HART CEO tears apart city’s rail audit: ‘It’s a mess’

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Dan Grabauskas, CEO and executive director of the Honolulu Authority for Rapid Transportation, says a city audit of Honolulu’s rail project is flawed and filled with inaccuracies.

The report was sent to the Honolulu City Council on Friday.

“I’d say that this so-called audit is a joke, but it hasn’t been funny. It’s a mess,” he said. “When you take a look at response that we have for the audit and each of the 21 recommendations that they have and the so-called observations that they’ve made, I think you’ll see pretty clearly that they have made a number of observations or critiques without any substantiation.”

Grabauskas claims the timeline was rushed, and the audit was completed several months ahead of schedule.

“The auditor (Edwin Young) said to me, ‘I’m going to have to ask that we hurry this up,’ and I said, ‘What do you mean?’ and he said, ‘Well, we’ve got to issue this by April 15,'” Grabauskas said. “He said, ‘I’m under tremendous pressure from members of the city council to get this out.’ That’s what he said. And I said to him, ‘That doesn’t sound like an independent auditor to me,’ and he said, ‘Well, it’s what I have to do.'”

Grabauskas claims none of the auditor’s documents show money for rail was misspent, and all of the money was accounted for.

He also took issue with the audit’s claim that HART never updated its financial plan, which he said, is true. But “when you read the report, it makes it sound like the fact that we didn’t update the financial plan was something we did wrong. Absolutely false,” he said. “It doesn’t mean we’re not updating financial data on a regular basis, weekly, monthly, quarterly. You’ll see in the report, every single report, every single update that we’ve made. But for them to, as they will conclude in this report, that somehow we have a flawed process here because we didn’t update the financial plan is an absolute misunderstanding of the fact that you can’t do it if you don’t have the money, and we didn’t have it until the mayor signed the bill.”

Another example of inaccuracy, according to Grabauskas, is that the audit claims HART issued a stipend for the airport guideway and stations contract.

“Folks, that’s the contract on the street right now and hasn’t even been awarded, so we cannot have issued any stipend. Again, it’s a factual error that they’re trying to add in there because it’s a big number, half-a-million dollars,” Grabauskas said. “It’s a mistake in their audit and they didn’t choose to change it.”

Grabauskas also takes issue with the idea that HART needs to do a better job of reporting Department of Taxation GET revenues and receipts.

“I said to auditor, you know, I don’t run DOTAX, so I cannot be held, nor can HART be held, to the slowness with which they report, sometimes the difficulties with which we’ve had to get information from them,” he said. “We report regularly and accurately, we have every quarter, what we collect… The fact of matter is they tried to equate monthly income that is reported by DOTAX after the fact to the quarterly amounts that we have reported to us.”

“These inaccuracies that you’re pointing out in the city auditor’s report, are you saying that they were intentional? That the city auditor and his staff deliberately flawed this report?” KHON2 asked.

“I will say this. There were a number of things that we did point out to them between the initial draft and the final draft that we said, like, the fact that don’t keep saying that HART issued those stipends when it was the city, because HART didn’t exist. I don’t know why they didn’t change that. You’ll have to ask the auditor,” Grabauskas said.

He also pointed out several things in the audit he agrees with: fill key vacancies, improve contract administration, and increase staff training.

Grabauskas and Don Horner, former chair of HART’s board of directors, recently came under fire in part due to the spiraling costs of the rail project. Horner stepped down Monday, a few days after Honolulu City Council chair Ernie Martin asked for his resignation.

Councilmembers say they were not given accurate answers about rail’s financial situation and expressed frustration that a recently passed tax extension may not be enough to cover the costs.

“All told, we are presently facing another shortfall of at least $348 million which could climb higher than $800 million. With mounting evidence of mismanagement and out of control costs, immediate consideration must be given to a reorganization of the HART board and taking the difficult step of asking for the resignations of both the HART Board Chair and CEO,” Martin wrote in a letter dated Thursday, April 7.

Grabauskas would not comment on calls for his resignation. “I’ll talk about it tomorrow,” he said. “Today, I want to focus on the audit and I’m hopeful you all will as well.”

He did, however, question how Martin knew about those numbers in the first place.

“An audit under general auditing standards is not to be released until the audited entity has the opportunity to respond, to correct inaccuracies and then have final audit issued with final conclusions and the response of the agency,” he said. “I would ask the media to ask the auditor to whom has he released prematurely that audit, running afoul of the actual standards that he has on his website.”

Neither Caldwell nor Martin wanted to comment until they had a chance to see the final audit.

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