Nine months after being chartered to examine two state audits, a special Hawaii House of Representatives committee has issued its final report.

While the full report will not be posted until Saturday noon on the panel’s website, committee members said Friday that it will entail both legislative proposals to improve the performance of the Agribusiness Development Corp. and the special land development fund operated by the Department of Land and Natural Resources.

And, though the committee was not specifically tasked to assess the performance of the Office of the Auditor itself — which conducted the audits of the ADC and DLNR — its report will make 11 recommendations related to that office.

The report will call for an independent third party to conduct a performance evaluation of the office and ask the Office of Attorney General to investigate some of the findings in the report.

Representatiive Mark Hashem, Chair Della Au Belatti, Linda Ichiyama and right, Rep David Tarnas Capitol
Reps. Mark Hashem, Della Au Belatti, Linda Ichiyama and David Tarnas discuss the findings of their report Friday at the Capitol. Among other things, it calls for more investigation into the state auditor. Cory Lum/Civil Beat/2022

Rep. Della Au Belatti, the House majority leader who chaired the committee, mentioned in particular what she described as “significant omissions” on the part of the auditor’s work on the ADC and DLNR.  She did not elaborate at a press conference on Friday.

Belatti said her colleagues also sought further information from State Auditor Les Kondo but said his office “refused all attempts” to engage with the committee, noting that Kondo even took it to court.

The committee has two legislative recommendations regarding the auditor that could be heard in the 2022 session that began Jan. 19:

  • House Bill 2419, which would require the auditor to disclose “information, evidence, and requested documents, including working papers, to an investigating committee after the final audit report has been issued.”
  • House Bill 2420, which would establish draft audit report requirements so that the auditor will follow best auditing practices and standards when obtaining testimonial evidence and, if recording an interview, to follow certain requirements.

In a statement posted on the auditor’s website late Friday, Kondo said: “I’m puzzled by the chair’s position that my office should be investigated further or audited, which would mean a third ‘investigation’ in less than a year. She conveniently ignores the fact that we are peer reviewed every three years. That means audit professionals from other jurisdictions — other state auditors — spend a week thoroughly reviewing our reports and supporting work papers, interviewing our staff, confirming our continuing professional education requirements, to determine whether we are complying with Government Auditing Standards. And, those peer reviews have been uniformly positive, dispelling the committee’s unfounded allegations and concerns about our audits as well as our operations and professionalism.”

‘Innuendo’ Versus ‘Evidence’

Before the press conference at the Capitol, the House committee voted to approve the final version of the report. Voting “yes” were Belatti, Vice Chair Linda Ichiyama and Reps. Mark Hashem, David Tarnas, Amy Perusso and Kyle Yamashita.

Rep. Val Okimoto, the only Republican on the panel, voted “no” as did Democrat Dale Kobayashi.

In his brief comments before the vote Kobayashi reiterated many of the arguments he has made over the course of the committee’s work, including that it should not have been evaluating the performance of Kondo and his office. He said the report is full of “innuendo” that casts “a negative light” on Kondo.

State Auditor Leslie Kondo Editorial Board-5
State Auditor Leslie Kondo strongly denounced the work of the House committee on Friday and expressed concern for the independent status of agencies like his. Claire Caulfield/Civil Beat/2021

The House resolution creating the committee, however, allowed for it to address “any other matters” that might crop up in the course of its work.

Tarnas said he believed he and his colleagues had a responsibility to conduct oversight of the auditor’s office, as is common in other states. And Ichiyama described the process as “an unchartered journey” that led the committee to “follow the evidence.”

The report also will have 27 recommendations for the ADC and 14 for the DLNR. Tarnas said the House would likely introduce more legislation in the 2023 session but currently has two active bills regarding the report’s findings:

  • House Bill 2417, which aims to improve the process of leasing public lands and to ensure that the state is fairly compensated for their use — something the 2019 audit of the DLNR said was not the case.
  • House Bill 2418, which amends the focus, scope and management of the ADC and appropriates funds for the agency to hire a consultant for planning, an accountant and for security on ADC property.

Hashem said the ADC, which was created by the Legislature when sugarcane and pineapple were still being harvested widely in the islands, needs to be “modernized” for the current era. Among other things, the 2021 audit faulted the ADC for significant mismanagement and straying from its original purpose.

The committee also made several recommendations on how a future investigative committee might operate. During its tenure, 19 public briefings were held and 22 witnesses and tens of thousands of documents were subpoenaed.

As well, the summary advised that the House of Representatives should consider establishing a formal standing committee that could work over the course of a legislative biennium “to consider complicated topics of deep concern to the Legislature.”

Such investigative power may well unsettle the Office of the Auditor as well as other watchdog agencies, whose duty is to also be transparent, accountable and responsible to the public. On Friday, Kondo said he did not know what was driving it all and said the committee’s work amounted to the “kind of abuse of power that damages the public’s already shrinking confidence in state government as well.”

“It’s a shame that the investigative committee wasted the opportunity to fully address the real problems and shortcomings at DLNR and ADC identified and reported in our audits,” he added. “Instead, the chair and certain members of the committee were more interested in constructing a false and defamatory narrative that I intentionally omitted information from our reports and engaged in criminal conduct, instead of focusing on the real, serious problems and issues that we did report. The public deserves better.”

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