies, as well as others that challenge assertions that the ADC lacked the proper controls to provide security for some of its parcels.
“If we don’t get documents and we don’t get responses, we don’t know what we don’t know,” Kondo said.
Later in the hearing, Kondo said that his office met with ADC executive Director Jimmy Nakatani before publishing the audit. He said that would have been an opportunity to provide the auditors with any documents to respond to findings.
“I find it a little bit odd they would not address that in their exit statement and make comments about it later,” Rep. Dale Kobayashi said.
Kondo also said that he offered to meet again with ADC leadership and its board of directors to go over the findings and discuss ways to develop plans to address them, but he hasn’t received a response.
The ADC audit was also critical of the agency’s record-keeping. At the time the audit was performed, Kondo’s team found that financial documents were in such disarray that a financial audit couldn’t be completed.
Kondo told the committee that the ADC hired an accounting firm, KMH LLP, to sort through the records. Meanwhile, the auditor contracted with the accounting firm Accuity to perform an audit of the records made available by KMH.
Kondo expects the financial audit to mirror the findings of his performance audit of the ADC.
“There are going to be significant findings in the report,” Kondo said. “They will find material deficiencies in those financial records and in those processes, that ADC has … to maintain those records, the accuracy of those records.”
The ADC has previously told lawmakers that it lacks the staff necessary to compile the documents and said in 2018 that it’s too busy to be audited.
Rep. Amy Perusso, a critic of the ADC, asked Kondo whose responsibility it is to hire more staff and ensure documents are in order. The auditor said Perusso’s questions are better directed at the ADC.
The ADC is scheduled to appear before the House committee Tuesday morning, with Kondo returning for another round of questions Tuesday afternoon.
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Blaze Lovell is a reporter for Civil Beat and a graduate of the University of Nevada, Las Vegas. He was born and raised on Oahu. You can reach him at firstname.lastname@example.org or follow him on Twitter at @blaze_lovell