Government Relations, Ethics and Transparency Committee Meeting on June 30, 2026

The Government Relations, Ethics and Transparency Committee of the Maui County Council met on June 30, 2026 at 1:35 p.m. to review and discuss the County of Maui Fraud Risk Assessment report prepared by Spire Hawaii LLP (dated February 2026). Chair Kamanoi Batangan presided, with committee members participating in person and remotely. The meeting was part of an ongoing effort to strengthen good governance, transparency, and accountability. No decisions or votes were taken; the item was a discussion-only (7B) item.

Public Comments & Testimony

• Konamu Balending expressed support for the fraud assessment and urged adoption of a nepotism policy, noting that some employees may be in positions due to personal connections.
• Kaneali Williams raised concerns about the Department of Finance’s real property assessment division, alleging that TMK property reports may misrepresent ownership by omitting references to royal patents. He argued this constitutes fraud risk and urged the council to consider this when evaluating related bills.
• Lala Johnson highlighted the need for strong internal controls as the county expands grant programs, citing proposed $1.09 million for a new grants division. She asked for transparency in recipient selection, performance standards, and conflict-of-interest reviews.
• Christopher Salem challenged the SPIRE report’s conclusion that no countywide fraud reporting process exists, pointing to the Office of the County Auditor’s stated adherence to GAGAS (Yellow Book) standards. He questioned whether the auditor properly investigated allegations and raised concerns about legal fees and the auditor’s independence.
• Sam Small argued that the charter already provides the council authority to initiate forensic investigations, and that lack of political will has prevented action. He alleged conflicts of interest involving Corporation Counsel and outside counsel, and connected these to deferred agreement audits and improper warranty deeds.
• Kohava'i Paiina testified that all decisions on royal patented allodial title lands are fraudulent because no treaty of annexation exists. He requested return of such lands to descendants of original patent holders.
• James Langford submitted a list of federal grants he had written that align with county needs, and offered to collaborate with the county on recovery programs.

Discussion Items

• Presentation by the County Auditor and Spire Hawaii LLP: Lance Taguchi, County Auditor, explained the impetus for the fraud risk assessment, citing past employee bribery convictions, emergency procurements during COVID-19 and wildfires, and observations of possible fraud, waste, and abuse. Tyler Kimura of Spire presented findings: (1) existing controls are not adequately designed to mitigate fraud risks, with gaps in emergency procurement guidance, vendor fraud monitoring, overtime approval, nepotism policy, hiring screening, and unclear oversight roles between the Department of Water Supply and Department of Finance; (2) there is no countywide policy for handling fraud complaints, leading to potential forum shopping. The report made five recommendations: develop fraud mitigation systems following GAO/COSO frameworks; address policy gaps; provide employee fraud awareness training; convene a cross-departmental fraud reporting working group; and develop a communications plan for the reporting system. The administration agreed with all recommendations.
• Managing Director’s Response: The Managing Director acknowledged the report and noted that many corrective actions were already underway, including training, RFP for internal controls, and collaboration with the Board of Ethics on a nepotism policy. He emphasized that the administration disagrees with some findings but is committed to implementation. He also noted that the CDBG-DR program has strengthened internal controls due to federal oversight.
• Councilmember Questions and Discussion:
  • Emergency Procurement: Councilmembers asked about balancing speed with controls in emergencies. Spire clarified they recommend guidance on when emergency proclamations no longer justify non-competitive procurements. The administration highlighted pre-positioned contracts, training, and post-disaster accountability.
  • Direct Pay: The Department of Water Supply reported 6,223 direct pay transactions totaling $21 million, with $16 million for utilities; the remaining $5 million was for other goods/services. Councilmembers questioned whether utilities should be processed through purchase orders to maintain fraud safeguards. The finance director noted the RFP will address these gaps.
  • Nepotism Policy: Multiple members expressed support, and the Chair noted a draft policy will be considered on July 28, 2026.
  • Perception Gap: 86% of elected officials rated fraud risk as medium, while 95% of department heads rated it low. Spire suggested department heads may have a narrower view.
  • Non‑responding Departments: Several departments (e.g., Personnel Services, Police) did not fully participate in surveys or interviews. Councilmember Paulton suggested transmitting the report and concerns to oversight commissions (Civil Service Commission, Police Commission).
  • Sole‑Source Procurements: Not specifically covered in this assessment, but a state auditor review is underway.
  • Hotline: The county auditor announced a live fraud, waste, and abuse hotline (24/7, phone and web) managed by a third party.

Key Outcomes

• The administration confirmed it agrees with all five SPIRE recommendations and is implementing several: developing GAO/COSO framework, addressing policy gaps (including nepotism), and providing fraud awareness training.
• The Office of the County Auditor launched a countywide fraud hotline effective June 30, 2026.
• The Department of Finance has drafted an RFP (funded at $125,000 for FY27) to strengthen internal controls and provide training; solicitation expected in early July 2026.
• The FY27 audit plan includes a review of direct pay transactions by the Department of Water Supply and a review of county travel policy regarding private jet travel provided by entities doing business with the county.
• The council will transmit the fraud risk assessment report and concerns about non‑participation to the Civil Service Commission and other oversight bodies responsible for departments that did not fully cooperate.
• The committee’s next meeting is scheduled for July 28, 2026 at 1:30 p.m., when it will consider Board of Ethics legislative proposals, including nepotism and lobbyist regulation bills.
• Chair Batangan will work with committee staff to develop a detailed plan to address remaining unmet needs identified during the discussion.