Stacy Ferreira, who has been on leave from her position as the chief executive of the Office of Hawaiian Affairs since late September, alleged in a lawsuit filed Wednesday that Board Chairman Kai Kahele retaliated against her for reporting misconduct during the office’s budget sessions earlier this year and “orchestrated” her removal from office.

The lawsuit reveals that Kahele was under an investigation by the board for creating a toxic and hostile work environment after Ferreira lodged a complaint against him in late June, and that he introduced rule changes to gain access to the investigative files. 

Ferreira also alleges in the lawsuit that the trustees met in secret on Sept. 23 to put her on leave, and that Vice Chair Keoni Souza later directed her to write an email to staff saying that she was taking personal leave. A press release a few days later announcing an interim CEO “caused Ferreira significant reputational damage and personal harm.”

“The public dissemination of Ferreira’s administrative leave, presented without context or oversight, fostered speculation, undermined her professional standing, and cast unwarranted doubt on her integrity and leadership,” the lawsuit says.

OHA, the nine members of the Board of Trustees and interim administrator Summer Sylva are named as defendants in the lawsuit.

An office spokesman said OHA hasn’t received the lawsuit yet. But a letter from the Board of Trustees’ lawyer attached to the lawsuit says that the decision to suspend Ferreira wasn’t related to her complaints against Kahele. That letter says Ferreira is also under investigation.

Lawsuit Followed Other OHA Chaos

The details in the lawsuit shed light on the latest instance of problems for an office whose previous trustees and administrators have been plagued by allegations of financial misconduct and mismanagement. OHA was created in 1978 to improve the condition of Native Hawaiians. But over the decades, infighting among the trustees and tussles between the board and its administrators have hampered its mission.

In the lawsuit, Ferreira claims that Kahele, a former congressman who won election as an OHA trustee last year, repeatedly undermined her authority by assigning projects directly to staff, created unrealistic workloads and micromanaged executives in the office.

Things came to a head in June as OHA and the Board of Trustees undertook its annual budgeting process. Kahele proposed a draft budget that caught the staff by surprise and would have made cuts to education and criminal justice initiatives while directing millions of dollars in noncompetitive grant funds to various nonprofits and organizations.

According to Ferreira’s lawsuit, Kahele’s office solicited testimony in support of the draft budget from at least one of those organizations and provided that organization with confidential budget information.

Later, Kahele tried to get former OHA Chief Financial Officer Ramona Hink and Ferreira to certify the budget draft. After Hink declined to certify the draft citing issues with the budgeting process and the pressure Kahele was putting on her and staff, Kahele emailed Ferreira directing her to order Hink to act. A financial analyst later found errors in the budget, which required additional revisions.

The trustees voted to approve the budget just hours before a fiscal deadline on June 30.

Ferreira reported Kahele to OHA’s corporation counsel and human resources director on June 29 for violations of the state ethics code and a breach of his duties as a trustee. She also reported him to the state Attorney General’s Office on July 2.

The board began an investigation into Kahele sometime in July, at which point Ferreira began reporting to Souza, the board’s vice chair. According to the lawsuit, Kahele later introduced changes to the office’s policy manual that would enable him to gain access to the investigation files.

The investigation looked into allegations that Kahele created a toxic work environment but didn’t get into Ferreira’s allegations that he had breached the ethics code, according to the suit.

An excerpt of the investigator’s summary included in the lawsuit says that there are “significant systemic issues that are preventing the OHA Board of Trustees and Administration from working together to achieve a shared vision.”

Kahele scheduled the special meeting to put Ferreira on administrative leave a week after receiving a copy of the investigative report, according to the lawsuit.

After the board voted to put Ferreira on leave Sept. 23, Souza went to her office to tell her that she was put on leave pending an investigation. Then, he told her to send a memo to the staff, saying that she would be taking personal leave.

“Fearing that refusing to comply would be construed as insubordination, Ferreira drafted the memorandum in accordance with Souza’s request,” the lawsuit says.

She turned in her laptop, badge and keys and was escorted out of the office.

Ferreira alleges that the board violated the state’s open meetings law by convening in executive session, closed off from the public eye, to put her on leave. The lawsuit says she wasn’t invited to that closed-door session. She also frames the decision to put her on leave as retaliatory.

Ferreira’s attorneys sent a letter to the Board of Trustees on Oct. 9 demanding that she be reinstated.

“During her tenure, she dedicated herself to OHA’s mission to improve the wellbeing of Native Hawaiians and the perpetuation of the Hawaiian culture. Part of serving the greater Native Hawaiian community is bringing attention to misconduct by those in authority. Such is not an easy thing to do, but one that must be done,” Margery Bronster, former Hawaiʻi attorney general, and Lanson Kupau wrote in the letter.

Bronster and Kupau asked that Ferreira’s request to be reinstated go before the trustees at its Oct. 17 meeting.

In the response letter attached to the lawsuit, Paul Alston, the board’s lawyer, said that the board was declining that request. The trustees have the authority to suspend Ferreira based on credible allegations. Alston wrote that a majority of the board, excluding Kahele, “determined that good cause existed for suspension” based on allegations against Ferreira that weren’t related to the complaint she made against Kahele in June over the budget process.

“Following the board’s action to place Ms. Ferreira on leave, she elected to take leave, where she will remain pending the outcome of the ongoing independent investigation,” Alston wrote.

Ferreira’s lawsuit asks for her to be reinstated and for the investigation into her conduct to be terminated. It also calls for an unspecified amount of monetary compensation for damages and for the defendants to attend annual Sunshine Law training to prevent future violations and to “rebuild trust in the Office of Hawaiian Affairs.”