The Office of Hawaiian
Affairs filed suit against state Auditor Les Kondo on Friday in a move to get the state to release a $3 million general fund appropriation for next fiscal year.
Kondo suspended his
office’s audit of OHA’s limited-liability companies in December after the OHA board of trustees refused to hand over unredacted minutes of its meetings.
That put OHA’s $3 million state allocation on hold because the state Legislature conditioned the release of the money on the completion of the audit.
By going to court, OHA officials hope a judge will view the redacted meeting minutes as they do — as protected attorney-client privileged information — and then order the audit’s completion.
“OHA wants this audit finished so our beneficiaries can receive these critical resources. After weeks of discussions with the auditor, the trustees felt that asking the court to intervene was our only recourse,” OHA Chairwoman Colette Machado said in a news release.
OHA attorney Robert Klein said Kondo used an unprecedented interpretation of his powers to demand the unredacted minutes.
“Rather than subpoenaing OHA, which would result in a court reviewing his interpretation of his audit powers, the State Auditor has decided to suspend his legislatively mandated audit and placed significant Native Hawaiian funds in jeopardy. We believe today’s action will resolve this legal dispute so these monies can be released.”
In an interview Friday afternoon, Kondo continued to maintain that state law and a federal court opinion give his office the power to inspect all public records, including anything deemed attorney-client privileged. Such information, he said, remains “privileged” and sealed even when it goes to his office.
Kondo said the OHA complaint had yet to be served on his office.
The audit in question aims to examine the seven LLCs that OHA created from September 2007 to October 2015 to hold OHA assets such as Waimea Valley and to pursue other outside business opportunities and higher-risk ventures.
Kondo said the audit is intended to assess OHA’s use of its LLCs, including trustee oversight of and decisions involving the LLCs, as well as whether grants and other funding from OHA to the LLCs, and the LLCs’ use of those moneys, were consistent with OHA’s spending policies and procedures.
OHA officials say they fully cooperated with the auditor, timely providing 937 documents, including the minutes of 21 executive session board meetings with redactions to shield what they termed “privileged legal advice” protected from disclosure by state law.
But Kondo suspended the audit Dec. 30, saying he wasn’t getting all the information he was seeking.
“We don’t know what we don’t know,” he said Friday. “If we don’t know what’s behind the black lines, we may not have all information to complete the audit.”
OHA Chief Executive Officer Sylvia Hussey said that any questions Kondo’s office has about specific financial transactions of the LLCs can be answered in the documents already provided, including contract and grant lists, check registers and meeting minutes of the LLC managers, none of which were redacted.
Machado said OHA is being untreated fairly — and especially considering the state auditor completed his audit of the Honolulu Authority for Rapid Transportation despite that agency providing redacted executive meeting minutes.
However, Kondo said the two audits had different objectives, and it was determined there was already enough information to complete the HART audit, whereas that was not the case with OHA.
Machado said she’d just like to move forward, and she’s hoping the complaint will help make that happen.
“This whole situation is unfortunate,” she said.
Kondo said the law is on his side and that unfortunately, taking the issue to court could just end up
prolonging the dispute even further and costing a lot of money.