AFSCME Audit of Hawaii Affiliate Reveals Suspicious Spending

The reputation of United Public Workers, never all that favorable, has taken another hit. This February, an internal audit prepared by the parent union, the American Federation of State, County and Municipal Employees (AFSCME), concluded that officials of the 13,000-member Hawaii affiliate spent more than $300,000 (and possibly a good deal more) on unauthorized or suspect purposes over two and half years. The 25-page report, a copy of which was obtained by the Honolulu Star-Advertiser, stated: “There does not appear to be meaningful oversight on how funds are spent and accounted for, and…the opportunity for abuse of misuse of union funds exists as a result.” The audit did not accuse anyone of criminal wrongdoing. Union officials have vowed to meet AFSCME transparency standards.   

Hawaii has been the site of an unusual number of recent union corruption cases in federal court. Raymond Fujii, former head of a contractors’ association and a Painters union charity, was sentenced in 2016 for ripping off a combined nearly $1.5 million from these entities. Last August, Brian Ahakuelo, former business manager of International Brotherhood of Electrical Workers Local 1260, plus a pair of family members, were indicted on 70 counts of conspiracy, money laundering, wire fraud and embezzlement connected to the disappearance of $1.4 million in union funds. And this January, Nathan Lum, a former senior official with International Longshore and Warehouse Union Local 142, was indicted in 2018 for tax fraud and identity theft totaling more than $300,000; he later pleaded guilty, and received a 30-month prison sentence.  

The Honolulu-based United Public Workers, also known as AFSCME Local 646, also has a history of corruption. Its central figure is longtime former boss Gary Rodrigues. Back in 2002, Rodrigues and his daughter, Robin Sabatini, were convicted by a Honolulu federal trial jury on dozens of criminal charges, including mail fraud, money laundering and embezzlement, related to the disappearance of union funds. Far from accepting the verdict, the pair went all the way to the U.S. Supreme Court in an unsuccessful attempt to get their conviction overturned. The evidence against them was overwhelming, though the elder Rodrigues, described by one observer as “greedy, autocratic, vindictive and tyrannical,” refused to face the facts. He received a four-year prison sentence, and along with his daughter, was ordered to pay $378,000 in restitution. He also was required to pay a $50,000 fine.

United Public Workers leadership still has accountability problems. Based on charges filed on May 4, 2018 with the Hawaii Labor Relations Board by Alton Nosaka and other UPW members, AFSCME headquarters in Washington, D.C. last year conducted a full-scale audit of the Hawaii union’s finances. The confidential report, dated December 19, 2019, was released to the executive board this February 15. Shortly afterward, the contents were leaked to the Star-Advertiser. Reviewing documents for the period January 2017-July 2019, the report cited tens of thousands of dollars in union funds spent on restaurants, lodging, airfare and other expenses without proper documentation. “Many charges for meals, which were reported on expense reports, were either not supported by a receipt, did not document attendees and union business purpose, or both,” noted the audit. Questionable airfare expenses alone totaled $293,000. More alarmingly, the union spent a whopping $5.6 million on legal fees, though the details here were not available.

While the AFSCME report cited staffing problems and an outdated system as partly responsible for all this, it also pointed a finger at UPW State Director Dayton Nakanelua, who rolled up $26,659 in charges on a union credit card. Nakanelua told the Star-Advertiser that he accepts “sole and full responsibility for the findings and the deficiencies pointed out by the AFSCME audit.” As stated above, the report did not accuse anyone, including Nakanelua, of criminal wrongdoing. But given the red flags that it raised, indictments could happen by the end of the year.