Government Relations, Ethics, and Transparency Committee - Regular Meeting

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Go. Will the Government Relations Ethics and Transparency Committee meeting of June 30th, 2026 come to order? It is 1.35 p.m. I am your Chair, Kawinoye Batungan. Members, in accordance with the Sunshine Law, please identify by name who, if anyone, is in the room, vehicle, or workspace with you today. Minors do not need to be identified. Committee Vice Chair Nohelani Uuhajans.

Aloha, Chair. Aloha, everyone.

Aloha. Council Member Tom Cook. Aloha. Good afternoon, Chair. Council Member Gabe Johnson.

Aloha, Chair, Council Members, community members. There's no testifiers at the Lanai District Office. I'm here and ready to work. Thank you. Thank you.

Council Chair Alice Lee.

Aloha, Kaku.

Aloha. Council Member Tamara Paulton.

Aloha wina ala kākou, streaming live and direct from the Pili. I have with me my husband, George Vieira, and two minors, one human, one canine, who shall remain unnamed. Thank you.

Aloha wina ala. Councilmember Keani Rollins-Fernandez.

Aloha wina ala, Chair. Aloha wina ala kākou. Happy to be here in person. There are no testifiers at the Moloka District Office. Mahalo, Chair.

Mahalo. Councilmember Shane Tenente.

Aloha, here at my home office. I'm here by myself, and there are no testifiers in my chair.

Thank you. And Council Member Yuki Leisugimura.

Good afternoon, everybody, and looking forward to a very interesting meeting. Thank you.

Thank you. From the Department of Corporation Counsel, we have with us Deputy Corporation Counsel Tom Colby, who is with us for his very last day as Corporation Counsel for this committee.

Aw.

Thank you for being with us. We appreciate your service. He's moving on to recovery. We also have with us the county auditor and senior audit manager. The managing director will be joining us in chamber shortly. We also have the Emergency Management Administrator and members of his team, the Director of Finance, and do we have anybody from Water Supply with us today, staff? Okay. So we do have the Director of Water Supply, our representative from the department with us. We also have our great committee staff. Good afternoon, everyone. Members, please see the last page of the agenda for information on meeting connectivity. Today the committee intends to review and discuss the County of Maui Fraud Risk Assessment Report submitted by Spire Hawaii LLP for the Office of the County Auditor, County of Maui, dated February 2026. Members of this committee and members of the public, today's meeting is part of an ongoing concerted effort by this committee to focus on legislation and oversight aimed at strengthening good governance practices, promoting transparency, accountability, and public confidence in our county government. This follows our meeting last week, Monday, where we received comments from special counsel on the status of the Leo Kyrus lawsuit and discussed resolution 2699 regarding the council review of legal invoices and settlement offers. Today, we turn our attention towards systemic challenges and opportunities related to bolstering internal oversight and financial safeguards. I look forward to working with my colleagues today to ensure we are fostering trust and doing our best to serve all of our county residents. Before we begin our presentations, I would like to ask members that we focus on the Fraud Risk Assessment Report rather than discuss any specific individual case of fraud or alleged fraud. I would like to ask members to please hold off on asking any questions or providing comment until after the testimony is closed. Now, we have representatives here from the Office of the County Auditor. May I please ask you to introduce yourselves and the representatives from Spire Hawaii LLP.

Thank you, Chair. First of all, I want to thank you for the opportunity to present the County of Maui Fraud Risk Assessment performed by Spire Hawaii LLP. Here today with me is my senior audit manager, Scott Kanesina. Also here is Tyler Kimura, partner, and Lani Nakazawa, director of Spire Hawaii LLP. I want to begin by explaining what led me to procure the Kaneo Ma'i Fraud Risk Assessment. As you are all aware, the county of Maui has had its share of challenges. A bribery scheme from back in 2012 to 2018 involving Milton Choi and a former director of environmental management. In early 2003, two county employees were sentenced to federal prison for accepting bribes from a vendor. The county also had prolonged use of emergency procurements and large purchases during the COVID-19 pandemic and the recovery efforts related to the August 8, 2003 wildfires. Also, there were observations by my office of possible fraud, waste, and abuse made between 2003 and 2004. Oh, sorry, 2023 and 2024. Finally, there was a departure of key county personnel, including the termination of the Director of Finance in April 2024. Just to be clear, some of the issues predates this administration. However, that doesn't make them immune from being targeted nor being responsible for addressing it when they are made aware of it. We recognize that the administration, the council, as well as my office must stay vigilant and focus on making meaningful corrective actions until these risks are minimized. Mr. Kimura will go into more detailed discussion of what the results of the countywide fraud risk assessments were. But before that, I wanted to provide details of what my office is doing as a result of the risk assessment. Following the notion that county employees do not know who to report instances of suspected fraud, waste, and abuse, my office moved towards establishing a fraud, waste, and abuse hotline. This hotline is managed outside of the state and can receive reports and tips 24 seven, either via telephone or via the web. I'm happy to report that as of today, the hotline is live and active. And we brought along a flyer that we will be distributing. Certain transactions called direct pay were identified by SPIRE and those warrant further review as how they should fit into county operations in the future. We added that matter to our audit plan for fiscal year 2027. Lastly, for the fiscal year 2027, we also added a review of the county's travel policy regarding private jet travel. Specifically, private jet travel provided to county employees by entities with businesses in front of the county. This just came to my attention a few months ago, but I believe it warrants us taking a look to find out if this was widespread and whether or not the county travel policy allows such things. Members, thank you for your time and please let me know if you have any questions.

Thank you. Okay, before we move on to SPIRE, can I just confirm that the representatives are Mr. Kimura and Ms. Nakazawa, is that correct? Okay, members, without objection, I'd like to designate Mr. Kimura and Ms. Nakazawa as resource persons under Rule 18A of the Rules of the Council due to their expertise on this matter.

No objections.

Thank you. Okay, so I do see Deputy Director of Water here in the audience as well as the Managing Director. Managing Director, can I ask that you come down to the chamber floor? Because I'd like to have the presentation from our consultants and then you to give an overview of the administration's response to the audit itself. So I think next up is Mr. Kimura and Ms. Nakazawa. Can you please give us an overview of your report, including the two findings and five recommendations from it?

Aloha. Good afternoon, Committee Chair Butongan and members of the Great Committee. My name is Tyler Kimura, partner with Spire Hawaii LLP. Thank you for the opportunity to present our findings and recommendations related to our countywide fraud risk assessment today. First, we'd like to thank the many county employees and officials who took the time to respond to our requests and participate in our surveys and our interviews. And we'd also like to commend the county for taking this first step in starting this fraud risk assessment as it is part of an ongoing cycle of assessing, addressing, and monitoring risks to protect the county. With that, I have a short presentation that I believe the Council staff can pull up. Thank you very much. You can go to the next slide. So our overall scope and methodology, what we took a look at were fraud risks across 20 of the 21 executive departments. The Salary Commission was excluded as it did not have any staff. We looked at the Association of Certified Fraud Examiners fraud framework and applied that framework across 15 fraud risk categories. And we benchmarked the county's programs and controls against peer government anti-fraud programs. And we conducted these services under the AICPA consulting services number one standard. Next slide, please. So over the course of our work, we requested many documents from all of the departments, including policies and procedures, organizational charts for various fraud-related type of activities, procurement, any kind of handling of cash and that type of thing. um we issued surveys to a total of 382 elected officials and employees of the county so in addition to the elected officials and department heads we asked the departments to identify any personnel who may be involved in any kind of fiscal activities such as accounting or procurement and we also had interviews with the department heads and fiscal personnel and we looked at all the responses to our follow-up questions over this process as well. Next slide. One thing we wanted to highlight today is part of our survey we asked the elected officials as well as the department heads what their perception of fraud risk was. So for the elected officials we asked what is the perception of fraud risk in the county? And we asked department heads, what was their perception of fraud risk within their departments? And we did see quite a big perception gap. So as you can see of the elected officials, 86% had responded that there was a medium fraud risk and 14% said high. Whereas 95% of the department had said that they believe that there was a low fraud risk within their department. So we did see that perception gap kind of right off the bat there. Next slide, please. So our first finding was that the county's existing controls are not adequately designed to mitigate identified fraud risks. and that policies and procedures do not cover significant areas of fraud exposure. And so those areas are highlighted below. The first related to emergency procurement, we were focused on what happens when the procurement law is suspended. So when there's an emergency proclamation and what types of procurements can take place when that law is suspended. And so we were looking for overall comprehensive measures where guidance could be provided to the departments on the appropriate types of goods and services and guidance on when emergency circumstances may cease to exist and what should be done in terms of moving towards the regular types of competitive procurements. Related to vendor fraud monitoring, We noted that there were no county-wide programs to monitor vendor billing fraud or verify vendors have their own anti-fraud controls, in particular when they are handling monies on behalf of the county and then remitting them to the county. And so we were looking at just overall program again to make sure that this is addressed. Related to the approval of overtime, we did identify certain gaps in the payroll policies and procedures related to the approval of overtime and what may happen when an employee works overtime that wasn't aligned with the request that was put in or are there different thresholds for working two hours of overtime versus 20, for example. We noted that the county does not have a nepotism policy, and so Maui remains one of the two government entities without one. Related to hiring screening gaps, other than for certain departments, there's no county-wide procedure or policy to screen for fraud, fraud risks when hiring. And finally, we identified some unclear oversight rules between the Department of Water Supply and the Department of Finance related to just their overall fiscal procedures if the Department of Finance is reviewing and monitoring the Department of Water Supplies purchases or not. And so we had some conflicting statements during our work. And we had also identified, as Mr. Taguchi had mentioned in his opening, the use of direct pay by the Department of Water Supply and how that fits into other purchasing type of mechanisms with other departments. Next slide, please. And our second finding was that there's no overall policy for the county on how to handle fraud complaints. And so right now, Multiple entities receive, investigate and make decisions on fraud using their own processes. And so there are some practical consequences with this. There's potential forum shopping where employees may choose a certain venue to report their fraud. or their complaints, they may have a certain comfort level or they may see it as a way that they can get a desired outcome. And overall, there was just no overall agreed upon system in place where it's clear that this is how a fraud complaint would be handled. And again, I think in Mr. Taguchi's opening statements, he identified the use of a hotline, which is a great start, right? It becomes a centralized place where fraud can be reported. And then from there, I think, yeah, the county should develop what happens once those complaints come in and what is that reporting line after that.

Next slide, please.

So we have five overall recommendations. Three for the first finding are shown here. The first was to develop fraud mitigation and internal control systems following the GAO and COSO frameworks. The county did agree with this recommendation in their response to us in response to the report. Second was to address policy and procedures gaps that we had identified and to ensure that Any policies that remain unwritten are documented so that any further gaps can be identified. And again, the county agreed with this recommendation. And the third recommendation for finding one was to provide employee fraud awareness training. um many of the department heads um and then other respond respondents to our survey identified training as as important and would be worthwhile just to understand the types of frauds that could occur and what to look out for and i believe that the county has already taken steps to provide this type of training um since the issuance of our report And so we commend the county for that. Really, that's one of the best ways to fight fraud is knowing what to look out for and to try to stop it before it ever happens. Next slide, please. And for the two recommendations for finding two, we recommended convening a cross-departmental fraud reporting working group Just to figure out what makes sense for the county so that there can be a unified policy for reporting, investigating, and responding to fraud complaints. And also to develop a communications plan once that system is in place so that employees and the public understand what will happen once a fraud complaint comes in. Where should it go and where is it routed to? And the county did agree with both of these recommendations here. And so that concludes my presentation. I would be happy to answer any questions that the committee may have related to this presentation or the report itself.

Thank you, Mr. Kimura. We have to hold off on questions just because of the procedures of this council. So we'll get back to that after we take public testimony. In the meantime, I'd like to ask for comments from the managing director, MD, in both your response to the report, which is included as exhibit A in the report itself, and then in several media interviews since. The administration states that it disagrees with certain findings within the report, but that it agrees with the recommendations and will start to implement those. Can you summarize for us the findings that you disagree with explain why and then maybe give us a quick summary as to what is currently happening to adopt the recommendations in the report.

Okay, thank you, Chair. Hello, everybody. I feel like this is really loud. Managing Director, Josiah Nishita, Managing Director at the County. And Chair, we also have a variety of resources here and online as well as resource people if additional questions come up or whatnot. First and foremost, I think I wanted to thank the County Auditor and his team, as well as Spire Hawaii. Spire was really great to work through throughout the process. We did have a couple of challenges along the way, primarily with physical disasters or emergencies that we had to deal with. And we really extend our appreciation to them for kind of working with us on some of the timelines and things of that nature to allow us to kind of address urgent matters and other issues at hand. I won't go through the response in its entirety, because I think it just kind of speaks for itself. And what the confusing piece might be for some people, and I apologize to this, is the response was based on a draft report from SPIRE, and some of the items within that have since been changed in the final assessment. So even when I was looking back over it the other day, it's kind of hard to piece together some of the stuff for a couple of the items just because some of the things may have changed since the draft report. In regards to, I think one of the maybe blessings in disguise for the county being a CDBGDR recipient is all of the additional protocols and policies and everything that had to been put in place in relation to that HUD and federal funding. And so what we've really been able to benefit from is a lot of external agency review and really honing down onto a whole variety of policies and procedures that impact primarily the CDBGDR funding, but we've been able to start identifying how some of those can be integrated into kind of normal county operations. So I think that's been a real big benefit and kind of blessing in disguise in that element. Obviously, as indicated, I think correctly by Spire, that the administration really does appreciate the recommendations provided. I think the way that we look at and I know this isn't an audit, but assessments or audits in general is what can we learn from it and how we can do better. Because really in everything that we do, I think there's always ways to improve and get better at. And Chair, I think in response to the question itself, I think for us it's less about maybe what we may or may not agree or disagree with in relation to the report. I think what's more important is how do we learn from it and how do we get better?

And I think that's really the most important piece of it.

I think the, as I said, I think the, you know, response speaks for itself, whether, you know, agree or disagree on that. But the various elements in relation to this, and I'm sorry, Chair, my computer for some reason is not working. So I don't have my notes in front of me, but the in relations to the the findings There are a variety of things I did mention the Work that's been ongoing with the CDB GDR program and how that can be applied and that goes to a variety of findings that were identified aspire was gracious enough to also provide us with Another counties policies in relation to like emergencies and other areas. And so we're able to kind of continue to glean from other counties on how things are handled, both what not to do and to do. There are a lot of opportunities, I think, that we've been able to implement with training for key personnel. I think the recommendations in the report I think have to be viewed as, maybe for lack of a better term, like kind of a phased approach that some recommendations will take longer than others to fully implement and may take different resources than other recommendations. One of the things that our finance director can expound on later too is, We are working on a RFP that's pretty close right now to continue to kind of, lack of a better term, beef up on internal controls and a lot of the findings and recommendations contained therein will be able to provide kind of additional assistance to departments and to the Department of Finance and the county as a whole in relation to kind of what's being scoped out in that endeavor. I'll just touch on a couple more items, because I don't want to take up all the time, but like with the countywide nepotism policy, we have been working with the Board of Ethics on that, and Chair, I understand that the great committee and staff has also been working with our Board of Ethics on lobbyist rules and the nepotism rules, and I believe, Chair, you're looking to schedule, I think at the end of next month, some further discussion on those items. So we look forward to kind of implementing some countywide policies, either improving policies or, in the case of the nepotism policy, instituting something that can be applied countywide. I think one of the areas identified was on screening applicants for fraud risk. We do have an effort already underway. The council previously helped us fund through Guidehouse, who's a selected vendor, for consideration of the centralizing of HR functions as well as updates to all our rules and policies and whatnot that go through the hiring process and whatnot. So those are being flagged for consideration and strengthening areas that may be needed. I guess the last thing I would just highlight for now, and then of course, myself and the rest of our team are here for any questions, is that there are areas too that would assist us in the implementation of any recommendations or findings. Some of them include, I think it was identified in the report about, the exclusion of council from various policies and that there is a gap or risk identified in that when council is exempted from a certain policy. So as we go through it, and I know I worked on the council, I think for about eight years. Honestly, I was shocked when I came over to the administration, how much extra steps and everything we have to do. So it would be really beneficial to make sure that we start kind of the process of evaluating that. And obviously there's some cases where it doesn't make sense or it can't apply, but in areas that it can, I think we agree with the Spire Hawaii on that we really should have countywide policies and procedures and whatnot that apply across both branches of government. And then, you know, We do have some items to that. I know that the council's been trying to make some movement on, including the review of, I think the county auditor mentioned regarding our former finance director and the accounts, and that would assist the administration as well and to be able to move forward in different areas. And then, of course, we really appreciate you folks continuing to provide resources, ideas, expertise, feedback, and then, of course, oversight over everything that we're doing with making sure that we maintain public trust and use of taxpayers' funds wisely. So, Chair, I think that would kind of be it for my kind of opening comments, and then, of course,

myself and the rest of our team are happy to address any questions as they come up thank you thank you md okay so i think that concludes our opening remarks at this time i'd like to um receive testimony for great five eight staff is there anybody signed up to testify thank you thank you chair the first individual assigned to testify is kanamu balindin okay So before we take that first testifier, let me read through the guidance for receiving testimony. Testifiers wanting to provide testimony should sign up in the lobby, join the online meeting via the Teams link, or call into the phone number noted on today's agenda. Written testimony is encouraged and can be submitted via the e-comment link at MauiCounty.us slash agendas as well. Under the Sunshine Law, the chair will receive oral testimony for agenda items as the item is called up. For individuals wishing to testify via Teams, please raise your hand by clicking the raise your hand button. If calling in, please follow the prompts via phone, star five to raise and lower your hand, star six to mute and unmute. Staff will add names to the testifier list in the order testifiers sign up or raise their hands. For those on Teams, staff will lower your hand once your name is added. Staff will then call the name you're logged in under or the last four digits of your phone number when it is your time to testify. At that time, staff will also enable your microphone and video. Please ensure your name appears in Microsoft Teams as the name you prefer to be referred to or as anonymous if you wish to testify anonymously. If you're in person, please notify staff that you would like to testify anonymously. Otherwise, please state your name for the record at the beginning of your testimony. Oral testimony is limited to three minutes per item. If you're still testifying beyond that time, I will kindly ask you to complete your testimony. Once you're done testifying, or if you do not wish to testify, you can also view our meeting on Akaku Channel 53, Facebook Live, or on maori-county.us slash agendas. We will do our best to take each person up in an orderly fashion. Now, staff, can you please call the first testifier?

Thank you, Chair. The first individual signed up to testify is Kanamu Balinbin, followed by Kaneali'i Williams.

Aloha. Thank you, Chair. Thank you, other council members, and thank you for the Fraud Assessment Update. It's great to learn that Fraud will be taken more seriously by the county and the steps involved to battle fraud in our county. I like to, I guess, talk about the nepotism law. I feel like right now that there's some people in their position because of who they know, and they have family members that are within the county. We're not gonna mention names right now, but I think we should take a look at some of the directors in certain positions. I'd like to also, you know, I'd like to thank you, Mr. Batangan, for the steps that you're taking at your previous meeting. And I hope those meetings are gonna get addressed today. But I just wanted to congratulate the people who did the fraud assessment and the county for taking the steps to, to fraud risk management. So thank you very much. That's all I have to say.

Thank you very much. Members, any questions for the testifier? Seeing none, staff, can you please call the next testifier?

Thank you, Chair. The next individual assigned to testify is Kane'a Lee Williams, followed by Lola Johnson.

Aloha, my name is Kanye Lee Williams. In the fraud risk assessment presentation, page 12 identifies that corruption is a top fraud type with an approximately 55% likelihood, and page 14 indicates that the Department of Finance is the highest ranked department with, quote, the greatest potential exposure to fraud risk, end quote. The Real Property Assessment Division is under the Department of Finance and controls the tax map key TMK system that produces property reports. It is important to understand that although a TMK property report identifies parties who pay taxes on a property, Paying taxes on a property does not equate to having a clear chain of title to an Elodio title, of which Elodio is defined as, quote, free, not holding of any lord or superior, owned without obligation of vassalage or fealty, the opposite of feudal, end quote. The Elodio titles are the royal patents that were awarded by the government of the kingdom of Hawaii and are the basis of land titles in Hawaii today. Therefore, paying taxes to the county of Maui on a given property and appearing on a TMK property report does not equate to ownership rights and or interest in a property held under a royal patent. I'd like to provide a tangible example of how the county property report for a TMK is a fraud risk on the part of the Department of Finance. In the county property report for TMK 227007008, the legal information section is completely absent of reference to Royal Patent 383 to Richard Armstrong and presents a misrepresentation of ownership to the property. This is despite the fact that Royal Patent 383 to Richard Armstrong is described under Appendix B, land grants, And on page 67 of the final kapalakai analysis for the proposed haiku fire station and related improvements Kuiaha'ahupua'a, Makauau District, Hamakualoa, Moku Island of Maui, Hawaii, 2025 report conducted by the Department of Fire and Public Safety. This is also despite the fact that the Hamakualoa, Haiku, and Pawella overlay map created by the County of Maui using historic maps from the time of the Kingdom of Hawaii prior to 1893 and publicly accessible on the County of Maui East Maui water authority website, correctly labels Royal Patent 383R Armstrong for the Ahupua'a of Note that on page 14 of the fraud risk assessment presentation indicates the Maui County community water authorities as ranked lowest for potential exposure to fraud risk. So a juxtaposition to the Department of Finance. These facts coupled with the fact that through responses to uniform information practices, public records requests previously provided at the June 5th, 2026 regular Maui County Council meeting, the Department of Finance, Department of Fire and Public Safety, Department of Planning and Department of Corporation Council have all admitted to not possessing any records showing The county of Maui having a clear chain of title to Royal Patent 383 to Richard Armstrong within TMK 227007008. The totality of these circumstances underscore the information provided in the fraud risk assessment presentation that identifies the Department of Finance as being the department with the greatest potential exposure to fraud risk. They should be taken into great consideration with regards to future decision making on bills 89, 90, and 91, among other fraud risks concerning other departments that are relevant to those bills, which individually and collectively constitute fraud offenses against property rights. A fraud offense against property rights is a class B felony pursuant to HRS 708-835.65. I'm Paul. Okay.

Members, any questions for the testifier? Seeing none, thank you, Mr. Williams.

And then I also have a, I sent my testimony and exhibits via email to everybody, so, and then also provide the physical copies.

Thank you.

Mahalo.

Staff, can you please call the next testifier? Okay. Thank you, Chair. The next testifier is Lola Johnson, followed by Christopher Salem.

Aloha, chair and county council members. It's me again, Lala Johnson of Waiehu. Mahalo for the opportunity to testify on the County of Maui Fraud Risk Assessment. In 2023, the Hawaii legislature enacted HRS 708-835.65 to strengthen public trust. transparency and accountability in government. That same purpose is reflected in this fraud risk assessment. This report is not simply about detecting fraud after it occurs, it is about building systems that prevent it before public trust is lost. The report identifies the Department of Finance as one of the departments with the greatest potential exposure to fraud risk. It also recognizes that the fraud risk increases when internal controls are weak, documentation is inconsistent, and oversight is insufficient. Most importantly, the report notes that the county lack of controls specifically designed to mitigate fraud risk when procurement laws are suspended during emergency proclamations. As I reviewed the proposed 2027 budget, I noticed that approximately $1.09 million is proposed to AGN LLC through a new grant division for clean and safe programs. I am not here to question any particular recipient. My concern is whether the county's internal controls are keeping pace with new funding structures. When public funds are distributed through a new grants program, the questions raised by this fraud risk assessment becomes especially important. What criteria were used to select recipients? What measurable performance standards will determine success? How will conflicts of interest be reviewed? How will the public know that taxpayer funds are achieving their intended purpose? If services resemble security, Outreach or public safety are funded through grants rather than traditional procurement. How does a county ensure the same level of transparency and accountability? These questions extend beyond funding. Through multiple public records requests, I have sought documentation concerning land ownership and historical records. Those responses have led me to ask how the county verifies documentation before making decisions involving public resources. Strong internal controls should protect not only public money but also public confidence in decisions involving land and the communities affected by these decisions. Yesterday, I also learned about a proposed safe parking lot pilot program that may utilize private property and involve agent security as a resource. As someone who experienced displacement during the Kekahua sweep, and agent security being part of it, I know that trust cannot simply be assumed. Programs intended to serve people experiencing homelessness must be built on transparency, accountability, and meaningful community engagement. I respectfully ask this committee to use their recommendations in this fraud risk assessment to strengthen oversight of grants, procurement, land-related decision-making, and future county partnerships. Public trust is earned when county decisions are transparent, documented, and accountable. Mahalo for your time and consideration.

Thank you, Ms. Johnson. Members, any questions for the testifier? Seeing that, staff, can I ask that the record be updated to reflect that her first name is Lala rather than Lola? Thank you. Thank you.

Next testifier, please. Thank you, Chair. The next testifier is Christopher Salem, followed by Sam Small.

Good afternoon, Chair and members of the Great Committee. The SPIRE report concludes the county lacks a countywide process for reporting, investigating, and responding to fraud. I believe that conclusion should be revisited by this Great Committee, and here is why. On the official county website, the Office of the County Auditor publicly states, the Office of the County Auditor adheres to very rigorous and demanding professional auditing requirements as described in the generally accepted government auditing standards. These are commonly known as Gagas or the Yellow Book. The website further states that these standards provide a framework for conducting audits with competence, integrity, objectivity, and most relevant, independence. The Yellow Book is clear. Under the 2018 Government Auditing Standards, Chapter 8, Auditors performing audits are required to assess the risk of fraud, remain alert for the indicators of fraud through the audit, and respond appropriately when information indicates fraud may have occurred. So I bring to your attention a letter from County Auditor Lance Taguchi to the Director of Public Works. In that letter, auditor Cousy cites the same gag as standards, government auditing standards, as the required standards to justify suspending an audit of thousands of roadway infrastructure deferral agreements executed by corporation council. Did the auditor ever investigate the allegations of fraud? So here's where it gets real disturbing. The county auditor requested from this council $150,000 in public funds for legal fees for an attorney to defend a RICO complaint against him personally and professionally. Once again, Corporation Counsel was deemed to have a conflict of interest. They recommended that her attorneys be hired that just by chance already are representing Corporation Counsel and the county in related legal matters. Was the council informed in writing of the numerous conflicts? so that them as the clients could object. But here's the most concerning discovery. A September 25th letter that we just received that was submitted by outside legal counsel to the RICO investigator states, neither Mr. Takushi nor his office was required to conduct their activities in compliance with Gagas, the government auditing standards referenced on the county's official website. which do not automatically apply in the absence of a separate legal or regulatory requirement to do so. Has anybody read these letters from this council? Which speaks to last week, which we sincerely appreciate, Chair. And I'll wrap this up. Is this Maui County Council being kept out of these communications from special counsel? Are they actually anyone being able to review these things they're saying to government investigations? I did a UIP request to the council. There's no record that this special council involves any of you.

Mr. Salem, can you please conclude? That's disturbing.

Thank you so much for your time. There's more to be said, but I'll let that come to the other testifiers.

Thank you for your testimony. Members, any questions? Seeing none, staff, can you please call the next testifier?

Mahalo, Chair. The next testifier is Sam Small.

Hi, can you hear me? Thank you. As always, it's an honor to be participating in this process. Last week, you confronted something that no council has been willing to do before. Corp Council's oft-repeated claim that a firewall or silo protects the citizens from conflicts of interest has never been true. For years, that lie allowed Corp Council to say one thing and do another.

Mr. Small, can you please keep your testimony germane to today's agenda?

It is, it will be, and you will see. Thank you. Thank you for having the courage to open that Pandora's box. The Spire Report identifies real problems and concludes that they're insufficient mechanisms to prevent and investigate fraud. Respectfully, that's not entirely true. The most important anti-fraud mechanism does exist. The Charter gives you the authority from time to time to initiate forensic investigations into any subject that comes before you. The problem has never been lack of authority. It's been lack of political will or obstruction. What really killed the investigation into how Greg Brown got an SMA exemption he never qualified for? Does anyone for a second believe that court counsel actually investigated anything? Last week, your handler characterized Ms. Leader's role as just appointment setting. Her own testimony that outside report was not complete until she said it was shows you that Corp. Counsel misrepresented to you, and not for the first time. We know you were lied to regarding the remaining claims in Chris Salem's whistleblower case because Judge Drew agreed that the settlement submitted to the court was inaccurate and offered to set a second conference. I'm going to go deeper for a second, but it is relevant to this hearing. at the board of ethics with caleb rowe advising the county auditor lance taguchi appeared with outside attorney david nakamura mr nakamura went beyond representing the auditor in his private capacity without being procured by the county nakamura represented that it was the county's position that because Corp Council serves as legal representative to all agencies, that the auditor was required to consult with Corp Council during his deferral agreement audit, agreements that Corp Council itself authored. Think about it. The office being scrutinized was permitted to influence not litigation, but rather to preempt the independent audit of its own work, which could lead to litigation. Isn't that exactly the conflict that you recognized last week? One more step, please, and then I'm done. The auditor said the Yellow Book rules required him to suspend the deferral agreement audit because out of thousands, one single agreement was tied to Chris Salem's whistleblower case. Would it surprise you that at the heart of that controversy is a set of private warranty deeds which, after the fact and in the dark, expanded the three-lot agreement to now include five lots, with no county approval to amend the prior government agreement? Would it surprise you that the attorney who recorded those deeds was the same David Nakamura, who Caleb Rowe allowed to represent the county's position with no authority to do so? The Spires report is a call to action. The tools do exist. Does this council have the political will to use them? Thank you.

Thank you. Members, any questions for the testifier?

Seeing none, next testifier, please. Thank you, Chair. The next testifier is representing the royal patented kingdom of the entire country, , followed by James Langford.

Aloha. Mahalo. Yeah. Representing the kingdom of Hawaii, and my greatest concern about this topic, about fraud and everything like that is the decision-making that is happening on Royal patented, Elodio titled lands, because, um, it's all fraud. Like, like everything that the state of Hawaii is doing and every single, um, every single branch, every single, um, of you guys is, uh, what is that called, workers or whatever. Yeah, it's all fraud. That's why, where is the treaty? There's no treaty of annexation, mainly. So everything that is being decided and happening and built on and everything like that in Hawaii is all pretty much fraud and illegal. So will there, will it, so yeah, like what is gonna happen? um and yeah this is all this is a royal patented allodial titled kingdom and it is still being illegally or people are making decisions illegally anyway on top of these lands and is literally pushing out the people of these lands literally and um Yeah, please return the Royal Patented Allodio Title lands to the specific descendants of the Royal Patents. Because there's, like Brada said earlier, there's a frauded Royal Patent that is being used by Armstrong or whoever they had the Royal Patent for. No, okay, the thing is, Haole's had Royal Patent grants, but it was fee simple so when they die and when they muck it it reverts back to the kingdom or either that or you gotta find the freaking person who is a real title holder of that land and if anything it's the crown's land period of the king anyway but um And it's being illegally or, and you guys are making illegal decisions on the Crown lands also, not only just the regular Royal patented lands. And that's like, that's a great concern, a very great concern because the people that are, there's people literally displaced and how are they being displaced when Yeah, I don't know. It's just really scary and really crazy to me. But yeah, mahalo for hearing me. Mahalo.

Thank you for the testimony. Members, any clarifying questions? Member Paulton.

I just wanted to clarify one other minor. I just walked in the house. And then I guess for Mr. Kohawa'i Pai'aina, just clarifying, you wanted to know why the fraud risk assessment didn't address the illegal occupation of the Kingdom of Hawai'i?

I don't think I read everything, but why did it? I don't know. Yeah, I don't think I read anything, but I was just saying like in relations to fraud. Yeah.

Oh, okay. Thank you.

Thank you, Member Paulton. Thank you, Mr. Pai-Aina.

Next testifier. Thank you, Chair. The next and final individual to testify is James Langford.

Sorry, I just got the giggles. Aloha, everyone. Thank you for the opportunity to be here and participate. I feel very blessed. I just wanted to get on the record. I wrote 74 grants. that align with the CDBG and a whole host of other grants that the county needs. It's a letter to the Office of Recovery in response to an RFP dated April 28th, how it relates to the fraud, et cetera. I don't know if you guys got this. So just getting in on the record for y'all so you can hopefully work. with me someday. This one is a regenerative sovereignty global framework and the grants that back it up. This is a recovery program. Community Development Block Grant, Disaster Recovery HUD, CDBGDR, Hawaii Disaster Recovery Program Grant. FEMA, BERC, B-I-B-R-I-C, Federal Year 2026, Building Resilient Infrastructure for Communities, Maui'ahupua'a Resilience Network. United States Department of Agricultural Rural Business Development Grant, RD. our BDG program, subpart B. I'll give it to you folks, I don't have 13 copies. Maui Farm Box Rural Enterprise Initiative. the Hualani Community Resilience Center, Maui'ahupua'a Facilities Network, United States Department of Agriculture Rural Development Community Facilities Direct Loan Grant Program, United States Department of Energy, Rural Energy for America Program REAP, federal year 2026, the Marn Solar Resilience Network, Mahi Ahupua'a Regenerative Network, solar power containerized agricultural and rural energy resilience. Can I give this to staff or what's the best for that? I'd like to just submit it right over here, thanks.

Thank you. Members, any questions for the testifier? Seeing none, staff?

Mahalo, Chair. There is currently no one else who has signed up to testify. Can you please do a last count? If there is anyone in the audience or on teams that would like to testify, please come up to the podium and begin your testimony or use the raise your hand function on teams and staff will unmute you. This is your final call to testify. Three, two, one. Chair, there's no one that has indicated they are willing to testify.

Thank you. Members, seeing as there are no more individuals wishing to testify, without objection, I will now close oral testimony on this item. Thank you. As a reminder, written testimony will continue to be accepted. Okay, can I ask our research personnel to make their way down to the floor for discussion? We have with us Spire, as well as representatives from Management, MEMA, Finance, and Water. At least those are the ones that I had invited, just because I thought the topics of discussion that would be of most interest to the body would be related to policies and procedures for reporting and investigating fraud, the direct pay issue, and then procurement during when during an emergency situation when procurement laws are suspended. But MD, I think you mentioned that there are other resources available online. Is that correct?

Thank you, Chair. Yeah, we do have some people available online and in the audience here, but maybe for now we'll just keep who you asked to be here, and then if questions arise, we'll call them down. We'll ask for consideration.

Okay.

Thank you.

members as a reminder this is a 7b so there's not gonna be decision-making today I'm gonna propose two rounds of questions the first one three round are three minutes each we can you know kind of decide how long that second one's gonna be and then I'd like to open up the floor for discussion on how to proceed I think there's a couple options before us on implementing some of the recommendations. But I do think that the conversation we have with the consultants, with the auditors, and with the administration will help guide our decision making. So I'd like us all to have that opportunity to ask questions first. I'm gonna propose we start with Vice Chair Uhu Hodgins and then work our way that way first. So we'll go Member Uhu Hodgins, then Senanci. I'd like to then take a 10 minute break before we continue back around and finish up our first round of questions. Does that work for everybody? Okay. Staff, did I recognize all of the personnel that I needed to? Okay. So Member Uhu Hodgins, three minutes.

Thank you. Thank you everyone for being with us. I'll probably just ask just one question and it might take up our three minutes. But as far as emergency procurement goes, where do we find the balance of doing and buying things expeditiously and then following what we normally have as standard procurement code. So we don't really have the luxury of time, obviously, in an emergency. So what changes are we going to do and how can we find our balance to ensure that we're being safe?

So one of the things I'd like to say in that regard is that NEMA has contracted Tetra Tech to assist us with pre-position contracts. We have a number of contracts that we're working on identifying vendors, vendors identifying reasonable pay for those services, as well as common services that typically we call upon in an emergency, like security, like alternate power, and those kinds of things. That's what we are working on, and that would be one measure to help us to be responsible in that regard.

Managing Director, can I hear from you as well? Because I mean obviously we just heard from the Administrator for MEMA, but all the other departments also have emergency procurement processes that maybe we can hear about. And then no different than like we have a standard selection for people for Corp Council who does our special counsel, do we have like a standard of people that we go to during an emergency procurement that we typically work with that kind of abide by our rules anyway, who could maybe provide us some after the fact information considering we're in an emergency?

Thank you, Chair. And I'll let the Director of Finance expound a little bit more after I'm done. But kind of getting to, I think, your last point there is what the Administrator was addressing is in relation to essentially doing procurements ahead of time in anticipation that we're just going to have an emergency at some point or another. So I think that's a really critical mechanism to, you know, maybe at least for what we can forecast or potentially plan for, we can be prepared. But undoubtedly in every emergency, even if we do, you know, we're able to secure a bunch of pre-positioned contracts, we're going to face situations where, you know, all of a sudden now we need a gas pump or, you know, something that just was completely unforeseen. You know, each emergency requires kind of a different level of and or a different level of, I guess, consideration for waiver of existing requirements, something immediate and urgent, such as like maybe the August 8th, 2023 wildfires, require a different level of kind of, I guess, waiver consideration of normal procurement rules than maybe like an approaching tsunami or an approaching hurricane before it comes won't be as imminent because there's not kind of that public health and safety thing that has already occurred. So I would just note from what the, some of the recommendations in the SPIRE report, included communication with the governor's office, discussion about maybe removing provisions when the disaster is no longer needed, or I guess a disaster proclamation is no longer needed. We do cover it in the report or in our, I guess, assessment back, but the... In emergencies, I mean, in most cases, it's going to end up flowing through the My Emergency Management Agency. And in at least our recent memory, we've also had to then, because it become federally disaster declared disasters, We have additional extra layers of scrutiny that happened at both the state level and the federal level for reimbursement requests, as well as just what happened and what was spent on what. The additional measures, including training, education, tightening up policies, are all important as well. But as I mentioned earlier, SPIRE did provide some information about another county on maybe some of the things that they consider and look at, and so we are evaluating that. And in relation to the comment about the governor's office, we are in close coordination with every disaster with the governor's office and the state attorney general's office, including when provisions that the governor has provided as a part of the EPA is no longer needed. Some of the considerations to include is that other counties or other agencies including the state may still need provisions in place and or may just narrow the scope of the proclamation or what's allowed in there and so we support that and even if An emergency proclamation is still in place for a waiver of 103 D or other provisions once we get out of kind of that emergency piece of it then additional normal protocols and emergency protocols and everything kind of continue to fall into place. But I'll defer to our finance director on additional information regarding that. Thank you.

Thank you. I just wanted to reiterate what Managing Director said, that while procurement code is suspended, most county emergency procurements are still conducted under HRS 103D-307, which is a structured emergency procurement method and different from procurements made directly under an emergency proclamation.

Thank you, Vice Chair. Staff, it seems like we may need to extend these question periods. Can we give members and NC five minutes? And then we will take our break.

My question was kind of on the same lines as member Uhajan's during emergency proclamations. I know the finance director mentioned the HRS for emergency procurements. What would be the HRS for I guess, emergency proclamations. I know during this time, particularly during the wildfires, suspended a lot of the council's ability or the power of the purse. So are there any, I guess, avenues that would keep us guess informed of maybe the spending during an emergency proclamation or how does it come back to us so that we can you know continue to balance the budget i know it's a it's a big question but if anybody can address quickly thank you

Thank you, Chair, and I'll try to be briefer. It might be my fault on the time. So to try to be brief, most of the emergencies, when they occur, of course, there's different circumstances in each, but in most emergencies, departments have to immediately kind of outlay funding. and that's out of their own program budgets. So I wouldn't say that the council's, I guess, authority or anything was suspended, because you still provided the program budget component of that. But we will come back to the council. We have recently asked for emergency funding to kind of refill those coffers so that we can continue to do the normal work that council budgeted previously. And then generally at that time, that's when additional questions come up from the council about, okay, what was spent and why was this needed? That's not to say that the administration is not open to additional ways that maybe the additional communication or collaboration or whatnot could occur. I think the only consideration we would ask is that, depending on the emergency, there might be, the need for people to take on multiple tasks at all at the same time to kind of respond to the public health and safety crisis. So, um, to the extent that we can balance that with, you know, the need for immediate information and whatnot, I think that's all we had asked, but we're definitely open to, um, you know, more communication or collaboration as the council sees appropriate. Thank you.

Follow managing director. And then are there any, uh, guess guidelines in place during an emergency proclamation that would kind of keep the administration from, I guess, risk of fraud?

Thank you, Chair. So I think, I mean, one way to look at this question is that everything, you know, even in the most sophisticated programs, there's still risk. And so it's balancing that risk with the need for kind of the immediate attention to the matter. I think some of the measures that we're already working on putting in place I think are gonna help mitigate a lot of that risk, but one kind of maybe similarity you can draw from is when we had the safe harbor period for people sheltering during the wildfires, and we immediately sheltered people for 45 days under safe harbor provision, So you could institute very stringent kind of risk mitigation measures, but then you're gonna displace a significant amount of people who actually need assistance while, you know, if you do that over time through a safe harboring period, you have some risk, but you also have a backend kind of catch to it. So it's kind of a risk harm reduction kind of calculation that has to be made. But like I said, the protocols and pre-position contracts and things like that can all help mitigate that. And an important component of kind of, fraud risk assessment and activities in relation to that is going to be, do you hold people accountable at the end as well? And the fraud policies, yes, prevention is extremely important. I forget the saying, whatever an ounce is worth more than a pound of cure or something like that. So undoubtedly fraud prevention has been drawn out as a part of this assessment and we agree with that and taking the recommendations to heart. But I think what's also equally important is having the processes in place to identify fraud that may have occurred or potentially occurred, having the processes to investigate and then ultimately hold people accountable. And so, oh, I'm searching. Okay. I thought maybe I was going too long. You adjourned the meeting already.

Thank you, chair.

Thank you, sir. I guess that's, that's what I would add for right now. Thank you.

Call of my members. I have no idea what I just kicked. Um, yes. But thank you for that, and I appreciate the discussion from the administration and from the members. It is now 2.48, or 2.49 now. Let's come back at three o'clock. This meeting is now in recess. Will the great committee meeting please come back to order? It is now 3.02 p.m. I believe we just finished member senancy, so now we are on to Chair Lee.

Thank you, Chair. I'm gonna give my time to you because for me, all I hear is general comments. So until we get to more specific information, how can we develop or propose policy? So we need to know where the mistakes were made and what are the mistakes. so we can prevent them in the future.

I have a question to that effect.

Okay, good. I'll give you my time, thanks.

Thanks, Chair. Okay, so I guess I have questions for finance and water. Members, I'm in attachment D on the departmental summaries. I see two instances of fraud or potential fraud, one in finance on page 51. There's reference to an undocumented instance of management override related to a county financial policy. This one's PCAR related. Then on page 58 under Department of Water Supply, there's a finding of 6,223 direct pay transactions for a total of $21 million worth of goods and services procured outside of the county financial policy. So I guess those are where I would direct my questions given the interest of Chair Lee. Finance Director, can you talk about when the department authorizes exemptions from county financial policies? We don't need to get into the specifics of this case, but I am interested in when the department authorizes exemptions from our policies and what we can do to better ensure document those instances and give guidance for when they're appropriate.

Thank you, Chair. So with regards to the P-card, transactions don't go undocumented and P-card users aren't undocumented. However, there are cases with the P-card or with travel where, you know, inadvertently, it's usually newer employees. don't follow policy or don't understand the policy. And so we can provide training rather than more of a disciplinary action. Usually with those types of, I wouldn't call them exemptions but training opportunities, myself or Josiah would sign off and then of course we would provide training to the employee.

Thank you, but I don't think the report is saying that there is an undocumented use of the P card. I think it's saying that there is an undocumented instance of a management override for the county policy. So are those instances being documented? And if so, when or is there guidance of when exemptions to the county financial policies are permitted?

Well, I'm not sure what happened in this case, but management does have the authority to remove the P-card if the policy is not being followed. And we do do that, but in some cases, we might provide training instead. So I can't speak to this specific incident.

Yeah, and I don't think we need to speak to the specific incident, but I do think what would be of interest to this body is ensuring that there are policies in place so that there's guidance on when we can do a management override and that there's documentation for those instances. Can I move on to the direct pay question now? So my understanding is that all of our procurement protections are in place for purchase orders or RFPs and that the direct pay system is used when there needs to be some kind of like you need to purchase something quickly or I don't know what the explanation given from the department is for when it's necessary, but it seems like the protections in place are being circumvented through this direct pay system and 6,223 transactions through this seems problematic. Can you speak to what the department is doing to ensure that procurement policies are being followed? or what policies need to be shored up to ensure that the fraud protection is being utilized?

Thank you, Chair. I'm gonna let, so Mark Pigou, our fiscal officer for the department, is online, and he can address that question better than I can.

Mark Pagal, acting fiscal officer for the Department of Water Supply. Just to provide some clarification, the assessment did indicate that $21 million of direct pay. However, I do want to clarify that almost $17 million is related to utilities, whether it's electric or telephone. So the remaining $5 million, we would consider that as direct pay. We define direct pay as any disbursements not attached necessarily to a purchase order or a contract.

Shouldn't the purchase of utilities be done through purchase order? If all of the county fraud protections are in place through purchase orders or RFPs, shouldn't when you said all but five million so that's what 16 million dollars worth of utilities being procured shouldn't they be done through a purchase order or an rfp 16 million is for electricity that i believe is an acceptable direct pay avenue I guess that's kind of what the committee's trying to get at, is it? Because all of the protections for fraud are built into purchasing order, for purchase orders, P cards, RFPs, and the direct pay system circumvents all of that. Maybe you're correct in that the purchase of utilities is an acceptable use, but that doesn't, the explanation for how direct pay is used and when it's appropriate given by the department doesn't match what you're telling me now. I'd also like to note that the managing director's response to this direct pay question. In his letter, he says that the responsibility for oversight is very clear, but the responses I got from the committee or from the departments themselves during budget contradicts what managing director had said in his letter. I asked both departments when they came before us because of this audit report, who is responsible for fiscal oversight of Department of Water's transactions, specifically related to direct pay? And Deputy Director Maria Zelenci gave one answer, saying that water is responsible for independently overseeing their their purchases and then water responded by saying that finance is responsible for overseeing that so I guess what I'm asking is there seems to be some confusion that was documented in the report it was again reaffirmed during our Budget Committee hearings that contradicts the response from the administration I would like some clarity as to what the process currently is and what the process should be. But I hear the time and we'll let you guys noodle on that before we, unless Deputy Director wants to give a response now. If not, I'll let you noodle on it and come back, because I still have questions on this.

Okay, so what I said was true before, that the department is responsible for all their transactions, right? We need to take responsibility for whatever transaction is made. I don't get to see every single transaction. I do a lot of the signing on a direct pay, so what usually happens with that is the direct pay, it kinda not goes around the requisition process, but it usually happens if there's an emergency. So say we're out in a well pump, we need a part, and we're not gonna take the time to process the requisition, so what will happen is they will just buy the part from an approved vendor, they will get the part, and then the requisition will come and it will say direct pay because of such and such, we had to replace the PLC on the well so that we could get it to run. That's kinda how we do that.

Yeah, I guess, so I hear what you're saying and how it's supposed to work. I just don't see that as what's happening, given that the vast majority of procurement through the department is the direct pay system, and I don't see utilities, say electricity, as an emergency procurement. These are like normal operating expenses that should be done through the systems that we have, which allow for- Your time went off a long time ago. Which allow for fraud oversight.

Okay, I'm not sure, but so when we get the electric bill, we just pay it, right? That's kind of what it is, right? So I don't know if we actually have to make a requisition, but because we already have an account, we just keep paying the account, so I guess that's considered direct pay.

Okay, thank you. I hear that the time has gone on. Member Sugimura.

So it sounds like you're going good, so why don't you take my time? Are you done?

No, but I recognize that I am not the only member of this body and that there are others. I also want to note that member Johnson has to leave. So after you, I will go to him.

Okay. So auditor, I guess I'm grateful that you did this report. And if you could talk about your hotline and is it in place and can people call and or all the departments working with you, what's happening with that? Please.

You know, real briefly, sorry, Scott Kaneshina, Senior Manager. You know, the hotline is something we undertook based on some preliminary work that we saw Spire seeing. We're running it. A third party is receiving this stuff and processing it, and we're gonna triage it. We're starting to develop relationships with other good governance bodies, you know, prosecutors, board of ethics, other people. to see where everyone's yard is. And we're gonna try to work together to try to get stuff processed faster. But like Lance, Mr. Toguchi said, it just went live today. So I don't really have a lot of benchmarking yet. But perhaps in the future, we can give you a better detailed discussion of its effectiveness. That's all we have for today.

Can you share the number? Or can you share more information? how to get to you?

Yeah, we can hand out, I think Ms. Sakamoto has copies of the flyer that we can hand out to you guys later. I think she made enough copies, so yeah.

Okay, but these are employees can call you, right? It's not like the general public. Oh, it can be anybody. It can be anybody?

Yeah, because it concerns, you know, not only employees, but also like vendors too, right? So, you know, sometimes there's a concern whether or not a and it's hypothetical, a procurement was done fairly. If you're on the wrong side of that deal, you might wanna say something. So that's why we allow it open to other people.

Okay, so it's a general number.

Yeah, so it's a general number, and there's also a website that they can go on. You can call the operator there to triage it, to ask you questions, and there's also a web-based pull-down menu where you can report exactly where it occurred and whatever information you feel comfortable submitting. You can make the complaint anonymous if you want. But like I said, we just turned it on today. So we don't have any numbers to give you right now. But maybe in the future, we can have a bigger discussion.

Okay, Director looks like he wants to say something.

Thanks, Scott. The one thing I wanna point out, and just so that you have a clear understanding. The reason why I brought this to your attention today is because it's an example of using this tool, which is a fraud risk assessment, to move forward and direct our attention to areas that need our attention. I mean, it's an example of where we can get better. It's an example where we can do something to address this, but the tool that allowed us to focus on this was our discussions during the fraud risk assessment, but rather than wait for the final report, we decided to move. And it's just an example, and I think the administration, I'm hoping that the administration will take this tool and do the same thing, to focus your attention where it needs to be focused. But that's the reason why I included it in my opening remarks.

Very good. We will start referring people to you then. when appropriate. Thank you very much. So I will defer then to Member Johnson. I just want to ask that one question.

Thank you, Member Sugimura. Member Paulton, do you mind if Member Johnson goes before you in order since he has a time constraint?

I don't mind if you don't forget me. We can never forget you.

If I do, please remind me.

Okay.

Okay, Member Johnson. Thank you, Council Member Paul, and thank you, Chair. I appreciate the work that was done by your department, Mr. Toguchi. There was a lot of things that stood out to me in the report. The first one, it's in like the very first paragraph. This report was because of incidents involving county employees. It didn't mention it was because of grant writers and yet our grant or grantees, because a lot of our grantees have been getting hit in the head with a hammer by some of these administrators and decisions. I think the other thing that jumped out to me was that we do screen job applicants for fraud and risk in certain departments, police being one of them. Another one, Parks and Rec, which was surprising to me. Why Parks and Rec, but okay. That's because of maybe it's reactive, right? So having the reactive shows, well, then, maybe we should be proactive. The other thing, and this is where I wanna talk a little bit about, was the survey that you gave the electeds and the surveys that you gave the department heads. 86% of electeds said there's a medium risk for fraud and abuse, and 95% of department heads said there's a very low risk for fraud and abuse. I'm really curious of why we're so disconnected because in my world, we're in the great committee executive session after executive session i see the press i hear the stories and then it seems that in the administration's very low risk i want to find where where i feel that if i do i do agree with 86 is is about right for me uh i feel that it's a medium risk but i'm it seems the department seems a low risk can we talk a little bit about why is it's not overall on the same page

I guess I'll ask the consultants to chime in on that since the other one who collected the data may be able to speak to it with the most context.

Sure. Thank you. Thank you, Member Johnson, for the question. Yeah, it is a question and I think That is why we highlighted it in our presentation to show that there was a disconnect. Now, I can't get into the heads of the department heads as to why they answered that when we did pass out the survey. It could be just a matter of how they perceive their individual departments. Their viewpoint may have been narrower than the elected officials who are taking a look countywide. um that's again you know that's just an assumption based on us receiving the data um and how they may have responded um but again i also don't want to put you know words or thoughts in their heads as well but you know across the board that was that was the um response rate right 19 out of the 20 um responded that there was a low risk

Okay. Anyone else? Otherwise, I'll move on. Okay. Mr. Nishina mentioned that he uses, is it GuideHouse? Am I saying that right? What's the cost and is it enough to continue? Is it called GuideHouse? Did I say that correctly? Yes.

Okay. Thank you, Chair. Thank you, Council Member Johnson, for the question. I don't recall the exact cost offhand. I can get you that back in writing following the meeting. But the council members will be interviewed at some point here in the near future for kind of your input and whatnot into changes to rules and policies in relation to that. And yes, we did ask for funding in FY27 to continue that project and the council was gracious enough to approve that as well.

So on page 17, the recommendations, one of the recommendations is the GAO and the COSO, I assume those are professional organizations, internal control systems, like funding internal control system. Basically, it seems like you want to have a standard on how you go about looking for fraud and abuse. I wonder how much that would cost to do something like that. And again, we're in control of the purse strings. This is something I think we could help you with.

Thank you, Chair. Thank you, Council Member Johnson, for the question. I'll let Director of Finance elaborate too on the RFP that's being done in relation to that. But even prior to us receiving the draft report, due to our work in the HUD realm with our CDBGDR funds, we had already been reviewing the GAO and COSO frameworks and a lot of the COSO kind of frameworks in relation to that are built into our DR programs. So it's why we also agree with the recommendation because there's lots of ways that we can identify areas of improvement. And I'll let Director of Finance talk to the RFP. Director.

Thank you. So in response to the SPIRE report, just like the county auditor, the finance department requested $125,000 in fiscal 27 and it was approved. Thank you. And so we have drafted the RFP and we're waiting for the fiscal year to begin. So it should be solicited in the first few weeks of July. And we're expounding on what the SPIRE report presented. And in addition, it will include countywide training. So that's where we're starting.

Okay, I'd love to learn I heard the bell chairs and I want to respect time I'd love to learn more when that as that process continues Maybe that could be a question we could ask your department when it's finished Let us know and maybe the chair one of us could pick up that in a committee Thank You chair Thank You member Johnson Thank You director I did not forget number Bolton

Thank you, Chair. Thank you, everybody over there. I like to hear about the pre-positioned contracts. Was DPS one of the departments that you invited?

I did not, no. Josiah, is anybody from DPS on standby? I know you had resources that I did not request that are here.

Thank you, Chair. No, the only resources we requested separate from what was requested by the committee was in relation to supporting the agencies that you requested. Thank you. Okay.

If you have that, we got to put it in writing.

Yeah, because they were the owner of several of the things pointed out by Mr. Kimura's company. So that's why I was asking. But Mr. Kimura, when it says that in many of the sections that the department did not fully respond to your requests, how did that affect your ability to give us an accurate report? I assume we paid you money for this, so did that make us waste our money if the departments didn't fully respond? And then departments that aren't under, say, the managing director's jurisdiction, like personnel or police that didn't fully respond, what is the consequences to that? Was that brought up to the commissions that oversee them? Some of my questions to start off with. Also, Since you said that a lot of people that participate in fraud may not have a criminal record, what exactly were you looking for in the background checks? Like, I imagine police, you know, it's for criminal activity, for parks and rec, it's, you know, they deal with kids and things like that. So if majority of the people don't have criminal records, what type of things... should they be looking for? And I guess, is there additional cost if personnel is already doing these background checks to expand them? I mean, they don't hire anyone in under 180 days most times anyway, so I think they would have time to do the background checks. But those are some of my questions to start off with.

Mr. Kimura. Thank you, Council Member Poulton. First, so related to the departments that did not respond. This was a comprehensive effort. We tried to touch and get information from the 20 departments. We sent emails. Well, first we had a kickoff meeting with the mayor's cabinet. We came in person. We talked about the scope of the risk assessment. And I believe all department heads or at least the representative were in attendance or got information about that kickoff meeting. Subsequent to that, we submitted numerous document requests. And once we got those documents returned to us, we issued either follow-up or interview requests. And so throughout that process, yeah, about four departments, you know, either provided limited information or we weren't ultimately able to schedule an interview. And this was after many attempts to try to get those interviews scheduled. You know, follow-ups via email, calling the office and whatnot. And so the effort was there to try to make sure that we could provide as comprehensive and like the title of the project is, countywide. Now, certainly without some of the responses and information, yeah, there are gaps, right? And we tried to address them, at least by identifying where we were not able to get information. But I think at the same time, we had to move on and provide a report based on the best available information that we did receive.

Thank you so much. That being said, I'll move on. Mr. Nishita, I know personnel and police aren't directly under your jurisdiction. Was it brought up to the commissions overseeing them that were trying to do this very serious fraud risk assessment that we're paying money for, and why were they not cooperative? Department of Planning, I think, is under your direct purview. Parks and Rec. Has any accountability been had with these various departments that did not participate in this very important fraud risk assessment?

Thank you, Chair. Thank you, Council Member Poulton, for the questions. I guess to one part of your question, when the, I guess before the, you know, we're kind of at the process we're here today and the initial response to the draft report. To my knowledge anyway, it wasn't disclosed to the administration who was not maybe participating or not communicating well. If that occurred, then I apologize, but I'm not aware of that being disclosed to us prior. We did have a situation very early on when initial outreach was being conducted where there was a variety of entities who it was identified to us were not, I guess, getting back in emails or whatever. And what we did identify at that time was that there were a number of individuals where, for instance, the email address was incorrect. So there might have been, you know, the wrong kind of ending to it or like for Kaponowai, for example, under his email, it's his legal name. So it's john.molitao. And so, you know, there were situations like that that was identified to us. in the beginning, I think in the initial stages. And then it's identified in our response letter, but that, you know, I guess during the process, I think we would have appreciated being notified or whatnot that it was hard to reach certain people and we could have identified why. I did look into a few of the matters following. I guess I received conflicting information regarding that and emails in relation to trying to schedule interviews and at least from the evidence that was provided that there was no response to it. But regardless of the fact, I think it's clear that Aspire did make attempts and for whatever reason or another,

mr nishi okay we don't need to drag this on anymore and just um suffice it to say it doesn't reflect well on the departments that didn't respond and chair um can you please um write the questions to dps with your um staff about you know if there's additional cost time and and whatnot involved in the level of screening that goes on to um like, I guess parks, police, like what it would take to make that be across the board, including our, um, applicants for boards and commissions and whatnot.

Thank you. Member Palton staff. Did you get the question? Yes. Member Palton. We will transmit that question in writing.

Thank you so much.

Thank you. Member Palton. Member Rollins-Fernandez.

Mahalo chair and then aloha everyone for being with us today. Okay, I'm sorry if I missed it. Mr. Taguchi, is this the first risk assessment, fraud assessment we've done before? Yes.

Thank you for the question. Yes, this is the first assessment.

Okay, how much did it cost and how long did it take?

I'll get you specifics in writing. That way I can give you the notice to proceed date all the way through to when the report is issued, and then I can give you progress billing amounts. I think there is still money left in the contract. The contract is still technically open. But after this meeting, I think we probably should close it. But I can give you exact numbers in writing.

Do you have a ballpark figure?

I think it was, I think it was between, I think it was like maybe 200,000, approximately 20 departments. But like I said, I'll get back to you.

Managing Director?

And thank you, Councilmember. The only thing I wanted to add that I'm sure they won't include in the written response is that we appreciate the extension of time that was given in relation to kind of our responding to ongoing emergencies and whatnot. And so I'm sure that there was additional costs and time in relation to that. So I just want to be fair to the County Auditor and SPIRE in relation to that. They did make accommodations to us to help through that process. So thank you.

Mahalo, managing director, yeah. I'm thinking and all of that, yeah.

Oh, even before that, okay, okay.

Okay, and then 20 departments, was the council included in the assessment, the legislative branch? And I didn't either, but just checking. because we should be. I mean, not that I think we are doing anything wrong, but if this is a tool to be better, then I think we should benefit from it as well.

The short answer is if this included the legislative branch, the answer is no. Just dollars and cents wise, 95% plus of the budget is controlled by the administration. So just from an efficiency standpoint, 20 departments, at some point you gotta draw the line. The other part is too, the legislative branch has a separate chief procurement officer by state law. So we don't have two different sets of criteria. So in the future, if you guys want, If this body wants us to look, we can do one. Or we're open to talk to you guys if you guys have any specific concerns about the legislative branch. We can work through that. But to answer your question, no, it didn't include the legislative branch this time around.

Okay, this time around. So you have thoughts of conducting an assessment in the near future?

I'll defer to Mr. Toguchi.

I think it's a good thing to do on a regular basis. But at the same time, we need to give the departments ample time to establish the things. Otherwise we're gonna be coming back and saying the same thing over. So my hope is that the departments will, and they have implemented some things already. So I'm hoping that they will implement it and it'll get to a point where we can go back in and get another fraud risk assessment. But the immediacy, I think, for this one, I kinda explained that in my opening remarks as to why we moved forward. Prior to this, I don't think we ever had a countywide fraud risk assessment.

Okay, mahalo. I think some of the recommendations we could probably adopt as a legislative branch as well, because if, who would develop, well, I guess if the administration adopts like a nepotism policy, for example, it wouldn't necessarily apply to the legislative branch because they're the policy makers.

I'll turn it over to Scott.

Thank you, yeah, you guys are the policy makers. That's, I mean, hard stop, right? So if this body wants to move forward with a nepotism policy, then that's your guys, Kuleana, yeah? I recall when I was the OCS staffer, I think I did get a PAF at one point in time to draft a nepotism policy, but.

Yeah, was it in 2016? I was just looking it up, and that's as far as Granicus goes.

Yeah, I don't recall. I mean, it's been so long, yeah? Somewhere between 2009 and now. Thank you.

I hear the timer. I do have follow-ups, but I'll wait for my round two. Yeah, I was on nepotism. I found a section in the meeting minutes that I thought was interesting and may shed a little bit of light on why we don't have a nepotism policy. Follow the chair.

Thank you. I guess before we move on, I just want to note, MD did say that nepotism policy is in the works. The committee's been working with Board of Ethics and the administration. We will be taking that up on the 28th. So there is a draft proposal that should be available soon. The language was reviewed by the Board of Ethics and is being referred our way.

Well, we got dinged for not having one. And so I looked into why we didn't have one. And I'm supportive of us having one moving forward. But it's also interesting to understand why we didn't have one.

Thank you, Member Rollins-Fernandez. I'll go to Member Cook, and then I'll ask either the auditors or the consultants if they want to provide comments at this point just to help frame the conversation before we go to round two. Then when we get to round two, I guess I'll save that for when we get to that point. So, Member Cook, and then I'll ask if the auditors or the consultant team have any comments before we start our second round of questions. Thank you, Member Cook.

Thank you, Chair. Well, thank you for this. I think that this risk fraud assessment, I like the way you described it. It's a tool, and it's the first one, and it's an opportunity to give, and everybody needs time, all of the departments, to sort of incorporate and digest it. We do have a shifting as far as the legislative branch changes, the administrations change, and so having rules and guidelines that are clearly understood Is a good idea I wanted to like During the most recent floods. It was really impressive what Department of Public Works did with the cleanup and what the administration did in general I saw what happened in my district. I saw in the news what happened to my colleagues district and it was It was a huge endeavor, and I guess it's the existing contracts with pre-screened contractors that enabled, and I'm gonna ask you for clarification of that, but pre-screened contractors that enabled them to move and operate quickly. One of the things that's needed to do that is trust, assessing who the potential resources are in advance when it's not under pressure, and I think that's what you're doing. So in general, what is the procedure for like how many people, how many companies and what some of the criteria that looked at that when there's a flood, an earthquake, a tsunami, they're like the go-to crews.

Thank you, Chair, if I may, and Council Member Cook for the question. It's a little broad because all the departments have different areas of responsibility and whatnot. The that was identified earlier regarding the pre-position contracts is just to set up a better mechanism for kind of, you know, emergency response so that we're either not having to contract, you know, without a procurement being done or contract With like rush procurements or other things being happening for things that we anticipate could you know happen in the the future? So just like maybe clearing roads or things like that Obviously there are Limited amount of entities available that actually do that stuff during emergencies depending on you know the area that we're talking about and and some of them do have a long history and track record of working with the county. In a lot of cases, some of them put up their own funding and manpower and whatnot and just respond to the community as needed without trying to seek some kind of benefit or whatever the case is.

So I'm gonna interrupt you for time. So I'm just, My perspective and what I'm saying is there's a level of trust that needs to be done that's earned and that's demonstrable. I just see having two rigid guidelines doesn't enable someone to basically move quickly, act promptly, and respond. Having things in advance the structure of it enables you to reach out who's available and then hold them accountable and I'm just I'm just sharing that because I think part of this is having transparency part of this is having accountability and part of that accountability in times of stress and prompt demand it's being able to go to the handful of go-to local companies that are capable of doing it, and inevitably, potential pushback of like, well, why do they always get the work? So anyway, I just wanted props to Public Works for what they did in Kihei, because it was twice as much damage as previous, and I think they got it done in half the time. So unfortunately, we're getting too much practice. That's really all I have, Chair.

Thank you, Member Cook. I guess I forgot about myself in this round because I went with Alice's one. I do have one question. Staff, since I had some of Chair Lee's time, can I have three minutes and then I'll turn it over to the auditors and the consultant team. I recognize that... Chair. Yes.

I thought for round one we had five minutes.

Yeah, but I had some of Chair Lee's time.

So you're going to do three?

Yeah, I'm just going to cut some off of mine. Um, cause I only have one question for this round.

I'm just trying to be fair to everybody. Thank you.

Thank you. Member Rollins Fernandez. And then, um, cause I recognize that we gave, you know, the administration an opportunity to, um, state where they dispute some of your findings and whatnot. So if there's anything on the record you would like to clarify or if there's anything, um, that you want to make sure that you stand or you let us know you stand by, I'd like to give you that opportunity. Uh, but, uh, I do have one question I'd like to ask right now. It's page six for Department of Finance. Second paragraph, there's a summary of their findings on Fraud exposure the last sentence reads quote other gaps probably exist But they cannot be identified because according to the Department of Finance many County policies and procedures are not in writing It then goes on to say elsewhere that the Department of Finance represents that County employees know what to do Even if policies and procedures are not in writing. So can I ask the department? what policies and procedures do we have that are not written and and How do we ensure that everybody knows what is expected of them when there's no written guidance?

Chair, thank you. So when you have staff, you train them, so not everything will be in writing, but with that being said, I'm all in favor of policies and procedures, and that is one of the tasks in the RFP that we are drafting, and I'm in favor of the fraud, waste, and abuse training also that we hope to procure moving forward.

Thank you director. I ask these questions because I'm trying to get a sense of where our gaps still exist. The report came out, the administration pushed back saying some policies and procedures are in place, but there is acknowledgement that legislation could be used, policies and procedures could be developed. I think my hope for this body is to get a sense of where those remaining unmet needs are. so that we can figure out a path forward to address them. I think everybody's goal is to cover those areas of fraud exposure so that we don't have these issues moving forward. That was my one question for this first round. Mr. Taguchi or Mr. Kimura, did you guys want to state anything in between our two rounds of questions?

um perhaps we can let um tyler kimura make comments and if we can make some comments after that okay mr kimura sure thank you chair um related to the discussion over um what occurs during emergencies um great questions and great discussion um i just wanted to say that yes absolutely the county does a great job of getting things done right and i think that's the goal right to make sure that the appropriate needs are met when there is an emergency and those circumstances exist and things need to get done. We're just recommending best practices over guidance as to what happens in the weeks, months after that, right? When emergency proclamations may still be in place, but where there may be opportunities for procurement to go back into regular procurement functions. And so having that guidance in place as to what goods and services would be appropriate at that time would assist the departments in

in knowing all right even though the proclamation may still be in place we should probably move back to competitive procurements just for best practices sakes thank you mr kimura um auditors thank you i mean obviously you know i echo what mr kimura said um you know we stand by the report as it's written um to kind of comment on some things that were said uh today um as member Uhu Hodges and member Cook alluded to, you wanna have controls, but at the same time, you wanna allow for operational flexibility when bad things happen. And I think this discussion, and I think where Mr. Nishita has kind of said, it's moving in that direction now. Not one control is gonna ever stop anything, but you gotta have a system of controls that together, it's kind of like plywood, right? Each individual laminate is weak, but when you put them together, it's strong. So that's all we're asking, is we move towards that. The second issue regarding direct pay, we're gonna take a look at it. We put it on our audit plan for fiscal 2027. It seems like it might be innocuous, but I'll take a look. We'll do some testing and do a deep dive on it. It might just be a simple matter of just transitioning over to the P cards like the other departments. in the rest of the state, to be frank. But we'll take a look. I don't wanna say anything's wrong, but it just stuck out, so we should probably look at it. Lastly, to get to Ms. Rollins-Fernandez's question, the RFP was issued in July of 2024, notice to proceed was September 2024, and then the report was issued in February 2026. It was approximately $200,000, but like I said, the final pay is gonna be different because the contract's still open. But I think it's gonna be under that. But just wanted to let you know into the record.

Do you wanna use the remainder of the funding to do the legislative branch?

It's not gonna be that much money, but Mr. Taguchi can do it for free.

Mr. Taguchi.

And for my comments. The fraud risk assessment, it's not a great report card on this county as a whole. But at the same time, I think consistently when I became the auditor, I try to focus on the recommendations and having the recommendations implemented. The findings are the findings. People will use the findings for whatever they need to do. But I've always felt, more importantly, it's the recommendations and implementation of the recommendations. Without that, then the report becomes useless. So that's my comment and I think I've been consistent with that in my tenure as a county auditor.

Thank you very much. Okay, members, we do have, I guess, before we go into the second round, does anybody want to ask for a break at this point? Are we able to keep going? Okay. So I don't get the sense that everybody has second round questions. Can I just ask for a show of hands on who has second round questions? I see... one two three four and then myself would be five okay so I'll start with vice chair and then work my way down in the same order as before is three minutes sufficient for this time okay I just recognized that it is 3 51 and I do want to save time for discussion with this body on how to move forward so we can ask the questions that we need to to inform our deliberations I just ask everybody to be mindful of time now. So, Vice Chair.

Thank you, Chair. Maybe that's kind of where I was gonna go with my next set of questions. So, first I'd like to say, like, I have a genuine trust for just about the majority of the people who work for the county. I really do think everybody tries their best, always. We do have a few outliers that I think sometimes We've seen it in the last few years, and not just the last couple, but as it was said in the report earlier, that kind of skew everything in a negative light. But I don't think that's the case for the majority of the people. And in those times, it would be good to have written policy and written procedure, just so that we have something to point to, to kind of CYA in those moments. And considering this report, when do you think we'll see some implementable items? As recommended in here, as we heard from the auditor, we do need to have some change and then in order for us to do this again and to see some sort of change, obviously we're gonna need to take this report and have some action items. So managing director, when do you think we'll see that action items? Are you gonna be meeting with the departments directly and kind of going over some of the recommended notes in here? What can we expect from your end on this?

Thank you chair, and I'll try to be very brief. Some of the recommendations in here we've already have actually implemented before the report was even started. So as I mentioned, some things regarding like the GAO and coastal framework and other things like that, those evaluations were already occurring before we kind of even got to the point of understanding that that would be a recommendation. There are other things that was called out as a recommendation in the report that I'll bring as one example, like the nepotism policy, as chair mentioned earlier, those things are already in development and will be coming to you soon. So there are things that have happened as a result of this that are already in development. We expanded, we further expanded the training that was provided for CDBGDR team in light of kind of some of the recommendations. to include a broader cross section of the the county and additional um you know employees and whatnot for fraud waste and abuse um there's um uh coming out soon is the rfp as uh director martin uh you know alluded to earlier uh to help strengthen uh some of the internal controls as well as documentation um in relation as what's called that in the report so I don't want to go point by point on everything, but some things were already started prior, some things were started as a result of hearing some of the draft recommendations, and some things are yet to come.

Thank you. And then so that's like internally. And then how do we reduce the fraud externally as we work with our vendors? Um, and they bill us for certain things like how are we double checking our vendors receipts and all the things they give to us as sometimes they look to this government as like, um, you know, a body with deep checkbooks and that's not necessarily the case. I heard my bow. I don't know. Okay.

I guess just to use one example, something that is evaluated as a part of the DR agreements, especially for subrecipients and others, is potentially the use of subrogation agreements or other things. So there's a lot of different elements. Like I said, blessing in disguise, having to administer $1.6 billion of funding and constant oversight and monitoring by a federal agency has really allowed us to kind of dive in deeper than in a lot of areas in what's been done before and then apply those kind of to other areas of the county.

Thank you. Thanks, Chair.

Thank you, Vice Chair. Member Sinensi.

Hello, Chair. I'd like to follow some of the recommendations from the report. Just with the individual departments that handle cash, that they're properly trained in the cash handling manual, as well as for departments, directors, the use of their P cards. Those types of things, I see there might be um areas for the risk of fraud and so maybe if the um they can come up with some type of uh avenue for us to not to report but just to if if we see any um of semblance of fraud, if there's a way to report it kind of nonchalantly. My only question for Mr. Kimura was, this survey was just to county employees, it didn't go outside of the county, correct? That is correct. Okay. All right. I just had questions about who received the survey, but that was the only question I had, Chair. Thank you.

Thank you, Member Sinensi. I think I saw Member Paltin's hand up. Is that correct?

Yes, thank you. My question might be for the auditors, any of the three. Was there nothing in this about sole source procurements because the county doesn't have the authority over the HRS because that's where a lot of fraud occurred as well, sole source procurements?

We did not specifically look at sole source procurements or look at all sole source procurements that may have occurred during the audit period. Typically, that may be a specific type of audit where we would dive in as that is the main topic of that audit. In this instance, we were looking at a much higher level in terms of how all departments manage their procurements, how they work with finance to review. So yeah, we did not look specifically at any sole source procurements that may occur.

Okay. And then in the emergency procurements that you did look into, there were things that say after COVID, what do we do with things that we don't use anymore? Like all those structures they bought from Milton Choi and like that, like what, some of them were never used. So what do we do with them?

That was outside of our scope in terms of items that may have been repaired and no longer needed. um i think i'm sorry or never used yeah and i i think our scope would just look at the process for understanding what can occur right in terms of purchasing that type of equipment or services during an emergency but in terms of fiscal oversight by the council we were not given a chance to oversee it it's either take this money from covid or don't take it and so

we were kind of left out of the oversight process in that case. And so that's what you're trying to address is when we get left out of the oversight process in that way.

Correct. Right. That highlights what can occur, right? Because if the procurement law is suspended, which allows sources to occur, right, because of the emergency circumstances, departments are left to justify those purchases, you know, on their own, just to, you know, make sure that, you know, what needs to be done can be done. But of course, that opens up risk, right? And you may be left with goods that were never used, that you're still stuck with, which is why we're just trying to highlight the need for getting ahead of it. I think that theme has been talked about throughout today's discussion, that preventative measures allow for things to get nipped in the bud prior, before we're stuck with problems.

Thanks for trying, Mr. Kimura.

Thank you. Mr. Taguchi, did you have anything you wanted to add in response to Member Palten's questions?

Yes, just for the committee's information, this last legislative session, the House passed a resolution tasking the Hawaii state auditor to look at sole source procurements for not only the state, but for the counties. So the state auditor's office is going to move forward with a deeper dive with sole source procurements, whether they be by the county or the state.

And Mr. Taguchi, what is the time period for this audit? Like what time period does the audit cover? Because my understanding is that it covered the period for both the COVID and the fire, but I just want to confirm.

The audit period covers January 1st, 2020 through December 31st, 2025.

Thank you. And then I see the managing director wanting to be recognized.

Thank you, Chair. No, I just wanted to identify that all the counties have already been contacted by the state auditor and we're all working in conjunction and have provided information already for the information requested. And it's specific to essentially those during the emergency periods. Yeah. Thank you. Thank you, MD.

Did you have anything else? Sorry, that was Member Paulton. Member Paulton, did you have any?

Yeah, I only have two minors left here, one human and one canine.

Oh, I meant questions for the department, for the administration. Okay.

No, I heard the bell, thank you.

Thank you. Member Rollins-Fernandez.

That's great. I'm glad to hear that there's going to be an auditing of sole source contracts. Too bad you couldn't do that for the White House. A whole lot of blatant money laundering that's happening over there. And then I'm not sure what it is that we're doing with the waste, fraud, and abuse, but can we name it something else? under Elon Musk, Dodge did the opposite of what they said they were going to be doing and actually committed the waste, fraud, and abuse when they stole our confidential information under the IRS and fired important civil service workers who then had to be rehired back. So that connotation is like stuck with waste, fraud, and abuse. And so if we could call it something else, I think that would be far more productive. So two things. One, okay, so when we first, when I first got onto the council, there was like, like contractors that would lowball their bids. And I don't know if your recommendations go like that detailed, but we wanted to develop like some kind of like a blacklist. And it didn't have to be forever blacklist. But there should be some kind of policy to prevent abuse of low balling. Thank you, change orders mid-contracts. Anyway, I figure I just like bring that up now and just get it on our radar since we're already working on stuff and the recommendations and nepotism and stuff like that. Okay, you don't have to answer me if you don't have anything to say in regards to that. And then 2016. Oh, you have something? Okay, go ahead.

Mr. Taguchi.

I'm going to read this real fast, and then you can take up the rest of my time. Special Committee on County Governance Meeting Minutes, March 2016. Ms. Charmaine Tavares was part of this committee. Yeah, yeah, yeah. And so Member Starr asked about her being hired as a parks director. And she said, it did create a perception of nepotism. In fact, it made the evening news and Joel Moore raked me over the coals. That lasted about two weeks because I had told my father when he first became mayor that I said, you don't know anybody who would be a good parks director. I should be your parks director. I have the most experience. I know what I'm doing and I've been da, da, da, da. I gave him everything and he said, well, I can't do that. That's nepotism. And I said, even if I were the best person for the job, he couldn't hire me. So there was a reverse discrimination in that case. So I said, I don't care about the relationship. I care about the qualifications and how the people can, how that person can relate to the community. that those are the important things and having a vision doesn't hurt either. And so thank you for the question. Yeah, okay.

I don't have any more time, but if you wanna respond to my earlier comment.

Mr. Taguchi, you're welcome to respond to her previous question. I think the first thing you're talking about is debarment. Is that the process of acknowledging that maybe a- Wait, debarment, that's like permanent though, right? Well, I don't know. I'd have to check with the SPO.

Okay, I don't mean permanent. I just mean like... Time out? Yes, sure. Time out.

I'm not aware of any sort of time out or cooling off period.

Okay, so we could create that. Is that something that would be helpful to help to ensure that you're not being abused?

I think as this party talks through with management, how to best approach this to have an equal balance of being able to respond but also control, that's something you guys should for sure talk about. If someone doesn't make the cut or someone's... maybe not as responsive as they should be in past work with the county, how should the county move forward with interacting with that entity in the future? I think you guys can talk about that for sure.

Okay, great, thank you. Oh, Mr. Toguchi.

Yeah, and in regards to your, you didn't really ask for a comment, but in regards to the second part where you talked about Charmaine Tavares, you know, I understand what you're saying. Sometimes the best people are, but... I think one of the solutions for something like that might be transparency, right? You go to the public and you say who you intend to hire and all the reasons. And in that way, you know, the public, it's upfront and the public knows, right? And then... After that, if the mayor decides to do that, then he's gonna be held accountable for the performance, right? But I think we have a saying for us auditors, not auditors, but everyone, they said, sunlight is the best disinfectant. So it's like transparency in those types of situations will go a long way.

I agree because our colleague hired her daughter and son-in-law and they worked damn hard and they're very qualified and I thought they made a great team and it would have been sad if they weren't able to be part of the office. Mahalo. Mahalo, Chair.

Thank you, Member Rollins-Fernandez. I would like to note that we have been working with the Board of Ethics on that empathism policy that has been contemplated and there are proposals that address these considerations. I just would say you gotta stay tuned because I don't wanna get too far outside of the agendized, yeah. My last question has to do with the second finding. I think there's agreement that there's no countywide process for reporting, investigating, and responding to fraud. Different entities have their own processes in place. The administration notes that there needs to be some flexibility and we agree. But I guess I wanted to understand within these various processes, for reporting, investigating, and responding to fraud. Is there a consideration for civil servant employees versus those appointed? And I just want to understand whether or not there's the possibility for... political considerations to influence how we report, investigate, and respond to fraud. Managing Director.

Thank you, Chair. I'm sorry, I'm not quite following, I guess, what you're trying to ask. Should we have different processes in place for appointed individuals versus civil servants?

I'm asking if there are different processes in place for appointees versus civil servants.

Well, I would say that the main difference is that generally an appointee is going to be like a department. I mean, there are mayor's office staff or whatever too, but generally when you're talking about that, it's like a department head. And in which case, you know, a traditional process would be to report it up to your supervisor or your manager. And if it's involving a department head, then it would be different in that sense from civil service because there's nowhere for them to go but to, you know, above them other than the managing director, mayor, and or an external agency like board of ethics or, you know, the auditor's office or, you know, Depending on whatever the allegation is. It could include a criminal element or other things as well So, I mean there are differences just based on I guess position or where they sit or who they report to I guess in terms of that but I don't believe in any way that They should be held to like a different standard if that's what you're asking Mr. Taguchi, did you have something you want to add to that?

Yes, um, you know One of the solutions that we began is this fraud, waste, and abuse hotline. It provides employees the alternative when they don't feel comfortable bringing it up with their supervisors. I've had several instances where employees come to me and they wanna be anonymous and they don't feel comfortable going up to the supervisor. But what I generally tell them is, okay, if you're not comfortable bringing it up with your immediate supervisor, go above. So you go to the directors. If you're not comfortable going to the directors, then go to the managing director. And if he's still not comfortable, then I'll try and look into it the best I can.

Personally, I think we should take all complaints to the managing director. Members, okay, so that concludes our two rounds of questions. I kept the format for this meeting. somewhat flexible because I wasn't super clear on what kind of responses we're going to get. If we had just been working off of the report and we had recommendations that could guide us on how to move forward, that would have been one thing. But I did recognize that there were disputes, and I wanted to recognize that there has been work done already, which we've now heard about. So I guess the question is, how do we fill the rest of those unmet gaps or unmet needs that have been identified and discussed here. Does anybody have any preferences on how to proceed? With the last meeting, it was really me working with committee staff to bring forth a proposal. I don't know if that's necessarily going to be the most productive way forward here. We could do a TIG, we could look to the administration, see what they want to bring forth, and then we can continue to work on things that make more sense for us. Oh, I see a hand, so I'll stop now and see if Member Bolton has any.

And then Chair, before you call on Member Bolton, if the rest of the conversation is gonna be with the committee, do you wanna release the department representatives?

I guess we could. If there's any deliberations that would require their cooperation.

I have no more questions for them.

No, I recognize that we may not have any questions for them, but if there's gonna be a request to collaborate on a specific task, it might make sense to have them still here with us. I don't know. If the rest of the body would like to dismiss them, I'd be happy to dismiss everybody but the managing director. But I guess that's why I wanted to keep them here for that part of the conversation. But we can hear Member Paulton's question, and if it makes sense to release them, then we can release them.

Oh, it wasn't a question. It was a suggestion. I thought I touched it.

That is, I just got distracted.

Oh, okay. In finding one of the synopsis provided by the auditor, it looks like the owner of three is Department of Personnel Services, but being that Personnel Services doesn't answer to the managing director or the council, I would imagine like those specific ones that were called out to personnel services or whatever should be transmitted to the Civil Service Commission.

Yeah.

as the Oversight Agency of Personnel Services. I don't know if Mr. Kimura can provide the, I guess, not full responses, but I think in the report it said that they didn't answer all the questions. If you wanted to provide the questions that weren't answered to the Civil Service Commission so they could be answered, or even the questions that weren't answered by the police to the police and fire police and public safety or police commission, you know, because we don't have direct oversight over some of the departments and neither does the managing director or the mayor. And so if we want anything to be done about the report released, then we need to go to the entities that have that oversight over those departments is my thinking because neither us nor the administration has that oversight. And so it doesn't matter if we don't include the entities that have the oversight.

No, agreed. So I guess as a first step, staff, can you transmit both this report and any questions that the consultant team might have outstanding to the boards and commissions that oversee departments which have not yet responded to their inquiries?

So I guess, Mr. Kaneshina.

Can you hold off on closing out that contract since we're requesting more work of you and your consultant team?

Oh. Just to be real clear, I mean, the contract is still live, but there's not much there. And just to keep everything really above board, at this point, the contract is, the report's issued. Okay. And so to kind of walk the talk that we're talking about today, we would probably have to rebid something.

okay yeah so i can't commit okay so then we cannot commit we cannot ask anything of the auditors or the consultant team but we can transmit at least the findings and then if there's anything we want to specifically ask um of those departments i think it was personnel services fire police if there's any others that have oversight over department members can you transmit those questions uh to committee staff by end of week

What are you asking us, Chair? What questions?

So if we have any questions that we would like posed to departments who didn't respond or if we would like to request specific follow-up from departments who didn't respond, we can transmit this Fraud Risk Assessment Report and any of those questions to the boards and commissions that oversee those departments. and you're asking us to send the questions to committee staff. I think that's the gist of what Member Poulton was asking for, correct?

Well, if they don't have the questions or the non-responsiveness, if we can't get a hold of it, then that's not something we can pursue. But I guess I did have a... I don't know if this is for Mr. Kaneshiwna or Mr. Kimura, but over time approval gaps, it says the owner is DPS. And I think I would kind of dispute that because... each department approves the overtime for their own department. And then I think it gets paid by finance. So I'm not sure why it says owner DPS on overtime approval gaps.

For that finding, we were pointing out gaps and discrepancies within the county's payroll policies and procedures, which provide oversight for all the departments. And so those policies are disseminated by DPS. So that's why we identified them.

Okay, so that's the type of thing I think we should transmit to the Civil Service Commission because they oversee personnel who oversees payroll policies. And and how are they going to address it because we don't have oversight over personnel and neither does the administration. It's the Civil Service Commission.

I remember, was that a question?

Okay, so Chair, back to the questions. I think Member Poulton was asking about the questions that weren't answered that was transmitted by the Mr. Kimura folks spire. So not questions from us, the questions from the Mr. Kimura folks spire that weren't answered by some of the departments. I think that's what I understood Member Poulton saying.

That's what she had initially asked for, but then we were told that the report's already published and their contract is almost at its ceiling. So we didn't want to utilize...

I don't think she was asking for Aspire to analyze the responses, just to get the responses.

Do we have the information that was being requested that we could easily just transmit, Mr. Kimura or Mr. Kaneshina?

Chair, if I may. Yes, Mr. Konishina. I think what, and I don't want to say, but I think what Member Paulton's kind of getting is like what's the recourse for not participating in the process? Because a lot of the risk owner, maybe they didn't, and so... Probably a good start is talk to the managing director about. Sounds great. Because as Member Poulton laid out, it's kind of like a web of oversight for that particular area.

Right, but Member Poulton's also saying that the managing director is not the authority over DPS, it's the commission. And so it's the commission that we should like get on their radar and ask the commission to hold TPS accountable for not responding to whatever questions or not participating fully so that we are able to make the improvements necessary, which is the whole purpose of doing it.

Yeah, perhaps that would be a fair question to send from this body to that oversight entity, right?

Yeah, well, I guess, I mean, so to the point that you're making, we don't know what they didn't do. So how do we know what responses they didn't provide and how do we get that information or at least have the Civil Service Commission urge them to respond and participate?

I mean, the gist of it is that they didn't appear for an in-person interview. So I don't know why. I guess I can go work with Spire and get their records and figure out what exactly the communication breakdown was. I don't know if it's going to be useful at this point to assign blame. or blame an email system that didn't work, or what?

Well, I mean, if they didn't even participate in this process, then how are we supposed to make the necessary improvements? Are they gonna participate in making the necessary improvements?

Yeah, I don't have anything for you. Right. But I get your point, and I get Member Palten's point, too. It's kind of a head scratcher.

No, it's not. We have to go to the commission. That's what Merle Bolton is saying. We should go to the commission because they're in the process of hiring a new department director. And so the new department director should be participating in this and making the necessary improvements that were identified as recommendations, right?

As well as these oversight commissions give the performance reports for the heads. And if they're not participating in a fraud risk analysis study or whatever you call it, assessment, I don't think that the... performance report should be that glowing because we want to root out fraud fraud and whatnot and this is an opportunity a 200 000 opportunity to participate in making our county and departments better so um i would give a ding on that if they're not participating

So we're gonna transmit it to the commission, the Civil Service Commission, with some of what we said here. Ask them to include this in their criteria review when, I don't know, evaluating the next director. Because they're the ones to hold that department accountable, right?

I agree. So I think we transmit the assessment to the department or to those commissions as we had previously stated. I think the question was whether or not we were trying to get the data from them. I think, you know, that has been cleared up. If we can make it known that their department head did not participate in the survey and we are disappointed at that, yes, we can easily transmit that as well. Uh, if there's any outstanding questions that we need answered, we can transmit that too. That's what I was trying to get at when I set the deadline for Friday. Um, and if, you know, I think we can still pursue that. Um, Is there anything else that we want to identify as next steps? Um, I recognize that some members have to go cause we only pulled till four 30 and it's, you know, six minutes till, um, for myself, I think we got some answers. There are some things that are still unclear to me as to what's the work still needs to be done. You know, there are, things in motion. We're taking up those additional legislation on the 28th. There is an RFP going out to try to come up with some systems that have been identified as missing within the county. I think I would personally like to get a sense of what is still outstanding, and then we can come up with a game plan for moving forward. I don't know exactly how that's gonna work, since I'm not super clear on what these individual items are. But at least we have this conversation, we've identified what our exposures are, what is, We had some conversation on what's happening, and then I guess I can work with committee staff to bring this back up. I've outlined what my plans are for this committee through summer. There is additional legislation in the pipeline, and I did reserve time on our committee calendar for follow-up work. that I anticipated coming out of last week and this week. I may not know exactly what that looks like right now, but we can work with committee staff and maybe even the auditors and managing director to try to come back to you with a more detailed plan on how to meet the unmet needs that we discussed today. Does that work for everybody?

Okay.

All right, so that being the case, members, before we wrap up, I just want to make sure that you're aware of what is happening in terms of next steps. Our next scheduled meeting will take place on July 28th, 2026 at 1.30 p.m. During that session, this committee will dive into the Board of Ethics priority legislative proposals. Our work will include reviewing Bill 55, 2025, concerning code of ethics violations and penalties, as well as critical new bills designed to prohibit nepotism within county operations and establish clear regulatory standards for lobbyists. The issues that were raised last week and again today will inform how we move forward after that. I appreciate everybody's rigorous discussion today and look forward to continuing these conversations as we work to safeguard public resources.

I have a question. Well, before we end, can I have a statement? Sure. Thank you. It's not about any of this, just FYI. Are you Paul? I don't want to interrupt you even though I just did. No, ew. Because my family watches, today is my grandfather's 83rd birthday, Thomas Johnson III, so I do have to leave because I do have a birthday dinner to attend, but I just wanted to wish him happy birthday. My family watches us on Akaku because clearly they have nothing better to do with their day. We're so I know. I mean, we think we are. I don't know if everybody thinks we are, but we are sometimes so fun. But anyways, happy birthday, Grandpa. I love you so much. I will be there soon.

And I guess before we conclude, I just want to thank Mr. Colby for his work with our committee.

All right.

Any other closing comments from the members? This concludes the government relations ethics and transparency committee meeting. Thank you very much members. The time is now 428 p.m. This great committee meeting is adjourned