In April 1997, Environment Hawai`i pulled the lid off what appeared to be a slush fund for the state’s effort to build an irradiation facility in Hilo, which would have allowed the export of Hawai`i’s fruit-fly infested produce.
The Exotic Pest Insect Committee was appointed in 1994 by then-Governor John Waihe`e and the Legislature gave it whatever it asked for. But this seemingly public entity did not behave as one. While it was created and solely supported by the state, EPIC claimed to be a private non-profit organization and received sole source contracts with the state, ostensibly to carry out fruit-fly projects.
But EPIC never registered its articles of incorporation or filed annual reports with the state Department of Commerce and Consumer Affairs. Its only office was that of its executive director, lobbyist Jon Okudara.
In 1997, Okudara allowed Environment Hawai`i to interview him by phone, but never face to face. When we sought documents, he would have his secretary bring them down from his office in a highrise building on Alakea Street in Honolulu (which paid $2,000 a month toward his rent).
And those documents, most of which were records of expenses, were strange as well. When laid side-by-side with budget proposals or contracts with the state, they didn’t match. By the time of our article in April 1997, EPIC seemed to have been transformed from an organization intended to facilitate research on fruit-fly eradication into a kind of ATM-machine for the state Department of Agriculture’s efforts to push irradiation.
Earlier this year, the DOA sought to close out an old state contract with EPIC. Our examination of records there suggest that while Okudara and the committee may have ceased their work years ago, they left many unanswered questions about how hundreds of thousands of state dollars it received over the years were actually spent and how assets purchased with state funds were disposed of.
A review of activities surrounding EPIC since Environment Hawai`i’s April 1997 article reveals that even in its demise, EPIC still behaved as if it were above the law.
Background
EPIC was the metamorphosis of an earlier panel, the Hawai`i Fruit Fly Committee, which was formed in the 1980s by scientists and representatives of government agencies with a stake in controlling fruit flies. In 1987, HFFC was turned into an official advisory committee, and by 1991, Okudara had been named its executive director. For most of its life, it received large contracts from the Governor’s Agriculture Coordinating Committee to carry out activities intended to help control, if not eradicate, eradicate fruit flies and thereby encourage exports of Hawai`i produce.
Many of Hawai`i’s fruits – most notably papayas — are susceptible to infestation by non-native fruit fly species that have become established in Hawai`i. Such fruits cannot be exported without undergoing some kind of post-harvest treatment to kill or sterilize flies.
By the early 1990s, some in the agriculture industry and state DOA were expressing doubts about the feasibility of controlling the flies. They argued that it might be less expensive and more efficient to develop a post-harvest treatment that would allow the export of fruit without controlling fly populations.
Fruits can be treated with heat, cold, or x-rays to kill hidden pests. The state Department of Agriculture (DOA) had its heart set on irradiation. And in 1994, in support of this new direction, Waihe`e transformed the HFFC into the Exotic Pest Insect Committee, or EPIC, whose new charge was to promote and develop technologies that would allow export of Hawai`i produce, including “post-harvest treatment protocols, irradiation, and the establishment and maintenance of fruit fly-free zones.”
HFFC and later EPIC had entered into a series of contracts with the GACC for which work products such as progress and final reports were never submitted – at least not until Environment Hawai`i began inquiring about them. Okudara was paid for his administrative services while EPIC appears to have entered into contracts with researchers at the University of Hawai`i to carry out the scientific research that was supposed to be done under EPIC’s agreements with the GACC.
Thousands of dollars requested of and received from the Legislature for fruit fly research were instead spent on trips by Okudara, DOA Plant Industry director Lyle Wong, and farmers and other parties who stood to gain financially. They included members of EPIC who grew fruits that were irradiated and sold under a pilot project in Chicago organized by Wong and EPIC.
When Environment Hawai`i last left EPIC, it had just submitted a report – months overdue and provided weeks after EH first asked for it – required under a $139,000 contract with the DOA. The written portion of the report was a mere three pages long, not including an appended study on fruit flies. Our article went to press before EPIC was to have submitted its final report for that contract in April 1997.
So what’s happened since then?
Shortly after the article was published, Okudara seems to have lost interest in obtaining further contracts from the state for EPIC. A request for approval of a $95,000 contract that the DOA submitted in April to the Department of Budget and Finance was withdrawn without explanation.
At the time, EPIC appears to have owed the University of Hawai`i’s College of Tropical Agriculture and Human Resources nearly $200,000 for fruit fly research completed years earlier. Okudara told Environment Hawai`i in 1997 that this obligation would be met by using an unspent EPIC balance of $84,000 along with “$105,000 from 1996 funds that have not yet been released.”
In December 1998, EPIC resurfaced to hand in its final report, a document that raises more questions about EPIC’s business practices than it answers.
The Final Report
EPIC’s final report, due in April 1997, did not arrive at the DOA’s door until December 16, 1998. Not counting the duplicated Appendix II (a simple compiling error, perhaps), the final report consists of a title page, a 2û-page summary of the committee’s activities, three studies totaling 28 pages, and 11 pages of expenses incurred from the 1991-92 fiscal year through 1996-97.
The three appended studies are “Fruit Fly Species and Related Environmental Studies,” by John Beardsley, William Perriera, and Grant Uchida; “Nontarget Attraction to Methyl Eugenol Traps Used in Male Annihilation of the Oriental Fruit Fly in Riparian Hawaiian Stream Habitat,” by Michael Kido, Adam Asquith, and Roger Vargas; and “Sampling for Insect Pests on Rambutan and Atemoya,” by Asher Ota and Willis Hong of the Hawai`i Agriculture Research Center – a study that has nothing whatsoever to do with fruit flies, but for which, Okudara reported, EPIC paid $28,000.
One might be led to think all of these studies were funded by EPIC or HFFC. However, at least one – that of Kido, Asquith and Vargas — was supported by the U.S. Department of Agriculture, not the HFFC or EPIC. Of the three studies, this is also the only one published in a peer-reviewed journal, Environmental Entomology.
In addition, the study of Kido et al. is not the same study that is described in Okudara’s short summary of the committee’s work. Instead, the short description contained there applies to a study appended to a draft report given to the DOA months earlier. That report, “Survey of non-target arthropods in native ecosystems captured with fruit fly traps” by Uchida, Beardsley, Elmo Hardy, Vargas, and Perriera, draws from research conducted a decade earlier and thus would seem to predate any contract that HFFC or EPIC could have drawn up with CTAHR.
Okudara was asked why the studies appended to the draft report were not the same as those in the final.
“I don’t remember that far back,” he told Environment Hawai`i in mid-July.
The studies, he said, were “primarily driven by Beardsley,” an entomologist who retired from the University of Hawai`i in 1991 and who died last year.
Fuzzy Math
In comparing the final report’s summary of expenses to budget requests and reports Okudara provided to Environment Hawai`i in 1997, it seems EPIC or the HFFC would request money for one thing, the Legislature would appropriate funds for it, the Governor’s Agriculture Coordinating Committee would contract for it, and then the funds would be spent on something else.
For example, the Legislature appropriated $196,370 in fiscal 1993-94 for fruit fly research. And HFFC (which later became EPIC) received a contract with the GACC for services totaling that amount. But EPIC’s final report indicates that that year, it spent only $69,893.08, all but $1,593 of which went to Okudara, his assistant, rent of the law office he shared then with Watanabe Ing & Kawashima, his accountant, and other miscellaneous administrative services.
Under that same contract, EPIC/HFFC was supposed to study the effects of various types of fruit fly lures on insects in environmentally sensitive areas on O`ahu and Hawai`i. But while EPIC’s final report states that it spent more than $300,000 between FY 1991-1992 and FY 1996-1997 on research, no study for O`ahu or Hawai`i can be found in EPIC/HFFC files at the DOA.
Another example can be found in Okudara’s 1997 summary of expenditures, which stated that in the 1994-95 fiscal year, HFFC/EPIC had intended to pay CTAHR $184,088 of its $203,790 appropriation for studies on male annihilation technologies on non-target native arthropods, “to concentrate in the Kipahulu area of the Haleakala National Park.”
Access problems led to the study being relocated to Moloka`i, while the nature of the study changed from one of looking at effects on native animals to that of simply inventorying insects attracted to lure-baited fly traps at 11 sites along paved roads.
Even with the scaled-down scope of work, EPIC was unable to pay CTAHR for the study. Because Okudara and the GACC could not work out terms of a contract before the end of the fiscal year, those funds lapsed.
In 1997, EPIC wrote in its expenditure summary that it planned to pay the debt to CTAHR with 1996 funds that had been encumbered but not yet released. (About $65,000 of EPIC’s appropriation for that year was not spent.)
In its final report, though, EPIC noted it had spent a total of just $80,000 on the Moloka`i study. The rest of the $326,208 it spent in the three fiscal years between 1994-95 and 1996-97, went mostly to pay a Washington consultant; to pay for travel costs and per-diem allowances of irradiation proponents on mainland and inter-island trips; and, of course, to pay Okudara for administrative services.
According to its final report, though, HFFC and EPIC paid out $371,802.34 over six years (roughly the same amount it paid for administrative services) for research. The only studies that EPIC ever provided to the DOA were those four appended to the draft and final reports, even though the only expense EPIC bore for the best of the lot appears to have been the cost of the Xerox.
Getting Stiffed
On May 1, 1996, the GACC entered into a contract with EPIC for $139,760, the full amount appropriated by the Legislature. As specified in the contract, EPIC was paid $70,760 upon its execution. And after Okudara submitted the required preliminary report in March 1997, he was paid $55,000, leaving a balance of $14,000 owed to EPIC on the contract.
By then, EPIC was attempting to encumber funds appropriated for the 1996-97 fiscal year. In April 1997 (the month our report appeared), the DOA asked the Department of Budget and Finance to approve a $95,000 contract with EPIC.
Budget and Finance balked.
“We discovered some problems,” Ed Rogoff of Budget and Finance told Environment Hawai`i. “We did a verbal communication to the [DOA] director [James Nakatani], basically using [the EH] article as a guide. We asked, ‘What’s going on here? Who made the decisions?’ They were going to ask for more money. We said, ‘If you’re going to waste your money this way, we’re not going to give it to you.'”
Getting Off Easy
It was at about this point that EPIC seemed to end its relationship with the state, and the DOA seems to have let EPIC slip away. But it’s not as easy as that.
Under EPIC’s articles of organization, adopted in February 1995, “the committee shall exist until it is dissolved by the Governor of the State of Hawai`i.”
EPIC’s articles and bylaws also state that “upon the dissolution of the committee, after paying or adequately providing for the debts and obligations of the committee, the remaining assets shall be disposed of in the manner directed by the Legislature, or if notÉ, shall be distributed to a similar organization which has established its tax exempt statusÉ”
In early 2002, the DOA realized that EPIC had not claimed the last $14,000, owed upon delivery of EPIC’s final report, of its contract.
In an April 17, 2002 letter, DOA administrator James Nakatani wrote to Okudara that, “Since there has been no activity with this contract since December 16, 1998 and the terms of the contract have not been met, the StateÉwill terminate the contract and the remaining balance will no longer be available for collection.”
To this, Okudara responded on April 30, “The committee has not existed since 1998 when it ceased operations.”
No documentation in files at the DOA shows that the governor formally dissolved EPIC in 1998. The Legislature never decided what to do with EPIC’s remaining assets. But if it did, what might those assets be?
Moneywise, not much. Between FY 1991-1992 and FY 1996-1997, EPIC reported that it spent a total of $833,853.36, roughly the amount it received through contracts with the state minus the $14,000 it never claimed.
While there may not be any money left, EPIC did spend $6,845.07 of it between FY 1991-1992 and FY 1996-1997 on software, computers, and an HP Laserjet.
And then there is the issue of CTAHR studies. According to Okudara, researchers would submit work plans with costs, then HFFC or EPIC would “prepare an agreement through the AG’s office and we set certain benchmarks when researchers would report on their progress.”
No such progress reports or agreements between the university and the state, the HFFC or EPIC, are in DOA files. Okudara suggests they’re “in a box somewhere.”
Stay Tuned
These missing reports and agreements, assuming they exist, may hold the key to an unexplained series of events following EPIC’s demise involving the DOA and CTAHR.
Last month, Okudara told Environment Hawai`i that EPIC “paid off all studies that were done. We didn’t go for any more moneyÉ We finally ran out of money and couldn’t do anything else.”
But in another statement, he seemed to contradict himself, saying that because of a GACC error that resulted in the lapsed funds, EPIC was left in debt. “We didn’t have money to pay CTAHR,” he says. “When Tish [DOA deputy director Letitia Uyehara] called saying EPIC had some money left, we said why don’t you give the money to CTAHR because we owed them.”
All that was left in EPIC’s coffers was $14,000. By Okudara’s estimation, the debt to CTAHR was on the order of $190,000. So if EPIC didn’t pay CTAHR, who did?
To be continued…
— Teresa Dawson
Volume 13, Number 2 August 2002
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