Aloha Madame Chair and Senators, I am here to answer your questions and welcome the opportunity to do so.

The Board of Regents and I sincerely regret the disappointment that the Athletic Departments fundraising concert mishap has caused. The planning and execution of the concert by our athletic department was a wellintended benefit for our athletics program. Yet based on what we have learned so far It was poorly conceived, and administered by those in charge, and the result has been an unfortunate and embarrassing episode for the entire University of Hawaii. In all of the news media and now legislative attention that this episode has received it appears that it has been forgotten that this money was stolen FROM us not BY us. As this briefing will confirm, as soon as I learned about the Athletic Departments mishap with its fundraiser, I consulted with the Board of Regents leadership and together we moved quickly to protect the ticket holders and to fulfill our responsibility to find out what happened, why it happened and what corrective action needed to be taken to ensure that a similar mishap would not occur again. While no one was terminated, there were consequences, and depending on the BOR Task Group findings, and individual discussions, there will be more corrective actions taken as the Board of Regents and the administration complete their work. In addition, some immediate corrective actions have already been taken. So what did we do? We immediately contacted law enforcement to pursue the people involved in what appears to be a sophisticated scam.

 We hired an experienced fact finder to prepare a detailed report on what happened. We temporarily placed the Athletic Director who heads the unit and the official directing the fundraiser on a paid administrative leave. We withdrew the Athletic Departments extensive authority to issue contracts and make exceptions in other fiduciary matters. We proceeded with an internal audit, both operational and financial. We approved the Chancellors recommendation to reassign Jim Donovan to the Chancellors office and to initiate the search for a new Athletic Director that we expect will be as successful as our search for a new Head Football Coach. We narrowed the job description of the Stan Sheriff Center arena manager. We hired expert legal counsel to avoid any conflict of interest for the Office of General Council (our in house attorneys). We have issued instructions that so called pro forma invoices are not to be used. We are counseling all the UH employees involved. The BOR created a special task group to examine our fiduciary procedures and oversight. What more could have been done given the limitations imposed by law enforcement authorities, the threatened lawsuit and the limited information and time available? It is not an easy question to answer. In retrospect I regret that the University leadership may have been too cautious in its public explanations of the actions it took as the investigation and personnel changes unfolded but we believed we were following the recommendations of law enforcement, legal counsel and practices of the UH System. I also want to ensure the Committee and our UH community that the missing money did not involve any tuition or state general funds and will not impact the many achievements of the UH System, with its record enrollment of over 60,000 students and 8,000 employees. Our recent and continuing successes -- not our stumbles should and do make the University of Hawaii a leader in areas such as cancer research, astronomy, ocean, earth and space sciences, Asian Pacific studies, and as a model indigenous serving institution. We also continue to grow as a revenue center for the State, bringing in more than one million dollars a day to supplement state funding.

Let me stress: I am not trying to diminish the impact of this episode or underestimate the role of athletics. Our athletics department has a very high profile and for many citizens it is their main contact with the University. But we cannot lose sight of our larger academic mission to provide a quality education to our students, and encourage and discover new knowledge with ground breaking research by our faculty. We are not a one-dimensional institution. The University of Hawaii is one of our states most valuable assets, and together we must make it even stronger. Thank you for the opportunity to make this opening statement. September 24, 2012