David C. Farmer vs. Harmon - Witness Marion Higa, Hawaii State Auditor

Kekuanao´a Building
465 South King Street, Room 500
Honolulu, Hawaii 96813-2917
Phone: (808) 587-0800
Fax: (808) 587-0830
Website: http://www.state.hi.us/auditor/

Through post-audits of the accounts, programs, and performance of state agencies, the office seeks to assure the accountability of government agencies for their implementation of policies, management of programs, and expenditure of public funds. The office reports its findings and recommendations to the Governor and the Legislature to give policy makers timely, accurate, and objective information for decision-making.

Fw: "HAWAII STATE AUDITOR: 'LACK OF INTEGRITY' IN ADMINISTRATION'" - (An Exhibit in CV05-00030 - U.S. Dept of Justice vs Harmon)

"Office of Inspector General US Dept of Justice" <oig.hotline@usdoj.gov>, "Executive Office for U.S. Trustees" <ustrustee.program@usdoj.gov>, "SEC Office of The Inspector General" <oig@sec.gov>, "Hawaii State Bar Association" <info@hsba.org>, "Hugh Jones" <hugh.r.jones@hawaii.gov>, "Insurance Division Fraud Branch" <insfraud@dcca.hawaii.gov>, "Lawrence Reifurth" <dcca@dcca.hawaii.gov>, "Linda Lingle" <governor.lingle@hawaii.gov>, "Jo Ann Uchida" <rico@dcca.hawaii.gov>, "Office of Inspector General Civil Rights Complaints" <inspector.general@usdoj.gov>, "American Arbitration Association" <webcase@adr.org>, "Judith Neustadter" <Judy@tiki.net>, "Benjamin J. Cayetano" <bjcayetano@aol.com>, "All Representatives" <reps@capitol.hawaii.gov>, "All Senators" <sens@capitol.hawaii.gov>, "Andrew Walden" <hfpeditor@email.com>, "Aon Insurance Managers" <mike_coulter@agl.aon.com>, "Arthur Rath" <imua@spamarrest.com>, "Bradley Tamm" <btamm@hawaii.rr.com>, "Carl Morton" <ethics@hawaiiethics.org>, "Charles Hurd" <mcp@mediatehawaii.org>, "David Shapiro" <volcanicash@gmail.com>, "Dee Jay Mailer" <ksinfo@ksbe.edu>, "J C Shannon" <Hapa1234@aol.com>, "James B Nicholson" <jamesbnicholson@aol.com>, "James B. Farris" <Farrisj@adr.org>, "James Cribley" <jcribley@caselombardi.com>, "James Wriston" <jwriston@awlaw.com>, "Jeffrey Watanabe" <jwatanabe@wik.com>, "Jim Dooley" <jdooley@honoluluadvertiser.com>, "Joe Moore" <news@khon2.com>, "John D. Finnegan" <info@chubb.com>, "Judson Witham" <jurisnot3@yahoo.com>, "Ken Conklin" <ken_conklin@yahoo.com>, "Lyn Flanigan Anzai" <lflanigan@hsba.org>, "Margery Bronster" <info@bchlaw.net>, "Michael N. Tanoue" <mtanoue@paclawgroup.com>, "Michelle Tucker" <michelle@sterlingandtucker.com>, "Nathan Aipa" <nathan@pitluck.com>, "Paul Alston" <palston@ahfi.com>, "Randall Roth" <rroth@hawaii.edu>, "Rick Daysog" <rdaysog@honoluluadvertiser.com>, "Robert Bruce Graham" <bgraham@awlaw.com>, "Robin Campaniano" <aigh001@aighawaii.com>, "Samuel P. King" <leslie_sai@hid.uscourts.gov>, "William K Slate" <Websitemail@adr.org>, "Jim Terrack" <tnthawaii@aol.com>, "Rocco Sansone" <rocco.c.sansone@marsh.com>, "Ted Pettit" <tpettit@caselombardi.com>, "Laura Thielen" <dlnr@hawaii.gov>, "Catbird" <the-catbird@hotmail.com>, "Jack Cashill" <JCashill@aol.com>, "Marshall Chriswell" <mc@whistleblowers.org>, "Laser Haas" <laserhaas@msn.com>, "Lucy Komisar" <lkomisar@msn.com>, "Democrats.com" <activist@democrats.com>, "Debra Sweet" <debrasweet@worldcantwait.org>, "John Jubinsky" <Jube@tghawaii.com>, "Global Exchange" <communications@globalexchange.org>, "Carole Williams" <cjwms@up.net>, "Susan Tius" <STius@rmhawaii.com>, "Michelle Malkin" <writemalkin@gmail.com>, "Phil J. Berg" <philjberg@obamacrimes.com>, "Amnesty International U.S.A." <aimember@aiusa.org>, "Thomas Fitton" <info@judicialwatch.org>, "ACLU Online" <ACLUOnline@aclu.org>, "Louanne Kam" <lokam@ksbe.edu>, "Eric Martinson" <emartinson@tradewindcap.com>, "Bruce Nakaoka" <bnakaoka@tradewindcap.com>, "Oswald Stender" <info@oha.org>, "Crystal Rose" <mail@legalhawaii.com>, "National Whistleblower Center" <Imw@whistleblowers.org>, "Orly Taitz" <dr_taitz@yahoo.com>, "The Whistler" <Whistler.Songs@gmail.com>, "James Paul" <jpaul@pjpn.com>, "Alex Chasck" <alex@consumerist.com>, "9th Circuit Court Mediation Program" <ca09_mediation@ca9.uscourts.gov>, "Glenn Beck" <glennbeck@foxnews.com>, "Lou Dobbs" <lou@loudobbs.com>, "Nomi Prins" <nomi@nomiprins.com>, "Deri Arakaki" <dearakak@ksbe.edu>, "Wendell Brooks" <WendellBrooksJr@aol.com>, "Mufi Hannemann" <mayor@honolulu.gov>, "Joseph Zernick" <jz12345@earthlink.net>, "Richard Turbin" <rich@richturbin.com>, "Jon Riki Karamatsu" <repKaramatsu@Capital.hawaii.gov>, "Stephen J. Downes" <sdownes@honoluluadvertiser.com>, "Demitrios S. Pousolides" <dimitrio@bright.net>, "Deanna Spingola" <deanna@spingola.com>, "Malia Zimmerman" <Malia@hawaiireporter.com>, "Nur Bahal" <nurb@rom.on.ca>, "CADES SCHUTTE LLP" <cades@cades.com>, "Ken Berger" <info@charitynavigator.org>... more

Subject: "HAWAII STATE AUDITOR: 'LACK OF INTEGRITY' IN ADMINISTRATION'" - (An Exhibit in CV05-00030 - U.S. Dept of Justice vs Harmon)

To: "President Barack Obama" <president@whitehouse.gov>, "U.S. Attorney General Eric Holder" <AskDOJ@usdoj.gov>, "David Farmer" <farmerd001@hawaii.rr.com>, "Steven Guttman" <sguttman@kdubm.com>, "Carol K. Muranaka" <ustp.region15@usdoj.gov>, "Judge David A. Ezra" <theresa_lam@hid.uscourts.gov>, "Judge Kevin S.C. Chang" <shari_afuso@hid.uscourts.gov>, "Judge Barry M. Kurren" <tammy_kimura@hid.uscourts.gov>, "Mark Bennett" <hawaiiag@hawaii.gov>, "Robert Faris" <hib@hib.uscourts.gov>, "Hugh Jones" <hugh.r.jones@hawaii.gov>, "James B Nicholson" <jamesbnicholson@aol.com>, "J P Schmidt" <insurance@dcca.hawaii.gov>, "Dee Jay Mailer" <ksinfo@ksbe.edu>, "Donna Mercado Kim" <senkim@Capitol.hawaii.gov>, "ERWIN J. SHUSTAK" <shustak@shufirm.com>

March 20, 2010

RE: "HAWAII STATE AUDITOR: 'LACK OF INTEGRITY' IN ADMINISTRATION'" - (An Exhibit in CV05-00030 - U.S. Dept of Justice vs Harmon)

Related Websites:

> http://sites.google.com/site/thecatbirdsnest/

> http://sites.google.com/site/thecatbirdsnest/home/confessions-of-a-whistleblower

> http://sites.google.com/site/thecatbirdsnest/home/here-come-da-judge

> http://sites.google.com/site/thecatbirdsnest/home/island-underworld

> http://sites.google.com/site/thecatbirdsnest/home/island-underworld/googling-for-the-godfather

Dear President Obama, Attorney General Holder, Trustee Farmer, Mr. Guttman, Ms. Neustadter, Judge Kevin Chang, Judge David Ezra, and All Concerned:

Due to new discoveries of FACTS related to this lawsuit (which I maintain is a "prior restraint" of my constitutional rights of Free Speech held in a Kangaroo Court and in violation of Federal and State Anti-SLAPP statutes), I am adding the attached Exhibit.

Trustee Farmer and Mr. Guttman, in light of this mounting evidence of fraud, conspiracy to commit fraud, honest services fraud, racketeering, theft, conspiracy to commit theft, bad faith, breach of trust, breach of fiduciary duties, perjury, obstruction of justice, withholding and destruction of evidence, invasion of privacy, violation of civil rights, wrongful denial of a trial by jury, tax evasion, tax fraud, libel, slander, misprision of felony, undisclosed conflicts of interest, and other wrongful acts provided by these many Exhibits and supporting documents, I again propose to you that WE, AT LEAST, ATTEMPT TO NEGOTIATE A GLOBAL SETTLEMENT in this case as well as for the unanswered bad faith and professional liability claims that I have previously submitted against you, your law firms and your undisclosed insurance carriers.

In case you have misplaced or destroyed these previous claims letters, you can find more information online at:

http://www.kycbs.net/Claims-Branch-Kessner-Duca.htm

http://www.kycbs.net/Confessions.htm

http://www.kycbs.net/Whistler.htm

If I do not receive a response within 15 days, I will consider this to be yet another act of bad faith on the part of you and your undisclosed professional liability insurance carrier(s).

Very truly yours,

Bobby N. Harmon, CPCU, ARM

Attachment:

March 19, 2010

Hawaii state auditor:

'Lack of integrity' in administration

Higa challenges administration over state investments

By Sean Hao
Advertiser Staff Writer

A feud between state auditor Marion Higa and Gov. Linda Lingle grew more heated yesterday with Higa challenging the administration to take a lie detector test.

At issue are more than $1 billion in state investments in student-loan-backed securities that have declined in value by about $250 million over the past several years. The state won't necessarly lose that money, because the principal will be paid back in full if the investments are held until their maturity.

However, Higa said yesterday that state purchases of so-called auction rate securities violated the law and put state funds at increased risk.

According to a report released by the auditor yesterday, the investments didn't comply with state laws and policies that require diversity of investments, that investments maintain a AAA rating and that short-term investments mature in less than five years.

The audit, which covered the Department of Budget and Finance from July 1, 2008, to June 30, 2009, said the agency lacked leadership and accountability and is not effectively managing the state's $3.8 billion treasury.

Earlier this month, Lingle harshly criticized a draft version of the report, calling it "shoddy," "unprofessional" and "politically motivated." The governor also called on state lawmakers to investigate Higa.

Higa yesterday said she and others within her office would be willing to take a lie detector test to prove their veracity.

"If the administration will do the same, we'll see where the truth might lie," Higa said.

Higa took the unusual step of releasing the results of the audit at a news conference yesterday in which she criticized Lingle's administration and Department of Budget and Finance officials who made the investments.

"I believe that the administration's attack on our reputation and our credibility deserves some unprecedented attention," Higa said. "I think we need an affirmative response to set the record straight.

"The behavior of the administration has also been unprecedented. I believe it reflects a lack of integrity."

Lingle yesterday was unavailable to comment on the audit.

In a written response attached to the audit, Georgina Kawamura, the Budget and Finance Department director, said the report includes inaccurate , misleading and false statements. She also expressed concerns that the audit's allegations of a lack of leadership and accountability could hurt the state's reputation.

"We are concerned that this baseless conclusion may damage Hawai'i's hard-earned reputation as a prudent manager of public resources and adversely affect our ability to sell bonds," Kawamura wrote.

The main issues raised in the audit resulted from a rise in the popularity of auction-rate securities as "near cash equivalents," investments that can be easily and quickly converted into cash. The rate of return on auction-rate securities is typically higher than for comparable investments. However, the liquidity of the securities evaporated when the auctions began failing last year as dealers hamstrung by subprime losses pulled back from purchase guarantees and credit markets started to tighten.

Cash crunch

The state shifted large amounts of its investments into the bonds even as the auction rate market started to tighten in second half of 2007, because of their high rate of return. The investments were legal and in line with an opinion by the state attorney general, according to the state.

However, those yield -driven purchases were in conflict with state policies that emphasize safety and liquidity of investments over yield, Higa said.

Money tied up in auction rate securities reduces the state's potential cash reserves, could affect the state's ability to meet future cash needs and could potentially be a factor behind state plans to delay income tax refunds , she said.

"It's very obvious the state is in a cash crunch," she said. "Having the billion dollars frozen like this presents a cash crunch. Whether we might still have to delay tax refunds is a possibility even without the billion dollars being frozen, but it exacerbates the situation."

The audit recommended that the state formalize polices and procedures and improve cash and investment management practices , including doing a regular review of investment policies.

Kawamura agreed with some recommendations, but maintained that the audit's main findings were unsubstantiated and lacked merit.

"The result of the review is an undeserved attack on the hard-working men and women of this department," she wrote.

The Honolulu Advertiser

NEW EXHIBIT ADDED (07-02-08): AS DESCRIBED IN THE FOLLOWING E-MAIL TO DAVID FARMER & STEVEN GUTTMAN:

This is to provide an update to the information regarding my potential witness, Marion Higa, Hawaii State Auditor. In particular, I call your attention to the following internet link which provides a means to search all past reports of the State Auditor:

Due to the extensive nature of the materials in this site, I will not quote any particular reports in this e-mail. However, I do request that you perform your own searches, particularly in the categories of "Hawaiian Issues" and "Courts, judiciary". Also, I especially call your attention to the following most recent reports:

After you have reviewed these reports, I ask that you please advise me if any of the pages in this NEW EXHIBIT contain any "phantom dots" or "conspiracy theories" or "Protected Subject Matter", which might result in the Court's rejection or disapproval of my future Motions.

As an alternative, however, if you wish to avoid this, and future, reviews of my Exhibits and potential Witness descriptions, and further expensive and time-consuming court filings, I again suggest that we attempt to reach a Final Global Settlement in these matters through simple NEGOTIATION or, as a second alternative, through MEDIATION.

REGULAR MEETING MINUTES
TUESDAY, NOVEMBER 20, 2001
MILILANI MAUKA ELEMENTARY SCHOOL CAFETERIA

CALL TO ORDER: Chair Jeanette Nekota called the meeting to order at 7:04 p.m., with a quorum present.

MEMBERS PRESENT: Lily Canas, Tim Dittrick, Melissa Graffigna, Wade Kodama, Teresa Lau, Jeanette Nekota and Pamela Young.

REPRESENTATIVE GUY ONTAI: Representative Ontai reported the following: (1) In the Third Special Session of the 2001 Legislature, legislation relating to residential and hotel tax credits passed, however bills relating to commercial tax credits were not even considered. (2) The Republican Caucus proposes a seven-day tax holiday - customers pay no excise tax on purchases - is needed to stimulate the economy. He noted that in these hard economic times, many of these small businesses have folded. (3) Voted against the $150 million for the relocation of the John A. Burns Medical School because he feels monies being diverted from the tobacco settlement fund along with the use of eminent domain is wrong. (4) $17.5 million will be allocated for construction of Mililani Mauka Elementary School II in two phases. (5) Expressed concern with the use of funds from the State Foundation of Culture & the Arts' Special Funds used to purchase statues should be used instead to fix and repair public schools like Mililani Uka Elementary that is having a problem with land erosion. Ontai stated his agreement with State Auditor Marion Higa that the Culture & Arts Special Fund be eliminated.

(1) Graffigna expressed strong disagreement with Representative Ontai to eliminate the Culture & Arts Special Funds by pointing out that arts education is beneficial to students. She therefore asked Representative Ontai to look into it.

(2) Chair Nekota informed everyone that the Mililani Complex has until Monday, December 10, 2001 to fully comply with the Felix Consent Decree granting equal education to special needs children.

The state may have compromised its environmental policy because of pressure from Hawaii Superferry executives who were worried about financing for the interisland ferry project, the state auditor has concluded.

The auditor found that an internal June 2005 deadline imposed by Superferry executives "drove the process" and pushed the state Department of Transportation to bypass an environmental review. The deadline, according to the auditor, was tied to Superferry's agreement with Austal USA to secure financing to pay the Mobile, Ala.-based shipbuilder to construct two high-speed ferries.

The federal Maritime Administration, which approved a $140 million loan guarantee for ferry construction, wanted confirmation that no environmental assessment of harbor improvements would be required because of the risk that environmental concerns could jeopardize port access. But Maritime Administration officials told the auditor they did not set the June 2005 deadline as a condition of the loan guarantee.

"In the end, the state may have compromised its environmental policy in favor of a private company's internal deadline," state auditor Marion Higa concluded. "It remains to be seen whether these decisions will cost the state more than its environmental policy."

The performance audit was required by state lawmakers as part of a law passed in special session last fall that allowed Superferry to resume operations while the state conducts an environmental impact statement. Legal challenges and public protests had halted ferry service after the state Supreme Court ruled in August that the state's decision to exempt $40 million in state harbor improvements from environmental review was in error.

The auditor's main finding was that the June 2005 deadline was not imposed by the federal government, but related to an agreement between Superferry and Austal. The audit questions whether the state did "sufficient due diligence to verify whether the deadline was valid for the reasons Hawaii Superferry Inc. claimed."

John Garibaldi, Superferry's chief executive officer, said yesterday that Superferry has consistently portrayed the June 2005 deadline as necessary for both federal and private equity financing. He described the agreements with the Maritime Administration, Austal USA and primary investors J.F. Lehman & Co. as interrelated.

"They were all dependent upon each other. No one stood on its own," Garibaldi said. "I think that's what we tried to express to people."

Garibaldi declined to comment on other findings in the audit because he had not yet seen a copy.

The auditor's descriptions of the chain of events that led the state to exempt the project from environmental review in February 2005 are similar to reports in The Advertiser in September and January.

The auditor and the newspaper received many of the same documents, which were screened by the Lingle administration for attorney-client privilege and executive privilege before being released. The administration is preparing a privilege log for the auditor and the newspaper to describe the documents that have been withheld. The Advertiser requested the documents under the state's open-records law.

Most significantly, the auditor — like The Advertiser — emphasized a late December 2004 meeting at the governor's office that included the governor's then-chief of staff Bob Awana, department officials, and Superferry executives.

Staff in the department's harbors division had wanted to require a statewide environmental assessment of the project and to get Superferry to install a stern ramp on the vessel to give it more flexibility at Kahului Harbor on Maui. But Superferry executives, according an account by a department staffer, told the state that anything but an exemption was a deal-breaker and that they would not install any ramps.

"Decisions made: We need to pursue EXEMPTION; and HSF will not provide any ramps on vessel," one department staffer told colleagues afterward in an e-mail.

The auditor concluded that department e-mails showed a decision was made at this meeting, although who made the decision is not revealed.

"Current and former department officials and employees who worked on the ferry project were either unable to recall who made the decision at that meeting or chose to invoke executive privilege when asked who directed the team," the auditor found.

The department, in its written response to the audit, rejected any inference that a decision was made at the governor's office directing the department to pursue an exemption. The auditor countered that the department's e-mails about the meeting "are self-explanatory."

"Ultimately, a decision involving the governor's office was made that directed the 'ferry project team' to pursue scenarios that would exempt the ferry harbor work from environmental review," the auditor found.

Awana, who resigned last year, told The Advertiser in January that he had no role in the decision. Barry Fukunaga, who was then the department's deputy director of harbors and is now Gov. Linda Lingle's chief of staff, has said he made the decision in consultation with his construction and engineering staff and then-department director Rod Haraga. The department also consulted with the state Office of Environmental Quality Control and county planning agencies.

Fukunaga told The Advertiser in writing last year that he did not discuss his deliberations or his eventual decision with Lingle, Awana or state Attorney General Mark Bennett.

The audit is also similar to The Advertiser's reporting last September on the Maritime Administration's loan guarantee for Superferry. Maritime Administration officials told the auditor that loan guarantees are typically exempt from environmental review because they just provide financing for ship construction. The vessels typically use port facilities already in place.

Maritime Administration officials told the auditor that harbor improvements for Superferry could have triggered an environmental assessment that could have limited ferry access to ports. So the Maritime Administration added a condition that Superferry provide confirmation that no environmental assessment was required.

"MARAD's position was that it was not willing to finance the construction of any vessel that might be unable to operate because it has no port," the auditor found.

The audit recommends that the Legislature empower a state agency to enforce environmental review laws and require agencies to update exemption lists every five years. The auditor found that the public has little involvement in the exemption process other than the right to file a lawsuit to challenge an exemption.

Higa had complained to lawmakers that she missed a March deadline for a preliminary draft of the audit because of significant delays in obtaining documents from the Lingle administration. Higa repeated those complaints in the audit and said her staff would be preparing a second phase of the audit for a later report.

Higa described the Lingle administration's cooperation as "slow and incomplete, at best." The department called that description "wholly untrue" and said any delays were based on requests by Higa that the attorney general found were "unreasonably broad in scope."

The department chose not to comment on many of Higa's conclusions. Mike Formby, the department's deputy director of harbors, said last night that the administration's wants the opportunity to review the second phase of the audit.

I think what we wanted to do was reserve the right to see the full report, because it's really risky to look at half the report and respond knowing that they're out there still doing field investigation, interviews, reviewing documents," Formby said. "And basically, they look at the response you gave, and they go out and look for a way to rebut your response."

Hawaii's government caved in to pressure from the Hawaii Superferry, allowing it to bypass an environmental review by the state, according to an audit to be released today.

The report finds that the Department of Transportation exempted the Superferry from an environmental study after the interisland ship threatened not to come to Hawaii unless it was given the go-ahead by June 30, 2005.

"In the end, the state may have compromised its environmental policy in favor of a private company's internal deadline," according to the audit, ordered by the Legislature and prepared by Auditor Marion Higa.

The Transportation Department's exemption set in motion a series of events including ocean protests off Kauai, court rulings that stopped the ferry and emergency legislation overriding the courts.

Since then the Superferry has been carrying small loads of passengers and cars from Honolulu to Maui when it has not needed repairs, as it did from Feb. 13 to April 7. The ferry still has not resumed voyages to Kauai.

Hawaii Superferry President John Garibaldi said he never misrepresented his business needs, and the deadline was something he had to live with, too, to satisfy shipbuilding contracts, investors and a $140 million loan guarantee from the U.S. Maritime Administration.

"People had imposed time deadlines on us to meet," Garibaldi said yesterday. "We were just trying to work with it, and we were upfront in disclosing that to people."

The state invested $40 million for harbor improvements and barges for the ferry to offload vehicles, which the Hawaii Supreme Court ruled last August should have triggered an environmental review.

Because the U.S. Maritime Administration's loan guarantee was valid until January 2006, the audit concludes it was the Superferry that forced the state's hand by setting a June 30, 2005, deadline. The guarantee was contingent on there being no further environmental reviews.

The Department of Transportation acknowledges that the auditor is correct in saying that the U.S. Maritime Administration did not technically set the June deadline, said Mike Formby, deputy director for harbors. But the reality was that the Superferry needed an environmental exemption by then or else it could not come to Hawaii, he said.

"There was pressure on them (the Department of Transportation) to make a decision, and they made the best decision they could make at that time under the circumstances," Formby said. "It would be inaccurate to say the date didn't matter. It did matter. But at the same time, it would be inaccurate to say the harbors division didn't do their homework, because I think they had."

In its review, the audit found strong disagreements among Department of Transportation staff regarding whether to allow the Superferry to skip the state's environmental laws.

"In a department e-mail, the chief planning officer wrote, 'We would be crazy to go exemption,'" the audit says.

The state has said the exemption was made by Barry Fukunaga, who was then deputy director for harbors but was later promoted to state transportation director and currently serves as Gov. Linda Lingle's chief of staff.

The audit recommends that an entity should be given authority to enforce environmental laws, state agencies should document findings that lead them to make an exemption, and guidelines should ensure that all steps required to protect the environment have been followed.

WAILUKU - State Auditor Maron Higa says her office cannot meet a March 2 deadline to complete an audit of the Hawaii Superferry as mandated by law because the Lingle administration has been uncooperative.

Higa said the state Public Utilities Commission has cooperated with her, but she has had difficulty getting documents from the Lingle administration.

State Attorney General Mark Bennett said his office has released thousands of pages to the auditor, but all the information the auditor wants must be reviewed before it can be released.

Bennett said his attorneys have to go through each page and e-mail to determine if they include legal advice requested by a state official exercising attorney-client privilege.

"It's a huge request," Bennett said. "We have made it a large priority. We have not been treating them as unimportant."

Higa said disagreements have also arisen about whether Lingle and department officials can claim "executive privilege" in restricting access to documents.

"They can make those claims. It depends on how they apply those claims," Higa said yesterday.

Higa, speaking this week during a Senate Ways and Means briefing, said since November she has received only one of 30 boxes of documents requested from the Lingle administration.

Higa said the Legislature passed Act 2 during a special session in late October, requiring the audit that included the task of determining who made the decision to exempt the Hawaii Superferry from an environmental study.

Environmentalists contested the use of the exemption, resulting in a two-year court battle that they won at the state Supreme Court.

State legislators passed Act 2 to exempt fast passenger ferries like the Hawaii Superferry from conducting an environmental study prior to operation, but required Higa's audit.

State Senate Republican Minority Leader Fred Hemmings said the Democrats have used the audit to thwart and harass the Lingle administration.

"Marion Higa is the legislative auditor and obviously doing the bidding of those who appointed her," Hemmings said yesterday.

Gov. Linda Lingle is protesting a state Senate investigation into bids for a research contract, and her attorney general is resisting a second one into how the Superferry was exempted from an environmental impact statement.

The Senate is investigating how Ted Liu, her director of the Business and Economic Development Department, awarded a $10 million contract to a company to provide venture capital investment for research into using hydrogen as a renewable fuel.

Liu initially picked the lowest-ranked bidder, H2 Energy LLC, for the contract, but complaints to the state procurement office forced Liu to award the contract to the first-ranked bidder, Kolohala Holdings LLP.

Despite the reversal, the Senate passed a resolution setting up an investigative committee headed by Sen. Donna Kim, who has started subpoenaing witnesses and holding hearings.

Lingle wants Kim dropped from the committee, charging that Kim "displays a lack of tolerance, patience and courtesy."

"These opinions should not be used as a basis for a vendetta against a certain department, agency or individual under the guise of an 'investigative committee,'" Lingle said in a letter to Senate President Colleen Hanabusa.

In her letter, Lingle said Kim wrote a critical opinion piece for the Honolulu Advertiser and "cast aspersions" about Liu's department in a letter to her constituents.

"The governor is taking an active role in trying to interfere with our investigation," Hanabusa said, calling it a issue of the separation of powers between the executive and legislative branch. "Sen. Kim was selected to lead the investigation. I can only assume she must be hitting a nerve," Hanabusa said.

Kim (D, Kalihi Valley-Halawa) said, "I could not do this by myself if I were biased. It takes the whole committee to vote on it."

In another controversy, the Lingle administration has been resisting a legislative auditor's investigation into how the state exempted the Hawaii Superferry from the need for an environmental impact statement.

Last week Marion Higa, legislative auditor, wrote to Hanabusa and House Speaker Calvin Say (D, St. Louis Heights-Wilhelmina Rise-Palolo Valley) to say her report would be late.

The law that authorized the Superferry to sail also called for the auditor's investigation and for the Lingle administration to cooperate.

"We have encountered significant delays and a variety of roadblocks in conducting our audit task," Higa said.

Lingle declined yesterday to talk about the letter, saying she did not know about it.

Hanabusa, however, said Lingle should be aware of the conditions because she had signed the bill into law.

"It is clear from what she (Higa) is saying that she has not been able to get the cooperation on the records. I am sure the attorney general has his own opinion.

"The governor, by signing the law, acknowledges that we are supposed to get this report," Hanabusa said.

She said Senate leaders would meet with the state House leadership regarding the Superferry investigation.

Mismanagement and a lack of resources could cost Hawaii its "fertile environment"

STATE conservation enforcement officers are spread thin, undertrained, underequipped and mismanaged, leaving Hawaii's natural resources susceptible to blatant "overuse and abuse," said state Auditor Marion Higa in a report released yesterday.

"If resources continue to be depleted at their current rate and conservation enforcement remains ineffective and inefficient, Hawaii's future generations will lose the enrichment of abundant wildlife, a fertile environment and a rich cultural heritage," said the audit, which reviewed the state Department of Land and Natural Resources' Division of Conservation and Resources Enforcement. "The absence of enforcement coverage contributes, in part, to overuse and abuse of Hawaii's resources."

The 60-page report, compiled between May and December, said enforcement officers are often pulled from conservation patrols to work on crime prevention and marijuana eradication.

The enforcement division has a $7.5 million budget and employs 103 people. Its officers are responsible for 1.3 million acres, from the tops of mountains to the coastlines and three miles out to sea.

Though the division's staff is small -- and overstretched -- the audit noted that the state does not use its enforcement "workforce efficiently and therefore does not provide as much enforcement coverage as could be possible. Through improved work methods and better scheduling, available staff could provide more widespread coverage for longer periods each day."

Lawmakers and environmentalists said the audit confirmed their suspicions about the state of conservation enforcement in the islands and raised serious concerns about the well-being of Hawaii's environment. Many also said they hope the report will provide a road map for making improvements.

"The fundamental problem is that whatever new law we enact, it doesn't have a lot of credibility if we can't enforce it," said state Rep. Brian Schatz (D, Tantalus-Makiki), one of several legislators who pushed for the audit last year. "We have work to do. The first step to improving the division is admitting that it's not running at an optimal level."

DLNR Chairman Peter Young said the findings and recommendations in the audit "were not a surprise."

He said he is already working to solve some staffing and compliance issues, and will go to the state Legislature this year with an increased budget request.

"We are trying to expand our enforcement presence, maximize our exposure and be as efficient as possible," Young said. "We're taking aggressive steps to do our part. It's all of our responsibilities to take appropriate action, to deter inappropriate action and to have us work together."

Young declined to release details on his upcoming budget request but did say he would ask for $800,000 to hire private, uniformed security officers who would patrol 22 state parks during peak hours or when violations tend to occur. He said it is still unclear whether the officers would be able to issue citations.

Also in the request is about $1 million that would be granted to Hawaii environmental groups to provide education on the state's conservation laws.

Jeff Mikulina, executive director of the Sierra Club in Hawaii, said underfunding is a key part of the division's woes. But, he said, leadership is also an issue.

"What we really need is an environmental 911," he said, adding that enforcement officers should be better supervised and held to higher standards. "It's an awesome responsibility to be protecting our island's environment."...

State Rep. Hermina Morita, chairwoman of the House Energy and Environmental Protection Committee, agreed, saying she wants the division to work on its "priorities for enforcement."

For example, she said, enforcement officers should be hunting out poachers or illegal loggers before looking for marijuana plants.

The audit notes that in addition to enforcement officers being "spread too thin," they are sent out into the field with analog radios, which encounter many "dead spots" with bad or no radio coverage.

Also, the report said, officers have four-wheel-drive trucks and access to boats but are not able to use all-terrain vehicles or dirt bikes to patrol hundreds of miles of shoreline and forest. And though officers are provided with handguns, they are not given shotguns or rifles while patrolling hunting areas.

While compiling information for the report, the auditor said, investigators saw a slew of residents breaking state conservation laws.

On a patrol with an enforcement officer at Kauai's Waimea Canyon State Park, officials saw extensive erosion caused by illegal dirt bikes. Also, the report said, they saw jet skis being used illegally in Hanalei Bay.

The UH Foundation cites privacy concerns in the state's
request for financial records

The University of Hawaii Foundation is negotiating to turn over financial documents under threat of a subpoena from state Auditor Marion Higa.

In a Nov. 4 letter obtained by the Star-Bulletin, Higa told Elizabeth Sloane, president of the UH Foundation, that the auditor would issue a subpoena commanding the foundation to turn over the documents unless it cooperated.

Lawmakers have asked Higa to find out how the private foundation that raises money to help UH spends about $2.3 million a year from a special fund. The money from the Tuition and Fees Special Fund is given to the foundation to generate private donations through fund-raising services.

The university had been spending $1 million a year since 1997 on a contract with the foundation, but the auditor said a new $2.3 million contract was signed in October 2002.

Higa said the new audit is a follow-up to a legislative audit last year that criticized the management of six special funds at the university, including the tuition fund.

She said she is also looking into other payments from the university to the foundation for development officers and a $350,000 annual contract to provide alumni relations services.

Higa said her office is examining "whether the university got what it contracted for."

Bill King, chief financial officer for the foundation, said the foundation has had two meetings with Higa since the Nov. 4 letter and is "making good progress" on turning over the documents. However, he said some details still need to be worked out.

King said the foundation wants to protect the names of donors who want to remain anonymous.

"We're trying to figure out how to do that," he said. "That's where we got bogged down before."

King said the foundation also had concerns about the state auditing a private foundation.

"We don't consider ourselves a state agency, but we're trying to work with her because we get funding from the university," he said.

State Sen. Norman Sakamoto, chairman of the Senate Education Committee, said it is unusual for the auditor to take the step of preparing a subpoena.

"Normally, people agree and work things out," he said. "I'm hoping they still can."

In the letter, Higa outlined the steps that had been taken to conduct the audit and what documents were being sought:

>> On June 3 she informed the foundation, university administration and the Board of Regents by letter that she was continuing with an audit of the UH contract with the foundation for "fund-raising, stewardship and alumni relation services."

>> In subsequent meetings, letters and phone calls through October, the foundation provided some documents but did not provide others. Concerns were also discussed on the scope of the audit and how the auditor would protect the confidentiality of some donors.

>> In an Oct. 1 request, the auditor sought, among other items, a list of gifts and endowments received, payouts and expenditures, and information relating to the calculation of the gift assessment fees and endowment administration fees charged to the university since 2001.

The auditor was also seeking budget information, revenues and expenditures related to alumni relations and a list of development officers supported by university funds.

Higa said depending on when she gets the documents, the audit should be released during the next legislative session.

The 2002 Legislature called for an audit of university funds after a controversy involving UH President Evan Dobelle's use of foundation money to take two dozen donors and staff members to a Janet Jackson concert at Aloha Stadium.

The residents of Hawaii owe an expression of thanks to two of our public servants and to their staffs. I refer to state auditor Marion Higa and Robert Watada, who heads the Campaign Spending Commission.

Both of these people could be called whistleblowers, though I find that term a little repulsive. But they have tenaciously carried out their duties successfully while being subjected to enormous pressure to shut up and keep quiet.

As they are human, I suppose it is possible they have erred from time to time. The fact that they do uncover and report numerous situations which are either illegal or evidence of poor management and that they report these to the public is a great service to us all.

All too often, people doing this type of work become the victims of retribution. As a note of caution to our esteemed Governor Lingle: Please leave the auditor alone so that she can continue to do her work. It is clearly an important and useful job.

REGULAR MEETING MINUTES
TUESDAY, NOVEMBER 20, 2001
MILILANI MAUKA ELEMENTARY SCHOOL CAFETERIA

CALL TO ORDER: Chair Jeanette Nekota called the meeting to order at 7:04 p.m., with a quorum present.

MEMBERS PRESENT: Lily Canas, Tim Dittrick, Melissa Graffigna, Wade Kodama, Teresa Lau, Jeanette Nekota and Pamela Young.

REPRESENTATIVE GUY ONTAI: Representative Ontai reported the following: (1) In the Third Special Session of the 2001 Legislature, legislation relating to residential and hotel tax credits passed, however bills relating to commercial tax credits were not even considered. (2) The Republican Caucus proposes a seven-day tax holiday _ customers pay no excise tax on purchases _ is needed to stimulate the economy. He noted that in these hard economic times, many of these small businesses have folded. (3) Voted against the $150 million for the relocation of the John A. Burns Medical School because he feels monies being diverted from the tobacco settlement fund along with the use of eminent domain is wrong. (4) $17.5 million will be allocated for construction of Mililani Mauka Elementary School II in two phases. (5) Expressed concern with the use of funds from the State Foundation of Culture & the Arts' Special Funds used to purchase statues should be used instead to fix and repair public schools like Mililani Uka Elementary that is having a problem with land erosion. Ontai stated his agreement with State Auditor Marion Higa that the Culture & Arts Special Fund be eliminated.

(2) Chair Nekota informed everyone that the Mililani Complex has until Monday, December 10, 2001 to fully comply with the Felix Consent Decree granting equal education to special needs children.

Some $55 million in fines, restitution, bail and other cash were collected by state courts but the state auditor found insufficient internal controls and faulty accounting procedures that could open the door to fraud or theft.

"The Judiciary should appropriately segregate cash receipt duties so that no one individual has custody of cash, access to supporting documents or records, and the function of depositing cash," said auditor Marion Higa in the audit submitted to the Legislature and Gov. Ben Cayetano yesterday.

There were errors in recording about $500,000 of the $30 million in restitution due from offenders to compensate victims.

More than $23 million in fines was collected, but another $6 million in outstanding fines was written off from the records and deemed uncollectible.

A review of 96 cash receipts from three court systems found 95 instances when cash collected was not deposited until two to 18 days later.

The state auditor's office and the accounting firm of Grant Thornton LLP said they found the decentralized judiciary system to be inefficient and the dearth of electronic controls poses a threat to security of information.

"Unauthorized access to critical data files compromises the integrity of information being processed and increases the opportunity for input tampering, which involves the entry of false or fraudulent data into the computer," said the report. "Cashiers have the ability to change account information on the online data master files including the victim's name and address. Restitution payments for a deceased victim or an out-of-state victim can be changed and issued to another individual by simply changing the account information."

Higa's report recommended implementation of control procedures, segregation of cash handling duties and restricted access to documents and files.

Michael Broderick, administrative director of the courts, responded by pointing out that "the auditor focused primarily on the "possibility' of problems."

He said that although the auditor said failure to implement internal controls could put court resources at risk, "the auditor did not find any actual discrepancies." Broderick's response was published with the auditor's report.

He said the Judiciary is addressing concerns about cash collection with blind count procedures, a lockbox system for mailed receipts and new bail refund procedures.

Broderick said the courts have taken measures to improve the collection of fines including converting to an automated ledger, and it will soon open a new electronic system by which the public can pay traffic fines over the Internet.

He acknowledged that "more can be done to collect restitution. However, the Judiciary's current compliance rate of 93 percent is high."

He said auditor's finding of $500,000 restitution not properly recorded pertained to two old cases, one from 14 years ago, the other was 15 years old.

Poor planning and little oversight of equipment purchases led to years of delays and cost overruns for computer-related projects in the state Department of Transportation, an audit found.

In one case, the department spent more than $1 million to develop a highway maintenance system that was originally expected to cost $100,000, state Auditor Marion Higa said in her report released yesterday.

The project remains unfinished even though it was supposed to be completed in 1991.

The tenfold increase in the projected cost stems largely from the department's failure to follow planning methodology required by the state Department of Budget and Finance for the development of computer systems, Higa said.

"I think it's very easy for departments to want to avoid using system development methodology because it's humbug," she said. "It's very tempting to not follow it. And some of these consequences are the result of that."

Department Director Kazu Hayashida could not be reached for comment. In a Dec. 30 letter to Higa, he said the DOT concurs with many of the findings in the report and is working to correct the problems noted.

Overview	Report Title (click on title to see full report in PDF format)
---	2007 Annual Report
08-09:	Performance Audit on the State Administration’s Actions Exempting Certain Harbor Improvements To Facilitate Large Capacity Ferry Vessels From the requirements of the Hawai‘i Environmental Impact Statements Law: Phase I
08-08:	Financial Review of the Hawaii Health Systems Corporation
08-07:	Sunrise Report: Condominium Commission
08-06:	Sunset Evaluation: Mental Health Counselors
08-05:	Study of the Social and Financial Impacts of Mandatory Health Insurance Coverage for Use of Intelligent Medical Vigilance Services in Acute Care Hospitals
08-04:	Sunrise Analysis: Debt-Management Service Providers
08-03:	Financial and Management Audit of the Molokaÿi Irrigation System
08-02:	Management Audit of the Department of Education's Hawaiian Studies Program
08-01:	Sunrise Analysis: Destination Clubs