 Think Tech Hawaii. Civil engagement lives here. Aloha, and welcome back to another episode of Talk Story with John Wahey. We've got a really important show for everyone in Hawaii, and it involves the Office of Hawaiian Affairs. I should make that plain from the beginning. And it is about the news regarding there was an audit that the state conducted on OHA. And today I thought that we needed to maybe balance some of the, dare I say it, fake news that's been coming out about this issue. There seems to be a lot of noise about it, but very little facts. And so I thought we ought to take a moment today on Talk Story with John Wahey to do some serious, to have a serious conversation about this issue. So I want to thank my special guest this afternoon, Mr. Kamanao Pono Krab, who is the leader, the CEO of the Office of Hawaiian Affairs. And I think that's Kapohana, which is, by the way, this is a little aside, but I noticed that other Hawaiian institutions, trusts and so forth, are starting to use the Hawaiian words for the various positions. And you actually started all of that, didn't you? Yes, in 2012, when I was elected by the board, you know, one of the changes at that time was to move towards a more cultural Hawaiian value-based institution. And so that was my proposal. That was one of your things that you brought to be proposed to the board. That's correct. Tell us a little bit about yourself. Sure. Sure. Before we go any further, which is real Hawaiian, by the way, we want to know who you are. Well, first of all, thank you, Governor, for asking me to, as an invited guest to share. I actually was born and raised in Mo'ilili. I'm the second youngest of seven. And my actually, my grandmother, my maternal grandmother, Hanai, my four older cousins. So I have a kind of an extended one. No wonder. No wonder I run. When I run in two people, they say they know your brother. They know your sister. You've got a whole line, a whole line of crab siblings. Born and raised in Mo'ilili. My family, I would say, where my parents are very staunch Hawaiian and traditional in terms of values, they really, really supported Hawaiian culture. And we're very, I would say very knowledgeable, not just of Hawaiian history, but of Hawaiian issues. Right. So my father is a retired fire captain, long term, long time Democrat. He used to run our neighborhood elections poll. My mom retired from United Airlines in Cabin Service. So I would say very humble family. And where did you go to school? I graduated from Kamehameha Schools. Oh, okay. And then after that, at that time, they weren't so college bound. And so Kamehameha Schools was known for ROTC. So they were known for training people to get jobs that actually paid one. That's right. We are in a different era. We are in a different era now. Certainly. So changes. So you went to university. I noticed that you have a doctorate. That's correct. I traveled throughout in my late teens, early 20s, traveled throughout the US, doing my military service. And then as a young man, came home, went back to Kapilani Community College, the university. Then I got my bachelor's, my master's, and my doctorate in clinical psychology from the University of Hawaii Department of Psychology there. Oh, terrific. And how long have you been the CEO of OHA? I've been the CEO of the Pohana from 2012 to current, 2018. So just about six years. About six years right now. I actually came to OHA in 2010. I was practicing out in Waianae Coast Cooperative Health Center with Hawaiian families and providing individual services. There's a licensed clinical psychologist, but I actually was recruited to be the research director from 2010 to 2012. Research director of the Office of Hawaiian Affairs. Correct. Okay. So you've had a somewhat extensive background working in the Hawaiian community and as well as being educated to deal with some of these, some of the issues. Correct. Correct. I would agree. Now, the topic of today's discussion is an audit, a recent audit that was done by this the state of Hawaii, I guess the legislative auditor. Correct. And I, well, first of all, we ought to let people know that the legislative auditor is not an auditor in the traditional sense. I mean, it's not an accountant. What they do is, right, it's, so every four years, because the understanding is that, you know, state agencies, departments under the state government receive what is called a performance audit every four years. So the performance audit means that the auditor actually looks at what you're doing and then uses his or her judgment as to whether you're doing anything that they might disagree with. Right. First of all, I think that's a great clarification because performance is to the degree in which an organization or institution is compliant with certain policies, procedures, and how either effective or efficient those programs are, which is very different from what we typically know as an accounting audit, which is much more of an accounting of those specific financial procedures. And whether you follow the rules that so far that are in existence at that time. That's correct. So the first thing is that the audit that is the topic of this discussion was, I guess, something that's called the performance audit. Performance audit. Which is the legislative auditor looking and seeing if he agrees with some of your carrying out your mission. That's correct. Now, I wanted to ask you, who authorized that audit? Well, it's authorized by the state. The state legislature? State legislature. Well, is this a regular thing that every four years? Every four years. And so in the past, for a number of years, OHA has complied. And I think part of that is, again, trying to clarify OHA's distinction as a Hawaii public state trust versus a state agency. Yeah. I having spent a little bit of my life in the creation of OHA. That's correct. You're from the beginning. You know, I find that discussion somewhat tilted in the sense that OHA was always looked upon, at least in its origin, as a Hawaiian agency, really as a fourth branch of government. That's correct. As opposed to being an agency under the governor. Under the governor and the executive branch. Have you been able to maintain that kind of separation? Well, as the fourth branch of government, distinct and separate from underneath the executive branch, which is the governor, is the Office of Hawaiian Affairs through the state constitution, Hawaii Vice Statutes Chapter 10. We have what we call semi-autonomous powers. And it's really up to the board and the organization to assert those powers. And then this is set up for you, actually in the law and in the constitution. That is correct. Now, I want to also be really clear that the fact that you may be like a fourth branch or not in the executive branch, that you still have a fiduciary duty to native Hawaiians. I mean, your mission, in a sense, gets even more important. And that's outlined or mandated in Chapter 10. So we must comply as much as possible. But in our mission, it clearly states that the assets, the resources, the funding goals, not only to improve the conditions for native Hawaiians, but really is to perpetuate, protect native Hawaiian rights, to preserve, to continue native Hawaiian culture and history for native Hawaiian people. And we have an enormous mandate because being a fourth branch of government, we're kind of like a micro government for Hawaiians in terms of economic health, education, culture. Well, at least you're going to be the advocate for Hawaiians in the executive branch and in the legislative branch. And so that's part of your mission. Now, let me ask you a question. Was this audit on funds that were only funds that were from the general fund that the legislature gave you? Or did they look at your operations? I mean, what was it on? I mean, what's the connection between the legislature and this audit? Right. So to provide maybe some context is a majority of OHA's funding comes from what we call it the native Hawaiian trust. And that's a separate funding that the OHA, the Office of Hawaiian Affairs over years through settlements with the state. We have our own fund. And so we have spending policies that draw down from that fund in addition to an annual payment from the state with 15.1. So the existing funds that you have are not part of the, you don't go to the legislature to ask them for anything. That's correct. We don't. And then the legislature in addition gives you 15.1. Now that 15.1, so people understand 15.1 million is a substitute really for what the Constitution mandates, which is 20% of all seeded land revenues. That is correct. Now my understanding a little bit that I have done on this is that 15.1 would be like a third of what 20% of seeded land revenues are. Right. Based on the research we did with a financial review in 2012 and 2016, based on that analysis, we would agree and concur that 15.1 does not measure up to the total 20% of the public land trust revenues. Now as a delegate to the 78 Constitutional Convention, someone who was dealing with the issue of seeded land revenues and Native Hawaiians and everything, it was at least the constitutional delegate's position and intention that those seeded lands revenues, that 20% revenue was separated from the general fund. That is correct. I mean if you ask people who were there, and I guess even today, the intention was that these were funds that actually belong to Native Hawaiians. Right. So this is not something that you're supposed to be processing. Right. And I think it should be stated that it's a result of the admissions act in state constitution. It is the state's obligation through the public land trust to use a certain amount of funds specifically to help improve the conditions for Native Hawaiians. And I think for people out there, they should know that when we talk about seeded lands and the seeded lands monies and trusts, we're talking about lands that will actually belong to the Native Hawaiian government that was illegally overthrown. And so when the United States returned these lands back to the people of Hawaii, or the government of Hawaii at that time, territorial government, there was a mandate that the fact that these lands originated as Native lands, that the mandate would be recognition of that by saying at least one of the five purposes would be for the betterment of Native Hawaiians. And it's proportionate, too. So that 20% figure was over time. And so I would agree that there's a legal basis, historical basis. Well, it seems like there's also a moral basis. And a moral basis. Yeah, for this to happen. And we're going to take a small break right now. And when we come back, I want to discuss with you or talk to you about what the audit extensive fund and how we are dealing with it. So folks, stick around. We've got a great show for you. You are not going to get this on the usual news media. So watch this show and we'll be right back. Aloha, I'm Dave Stevens, host of the Cyber Underground. This is where we discuss everything that relates to computers that just kind of scare you out of your mind. So come join us every week here on thinktecawaii.com, 1pm on Friday afternoons. And then you can go see all our episodes on YouTube. Just look up the Cyber Underground on YouTube. All our shows will show up. And please follow us. We're always giving you current, relevant information to protect you. Keepin' you safe. Aloha. I'm going to the game and it's going to be great. Early arrive and for a little tailgate. I usually drink, but won't be drinking today because I'm the designated driver and that's okay. It's nice to be the guy that keeps his friends in line, keeps them from drinking too much so we can have a great time. A little responsibility can go a long way because it's all about having fun on game day. I'm the guy you want to be. I'm the guy, say good morning. Welcome back to Talk Story with John Wahee. By the way, folks, if you've got a question, this is the number to our hotline, 808-374-2014. There's a way to Twitter in, but you've got to be younger than me to tell you how to do that. So, oh, there. It's under my, you can see it right here. This is how you tweet a question in. Meanwhile, for those of us that are a little bit from a different generation, 808-374-2014. Okay, so there's been a recent audit. There's been a recent audit. What did the audit cover? I mean, what does it tell you? Sure. So the current audit spans specific years from, you know, 2030 until about 2017, 16, about three, four years. And what did they look at? The entire organization, all the funds? Well, they looked at three areas. One was fiscal reserve spending. Now, we ought to say something. So one was fiscal reserve for spending. When you say reserve spending, you are dealing with the funds that you have set aside for investments and for future, I guess, corpus. So that is a distinction. So the fiscal reserve funds really come out of the Native Hawaiian Trust Fund. So that is not money that is taxpayer money or general fund money from the state. This is money that you have invested and earned income off of, as well as money that would do you because of state wrongs. Right. That is correct. As a result of past settlements over the past years, from the 90s to the 2000s, that understanding is that the proper use of the public land trust would have to go to Native Hawaiians. And Office of Hawaiian Affairs established through the Constitutional Convention in 1978 is that receptacle. So these are funds that you're totally responsible for. We are totally responsible. Those are these reserve funds. It was one category. What's the next? The other one is CEO sponsorships. Again, those come out of our own funds. Nothing having to do with general funds or taxpayer funds and then trustee funds. Okay. So that's the third one to be trustee funds. That is correct. So these are funds that the trustees have discretion over. That's correct. All right. So ostensibly, you know, and I'm going to ask you this question. What did the audit ostensibly find and tell me what your response to it might be? Sure. So there are a number of findings. The one was very clear is that there should be greater clarification and improvement of our policies. Sometimes they felt it was too broad for interpretation. And so we would have to improve on our policies. That's your policy on how to use the reserve funds, reserve funds, trustee funds and your discretion. Yes, yes. Now, none of these funds come from the state. Right. So actually, but you know, I guess you would be and anybody would be happy to see somebody's got a better mouth strap. I don't think that's the issue. Right, right, right. And I think we've always been transparent about complying and being transparent and accountable. When you look at our total budget, we do receive general funds and the general funds really are for some of our programs like the Native American Legal Corporation. So we match funds with the state and OHA's money. So let me get this real clear so the people out there can understand this. What happens is the general funds, a lot of it anyway, that comes in, then is appropriated by the legislature as an appropriate. This is not part of the 15.1. That is not. The 15.1 is the fake 20 percent. That's correct. Right. And so this fund, these funds are set aside mainly for other programs that you match. That is correct. That is correct. Okay, so none of that was this discussion. None of that was part of the discussion and we thought was very important to clarify. So for example, we also use funds for a fund to help out homelessness in for Native Hawaiian communities. So we provide a statewide grant that specifically goes to helping aid for homeless, prevent people from going, from moving into homelessness. And again, we match our funds with the state funds for the general fund. You know what the impression I had when I, the little bit, and I must confess that actually I wanted to talk to you and before I actually really went into the thing in depth. But, and so today was the chance. But what I little I saw about it is that the recommendations that have to do with better procedure and stuff, that's not the problem. But it seemed like the auditor was starting to judge content. Yes, yes. Am I correct like that? Well, we would concur. I think there's a subjective perception that they felt maybe was put out in the audit that was sensationalized or what we believe was overly embellished. Well, let's get some numbers. My understanding is that there was, well, first of all, my understanding of how the anytime reserve funds are used, my understanding is that it takes an extraordinary vote of the trustees to do that. This is not a simple majority policy. No, not at all. Not at all. So, so any funding or request for funding through the fiscal reserve goes through a vetting process by our staff in accounting. And sometimes it comes from different programs and lines of business throughout the organization. But we go through a vetting process. We put it in an action item and it has to go to the RM committee for one vote and then to the full board. So all the trustees are involved. And they're all involved. But, you know, normally it takes, I guess for the appropriation, it takes out of nine trustees, you need five votes. For this, you need six. You need a greater majority. That is correct. And you really can't remove these funds without the participation of the trustees. You cannot. You cannot. If any approval, it must be a majority of six votes for the board to approve. All right. So now, the audit seemed to have talked about $14 million. $14 million. Out of all the millions and all the funds that you are responsible for, the focus of this sensational audit was $14 million. $14 million. Now, my understanding that out of that $14 million, almost $10 million or $10 million of it, went to state agencies? Went to state agencies. So for example, we have a historical agreement between the Office of White Affairs and Department of White Homeland. So we provide an annual allotment of $3 million per year to help with their debt consolidation loans, which allows it to provide infrastructure, project planning, so that they can put homes on the land for native white beneficiaries, 50% or greater. So this is like, you know, they give you $15 million, you give them $10 million back. I mean, that's what this and that's what this is talking about. That is correct. So to the extent that anybody got money that shouldn't have gotten money, it was the state. It was the state and it all went to benefit native white. All right. And then there was about another $4 million left. But I understand that at least most of it, $13 plus million was actually the result of trustee action. That is correct. That is correct. We funded about 22 initiatives. The Department of White Homeland is one. The Lunalilo Trust for elderly care for native white kupuna was another. It went to fund chartered schools, native white charter. So did any of that money go to somebody's favorite contractor that was going to get a non-bid contract? No, not at all. These are purely, some of them we fund annually like wine homelands, chartered schools. Others were based on need, based on the demand to either help organizations sustain their operations or looking at how they provide services to the native white community. So, okay, this is a very important point and I really want to, first of all, all the money that was the subject of this so-called audit went to native Hawaiian beneficiaries. That is correct. So nobody, you know, did something. Yeah, no one got a favoritism for a particular concert. All of it went back to reinvest in our people, build greater capacity in our communities. And the judgment as to who should get the money was done by yourself and the trustees. Who actually are entrusted with that requirement. Right, that responsibility, yes. So what may be happening here, and this is what struck me and why we actually, my motivation for having this discussion today, is what makes the legislative, I'm not talking about, you know, you ought to have a little bit more paper or a little bit more, of course, whatever you need to do to make. But what makes the legislative auditor a non-elected, non-native Hawaiian expert judgment, better than your judgment, or the trustees judgment? You know, and I think to even put it into further context, 6%, which is the general funds, which approximate is about three to four million dollars. It's only 6% of our total budget. The remaining 94% is all from the native Hawaiian trust fund. And you guys, one of the reasons why we have the Office of Hawaiian Affairs is that the regular civil servant types, or the regular who weren't doing a good job to start with, and the idea was to get, now, there has been people saying, one of the items real quick was the idea that maybe you didn't listen to your staff. Now I know when I was governor, if I listened to the staff all the time, they wouldn't need me as governor. Right, so I mean, is it unusual for the CEO to say, no, I think in this case, the beneficiary may be right, and you guys may be just a bunch of auditors. So you're correct, is we go through a vetting process. But as a result of, we have a delegation of authority from the board to me, and then even from me down to directors, managers. But you are still the responsible person. I'm total, when the buck stops here, I'm the one fully responsible for all of the. I have somebody in the next room telling me that our time is up. And I know I hope that folks, I hope that this would at least enlighten you to the other side of the story. So I'd like to again thank Kamanao. Thank you, Aloha. Thank you so much for coming. I'll see all of you in two weeks. Aloha.