Hawaii County Mayor Billy Kenoi and former Hawaii Technology Academy Principal Jeff Piontek are members of an exclusive club.
They are among the few public figures whose purchases with state- or county-issued credit cards recently got them into trouble and thrust them into the unflattering glare of the media spotlight.
Kenoi’s case has generated headlines since last week. Despite an explicit prohibition against using the cards for personal purchases, the Hawaii island mayor acknowledged paying for such things as a $1,200 surfboard and a nearly $900 tab at a Honolulu hostess bar on his county charge card. He told reporters he thought that was OK as long as he paid back the county. It wasn’t.
Piontek’s case similarly drew media attention when he was charged with multiple theft counts in 2013 for allegedly using credit, debit and gift cards from his charter school for his personal use, which court documents say included trips for him and his girlfriend to Australia, Qatar and England. The criminal case is pending.
Piontek, who could not be reached for comment, was fired from his position in 2011 after allegations of misuse of public funds surfaced.
The two cases and another recent one involving a charter school have raised questions about whether adequate controls are in place to guard against abuse of credit and debit cards for public agencies.
Except for charter schools, which operate as independent public entities, the purchasing cards are issued through what is called the pCard program, which was launched more than a decade ago to streamline small purchases for state and county agencies.
More than 4,000 charge cards under the program are in the hands of government workers, ranging from secretaries to department heads and politicians.
The idea behind the program is to allow a select group of workers to buy goods and services without having to go through the more cumbersome process of obtaining purchase orders or seeking competitive bids — two other ways to make purchases.
But the oversight of the pCards is left largely to individual agencies — something that the state auditor raised questions about when examining the program in 2010.
Though the auditor’s office didn’t find problems with abuses back then, it noted that the State Procurement Office, which has ultimate responsibility for the pCard program, took a largely hands-off approach as administrator, delegating significant responsibilities to executive branch agencies.
"As a result, executive branch agencies are not held accountable and are left to determine for themselves how best to ensure controls and processes are adequate, working properly and cost efficient," the report found.
Sarah Allen, who heads the procurement office, could not be reached for comment.
Chuck Totto, who as executive director of the Honolulu Ethics Commission is one of two people in his office who has a pCard, contends there are sufficient checks and balances — a sentiment echoed by other officials contacted by the newspaper.
Purchases made within Totto’s office must be approved by him and the senior legal clerk, and are then examined by the Department of Corporation Counsel, to which his agency is administratively attached, and the Department of Budget and Fiscal Services.
"It’s thoroughly reviewed," Totto said.
The one caveat he mentioned about the overall program, though, was that someone intent on defrauding the system could do so. "There are never enough checks and balances to prevent intentional fraud," Totto added.
The Honolulu Star-Advertiser surveyed a half-dozen government entities to get a sense of how pCard transactions are monitored. It differs from agency to agency, but all said reviews of receipts and statements are done at multiple levels and on a regular basis, similar to the process used at the Ethics Commission. Some noted that regular and spot audits are performed.
Most of the cards are programmed so that certain categories of good and services — such as entertainment or restaurant purchases — are blocked and cannot be bought with those cards.
The 16 neighbor island legislators in the House, for instance, are issued pCards that can be used only to pay for airfare between Oahu and their home islands, according to spokeswoman Carolyn Tanaka.
Kenoi’s card, which has since been cut up, did not have the typical categories blocked.
The Star-Advertiser asked the six agencies it polled how many pCards over the past five years have been taken away because of inappropriate purchases. Four of the six — the city, Judiciary, Department of Education and House — said none had been removed.
Only the University of Hawaii, with more than 1,300 active accounts, and the Department of Health, with 172 cardholders, reported instances in which cards were taken away during the five years.
UH rescinded six pCards, typically due to poor record-keeping or not following purchasing rules, according to spokesman Dan Meisenzahl.
At the health agency, one person had the card taken away because of inappropriate purchases, according to spokeswoman Janice Okubo. An investigation was triggered when the cardholder initially did not submit an invoice for phone charges, and that led to discovery of additional discrepancies, she added in an email. The case was referred to the attorney general’s office.
Okubo and Meisenzahl detailed extensive procedures that their respective agencies followed for monitoring purchases.
Daniel Hanagami, chief special agent at the attorney general’s office, said sufficient policies are in place throughout the system to guard against pCard abuses. Problems crop up, though, when the policies aren’t followed precisely and exceptions are allowed, he added.
Hanagami said he was aware of one pending pCard investigation that his office was conducting involving a state clerk, but he didn’t have details.
The other charter school case that raised questions about oversight involved questionable purchases with a Halau Lokahi Charter School debit card, which is not part of the pCard program. Three former employees of the school were arrested on suspicion of theft and money laundering but have yet to be charged.
