Cesspool
Hawai‘i’s systemic corruption

Bob Stauffer and Josh Heim

September 18, 2002

Politics in Hawai‘i is a sewer. Corruption fouls the air we breathe. We live holding our noses against the stink.
     Every so often the stench builds up until a toxic bubble bursts, and an official caught with his snout in the public trough is exposed, indicted and brought to trial.
     Coming up to perhaps the most important election in decades, Hawai‘i is ranked nationally at the bottom for the number of elected leaders per capita (we prefer to have most leaders appointed), at the bottom for the number of adults who make it through the hoops to get a chance to vote, but at or near the top for the percentage of our elected officials sent to jail or under indictment or investigation.
     We are in a doldrums of political malfeasance, and its stench is thickening:
     o Daniel Kihano, state House Speaker, was convicted and jailed on 15 felony counts that included charges of obstruction of justice, fraud and the theft of campaign funds.
     o Mitsuo Shito, a power in the state House, was found in violation of similar acts concerning campaign funds by Campaign Spending Commission staff, but was never prosecuted.
     o Milton Holt, a power in the state Senate, was convicted and jailed for mail fraud.
     o Marshall Ige, a former state senator and state Democratic Party leader, pleaded guilty and is serving time for theft and tax evasion.
     o Jon Yoshimura, Honolulu City Councilmember and former Council chair, and now candidate for the state Senate, had his law license suspended for six months and was fined for leaving the scene of an accident he caused, and for covering it up.
     o Andy Mirikitani, Honolulu City Councilmember, was convicted and jailed for theft, bribery, extortion, wire fraud and witness tampering.
     o Rene Mansho, Honolulu City Councilmember, pleaded guilty and was jailed for theft and the misuse of campaign funds and Council staff.
     o Nathan Suzuki, state House member, is under indictment for crimes involving tax laws and control over foreign bank accounts.
     o Mike Amii, a member of Honolulu Mayor Jeremy Harris’ cabinet, was arrested on suspicion of theft and racketeering.
     o Other members of Harris’ administration, as well as the mayor himself, could face trouble. According to press reports, two grand juries are investigating allegations of corruption and campaign-spending crimes.
     Those are just some of the toxic bubbles that have burst publicly, with names on them. A serious statewide investigation to identify elected and appointed officials who are ethically and financially corrupt would quickly sniff out scores more, rising to hundreds, with the stink clinging to them.
    
Corruption = debt
     Corruption costs us, and costs horribly. Corruption means $8,000 of taxpayer money to put a single $160 sink in a public school classroom. It means over $100,000 to put up a stoplight. It means nearly $200,000 to put in a bus stop. It means nearly $500,000 to put in a short traffic-noise-suppressing wall that normally would cost one-tenth that much. That’s where taxpayer money has been going, repeatedly, systematically, hundreds and thousands of times over, for years and years, for decades — fortunes stolen from the public so that corrupt people get richer. And those fortunes are ripped from the good of the community. Over a single lifetime in Hawai‘i, we are talking billions of bucks.
     To pay a bribe costs money, but really not all that much, at least not in Hawai‘i. It’s just a minor business expense. For the briber, the cost-benefit ratio is very advantageous. The going rate for kickbacks on a Hawai‘i government contract is perhaps 1 to 1.5 percent of the dollar amount of the bid, and paying the kickback gives the corrupt contractor a guarantee that he can inflate the dollar amount multiple times over. When the fix is in, the return on investment is wonderful. Bribery produces, for the lucky insiders, downpours of public dollars. It beats the stock market all to hell. Hawai‘i doesn’t have casinos — yet. But with bribery, if you arrange to be one of the lucky few, your lucky number comes up with a casino-size jackpot, every time.
     For the corrupt contractor, what could be more rewarding? He can live in a big McMansion house in the Beverly Hills-carwash architectural style, drive a shiny car around town, join prestigious clubs and send his kids to the best private schools. All of which makes him what is called, straight-faced, "a respected member of the business community."
     But for the actual community, corruption is devastating, disaster piled on disaster. Government, meaning the taxpayer, overpays by multiples on corrupt contracts. This runs government into debt. Taxpayers are squeezed until they are wrung dry. But even squeezed cost-cuttings — of schools, of park programs, of basic public services — are not enough to balance the books, not nearly. Government has to borrow and keep borrowing. Coming up to this year’s election, Hawai‘i is in debt somewhere between $3 and $7 billion dollars, depending on which state figures are used.
     No way can this be paid off. So government, meaning the taxpayer, is stuck with paying for this debt. The payment is around $650 million per year. All that we spend on the environment is just a drop in the bucket when compared to this $650 million. This is more than we give for operating funds to the whole University of Hawai‘i system of 10 campuses.
     A tiny fraction of this $650 million could pay for schoolbooks and supplies that we can’t afford and that our teachers, year after year, have to pay for out of their own pockets. This annual debt payment is over twice as much as the total pension cost to all retired state workers, promised pensions that we’re told we can no longer afford. Indeed, the $650 million is more than we pay for the state offices of the governor and lieutenant governor, all of our libraries, and the departments of Accounting & General Services, Agriculture, the Attorney General, Commerce & Consumer Affairs, Defense, Hawaiian Home Lands, Human Resources, Land & Natural Resources, Public Safety (including the prisons) and Taxation, combined.
     Take corruption out of the equation, and the cost of government contracts would go down to a fraction. And if contracted work is done honestly, for a fraction, then the amount of state borrowing would also be a fraction, and the state debt would not keep escalating. But it does. In the last 10 years, the most obviously corrupt period in Hawai‘i’s history, state debt grew 50 percent.
     All those taxpayer dollar bills paid out annually for the debt — lay them down along the roads, and the line would stretch from Pearl Harbor, past the Legislature in the state Capitol, all the way to Hanauma bay, 2,500 times over.
     Corruption is smothering us in debt. Forty years ago, public debt in Hawai‘i averaged $600 for a family of four. Now it is $20,000 per family. These days, one Hawai‘i family out of every four is paying all its taxes and fees (income tax, 4 percent tax, gas tax and all the rest) just to cover the debt payments.
     Now look at the damage that the cost of corruption does to the public good: school buildings that would not look presentable in most Third World countries and no money for textbooks; having to charge people to go to public parks like Diamond Head; the lowest public spending for education in the nation; little or no enforcement of environmental laws because we can’t afford it; fee hikes to help pay for minimal services because the normal budget can’t cover them. This is where we live, and corruption is our closest neighbor.
    
Bribery is legal
     Corruption is so widespread here, in part, because so much that is obviously corrupt — payoffs, kickbacks, influence purchasing, graft, all the other forms of bribery — is simply not successfully prosecutable. Hawai‘i’s law on corruption is nothing but a joke. That law was put on the books by politicians, and it stays there because a majority of politicians simply do not want the law made strong and enforceable enough to stop corruption.
     You can find the laws of the state of Hawai‘i in public libraries and on the Internet at www.capitol.hawaii.gov/site1 /docs/docs.asp#hrs.
     The laws are bound into 14 blue-covered volumes that cover 40 topics called "titles." These titles are divided into chapters, parts, sections and subsections. The subsection is the sharp end. Violate a subsection and you face a fine or a lawsuit. Or you can land in jail.
     You can tell a lot about a society by its laws. The more a society cares about something, the more laws it writes. You can tell that in Hawai‘i we care a lot about real estate: Land and buildings get hundreds of subsections. We also care deeply about having people with money dying safe in the knowledge that their money will be passed on to the right people the right way — taking care of this takes perhaps a thousand subsections.
     Now, in all these tens of thousands of subsections in the assembled, majestic laws of Hawai‘i, how many are there to control and punish public corruption?
     One.
     Read it (see sidebar, Page 6). It won’t take you but a minute or two. And it won’t take you more than another minute to realize that this pitiful single subsection is itself a joke.
     Here’s the punch line, in plain English: In Hawai‘i, to bribe an official is not provably illegal.
     Read that punch line twice, if you like, then go back and read Subsection 710-1040(1) again. It always comes out the same. To make a bribery case stick in Hawai‘i, a prosecutor has to prove that the official intended to be corrupted. Likewise, to convict the briber it must be proven that he or she intended the payment to be a bribe. Think about this.
     "Sir, please tell the court and the members of the jury: When you offered the official this $90,000 sports car, did you intend it as a bribe?" Of course not, it was a token of respect and esteem for this selfless public servant who is a great human being.
     "And you, sir, when you accepted the keys to this $90,000 sports car, did you intend to be corrupted?" If the official says "no," or takes the Fifth, he gets to drive off with the top down, the wind in his coiffed hair and the warm blessing of the Hawai‘i sun on his skin, wheeling back to his reserved parking spot at the Capitol or other public office, to entertain the next expression of respect and esteem.
     Bribes, actual or attempted, should not only be viewed as crimes involving individuals. They are truly crimes against the people. Politicians, their senior aides and key appointed officials see bribes being offered all the time, to them and to others. And bribes are accepted all the time: cars, airline tickets, all-expense vacations, golf club memberships and green fees, nights on the town at hostess bars. But under Hawai‘i law, Subsection 710-1040(1) or anywhere else, no one has to report a bribe.
    
Killing reform
     Abill to require the reporting of bribes was introduced in 1996 and was quietly killed by then-House Judiciary Chair, Terrance Tom, who refused to hold a hearing on it. It was reintroduced in 1997, and again was killed by Tom (now running for the Board of Education). In 1999 it was reintroduced and this time it was killed by House Labor Committee Chair Terry Nui Yoshinaga. Reintroduced again in 2001, it was killed by House Legislative Management Chair Nathan Suzuki, who, we will recall, is currently under indictment for federal crimes. So, in the inner rooms of the Hawai‘i Legislature, reporting bribes is such a hideous creature that it must be strangled at birth, out of sight.
     In the 2002 session of the Legislature, a bill was introduced to cut down on corruption in audit contracts by shifting the responsibility for auditing state contracts from the Department of Accounting and General Services to the Legislative Auditor. In DAGS, audit contracts can be awarded on a nonbid basis, negotiated in private, between buyer and seller. Not surprisingly, their costs are often quite high. Coincidentally, private audit companies are a major source of campaign payments.
     The bill was an excellent idea. The legislative auditor, Marion Higa, is very good at her work, and would bring a sharp pair of eyes to the monitoring of the awarding of audit contracts as well as to what the auditors found. She would report on things out in the open. But this is the last thing that nonbid contractors and their public-official friends want. So the bill was watered down to just a pilot project. Then it was vetoed by the governor. In Hawai‘i, the open auditing of government contracts is a dreadful beast, and once you let it get started it will run riot. So stop it before it starts.
     This year also saw a major campaign-spending reform bill in the Legislature that included prohibiting people with government contracts from making political contributions. This time the bill got out of the state House — unanimously — but was held up in the Senate. The chair of the lead Senate committee that initially examined the bill was Cal Kawamoto, who oversaw the bill while it was substantially gutted with the complete removal of the proposed ban on contractors’ contributions. Behind-the-scenes negotiations, hidden from view, then resulted in a compromise that banned contractors from contributing to the governor or county mayors, but allowed them to continue contributing to legislators and county Council members.
     The watered-down "compromise" bill passed, but then the governor vetoed it, for the stated reason that it excluded the legislative branches. It almost seems as if it was all planned that way, like a skillful ballet, giving us the appearance of politicians wanting change. Political rulers, as opposed to true reformers who have no real power, can now point fingers all they want about why reform failed this year, but the result is still just a confusing smokescreen. The sad fact is that nothing happened.

See no evil
     Taking bribes is so pervasive here that it is a way of life, an accepted part of the remuneration package on top of salary, one of the perks that comes with a great many jobs in government.
     Economists will tell you that the price of something depends on supply and demand. With bribery, we have endless supply and endless demand — an excess of public officials more than willing to be bought, and a surplus of business folks offering bribes because they know that the risk of exposure, much less jail, is close to zero.
     When Daniel Kihano, the former House Speaker, was charged with corruption to the tune of $32,750 by the federal District Attorney in 1997, he received an outpouring of support. Letters to the editor said that what Kihano had done was nothing more than "common practice," and that "half the Legislature" was doing the same. Kihano got jail. But no one else was prosecuted then. "Half the Legislature" could go back to business as usual.
     When Milton Holt, former powerful state senator and a staff member at Bishop Estate, was caught spending thousands of dollars of Kamehameha Schools’ money entertaining politicians at strip clubs, there was not even a token effort to investigate those politicians for taking bribes. No attempt at all. "Your Honor, those thousands of dollars were not intended as a bribe, and accepting double handfuls of strip club goodies was not intended to be acceptance of a bribe." End of story.
     Meanwhile, you’ve finished your round of golf on a working day, and in the clubhouse you hear a happy foursome talking about the new sets of clubs they have been given. How come these guys are so lucky? Well, it just so happens they are purchasing agents for the state government, and a thoughtful friend, who only wants them to be the best they can be, tee to green, is a state-contract vendor or bidder. Oh, of course. End of story. Par for the course.
     Where does an honest official who sees a bribe being offered, or is himself offered a bribe, go to report it with any certainty that the case will be taken seriously and pushed to the max? And, what will this honest official get for his trouble? People in government jobs who are basically honest in the rest of their lives away from work (and they are the majority) find themselves cutting ethical corners in the office, turning their heads, closing their eyes, holding their noses — seeing, hearing, smelling and speaking no evil. All so they can keep their job, meet the mortgage, make it to the next payday. Everybody in the office knows about corruption, but nobody talks about it out loud. It’s the silent majority.
     In Hawai‘i, the sound of whistle-blowing is next-to-never heard. The whistle-blower is a threatened species. There are true cases talked about privately in whispers, of whistle-blowers losing their jobs, being blackballed, forced to leave Hawai‘i to find work. The threat of this is real, and the threat doesn’t even have to be enforced that often: Word gets around, and the word all by itself is enough to guarantee the sounds of silence.
    
Live dirty or die clean
     On the business side of corruption, many people do talk about their bitter experiences. But only off the record. It doesn’t pay to speak on the record. You want to stay in business, and to stay in business you have to deal with government. Even if you don’t have a direct contract, you still know that if you don’t deal with government the right way you can find your applications and approvals slowed down or shelved. Or, you will find that the contract that you want to bid on, for work you can do well, turns out to be nonbid, and you are locked out of the room where the fix is being put in place, because you have not paid the price of admission.
     So, if you want to meet your business bills and have a bit left over, you must pay to play. Forget for a moment about the crooks who want to bend or trash environmental and zoning laws to reap huge bucks from some multimillion-dollar development. Instead, think about honest engineers trained to do public roads or infrastructure development, builders who want to do homes and need approvals, or software folks who could help the government sort out its huge computer problems. They all have to face being forced to climb down into the sewer. That’s reality. Off the record, businesspeople talk about it with revulsion. But they hold their noses and do it, because they have to. Live dirty or die clean — that’s a hell of a business plan, a hell of a mission statement.
     Another bottomless tank in the corruption sewer here is election campaign spending. Corrupt money flows freely through the underground pipes that connect business with elective politics.
     Geolabs, a local engineering contractor (Clayton Mimura, president), does work for both the state and the City & County of Honolulu. Earlier this year the firm admitted that it made $224,000 in political contributions, of which at least $124,700 was illegal. Geolabs agreed to pay a $64,000 noncriminal fine. Criminal charges have not yet been filed, though grand juries empaneled by both the federal District Attorney and the City Prosecutor may be looking into the matter.
     The illegal payments went to Cayetano, Lt. Gov. Mazie Hirono, Mayor Jeremy Harris, Maui Mayor Kimo Apana, then-Big Island mayoral candidate Fred Holschuh (he’s now running for County Council) and former City Council Chair Arnold Morgado.
     SSFM International, the fourth-largest engineering firm in the Islands, is meanwhile being investigated by a federal grand jury for crafting an illegal system in which the firm asked other people to make donations that would then be reimbursed by the company. Although contributions made by chief executive officer Michael Matsumoto and SSFM totaled only $2,800 or so over the past several years, a Campaign Spending Commission investigation allegedly found $198,050 in illegal donations funneled to Cayetano, Hirono, Harris and Apana.
     SSFM has been awarded millions of dollars in state and city contracts, including nearly $4 million in nonbid engineering and consulting work from the city under Harris since 1996. As reported by the Honolulu Star-Bulletin, the well-connected firm hired Raymond Sato, a former state comptroller, to run its Kaua‘i office; George Kaya, a former Maui County official, to head its Maui office; and Hugh Ono, a former Hawai‘i County department head, on the Big Island.
     Although under investigation, at this time not one of the firm’s leaders nor the many relatives and friends who allegedly participated in the conspiracy has been criminally charged. The cases of Geolabs and SSFM have been in the newspapers, so strictly speaking it isn’t the sound of silence — just the sound, thus far, of little slaps to corporate wrists.
     Other companies that have admitted campaign-finance wrongdoing this year and have been fined include Browlie & Lie, Diversified Energy Services, Masa Fujioka & Associates, GKO & Associates, Mechanical Engineers of Hawai‘i, Okahara & Associates, PBR Hawai‘i, RMY Construction, Sato & Associates, Marc Siah & Associates and Thermal Engineering Corp. Illegal payments went to Cayetano, Harris, Apana, gubernatorial candidate Linda Lingle and Honolulu politician Mufi Hannemann. These firms are among 40 in the current investigation, initiated last year, that have admitted wrongdoing and been fined. Another half-dozen are about to be added to the list, with more to come. None of the firms, their responsible officials, or the ones who participated in the payments have yet been criminally charged.
     Another example: As a charitable trust Bishop Estate is strictly forbidden under penalty of law from involving itself actively in influencing politics. Yet, for years, it had an office with a locked safe stuffed with secret documentation of polite political corruption in the form of campaign payments, and evidence of illegal money transfers between politicians and contractors deliberately concealed in false invoices (the secret office was quickly shut down by the new Kamehameha Schools leadership). The list of political chicaneries is long, and the names of the businesspeople involved in the crimes have been in the papers, but none of them have been prosecuted.
     The beat goes on.
    
What’s needed
     Currently the Campaign Spending Commission, the state’s watchdog, operates on a shoestring annual basic budget of five personnel and about $400,000. The funds actually come from those of us taxpayers who check off that little "$2 campaign" box on our state tax returns. The Legislature, to its shame, gives not a penny of its regular budget funds to the commission, and actually limits it to just this little portion of the "$2 money." This is all the Legislature doles out, as little as the politicians can get away with. It’s no more than what a few good corrupt contracts cost in payoffs — cut out the corruption from just a few contracts and steer the money to the commission, and we could double its spending, hire more investigators and begin to really clean things up. Put another way, this $400,000 is what we pay on our corruption-bloated state debt every five hours, 24-hours-a-day, year round. This $400,000 is nowhere near enough of a Roto-Rooter to clean more than a few stinking pipes.
     For enough Drano to clean out the sewer, start with the law, Subsection 710-1040(1).
     Take out the deliberately insane requirement of having to prove intent. A bribe, given or taken, is a bribe.
     What if the defense says, "No, it was an honest gift"? Amend the law to say that a gift or gifts totaling above $100 a year are automatically defined as bribes. The prosecutor just has to prove the dollar value.
     What about reporting bribes? Make it the law to report all solicitations or offers of gifts over $100. Then prosecutors can go after whoever makes the offer — and whoever fails to report offers.
     What about "packaging," where a $2,000 bribe is packaged into 20 gifts of $100 each? Make that a felony, with every participant guilty of conspiracy.
     Jack up the penalties all round, to where they really mean something. Under Subsection 710-1040(4), even if the insane burden of proof can be met, bribery is only a Class C felony. This does not include any mandatory jail time. Even if a prison sentence is handed down by a judge, the criminal can have his or her sentence suspended, or can convert the prison time to probation. Parole is also allowed. And any prison (or probation) time can be no more than five years.
     Bribery should be put up where it belongs, as a Class A felony. Only by reaching Class A is the criminal given any mandatory prison time, with suspended sentences and probation banned. The length of time in jail, up to 20 years, is set by the parole board.
     Note that under our criminal laws a first-class crime has a longer punishment. This type of crime includes murder and attempted murder. Class A is actually a second-class crime, and so forth. So the current system actually counts bribery as a fourth-class crime. The suggestion of raising it to Class A simply says to raise it up to a second-class crime. It deserves no less.
     Federal bribery law mandates up to 15 years imprisonment and heavy fines. In Massachusetts, it is illegal to even accept a cup of coffee from a lobbyist. In Iowa, the threshold is $3. In Wisconsin, all gifts, meals and travel are banned. A great many politicians here would have long since been thrown out of office if this was California, which constitutionally bans accepting free transportation with a penalty of immediately losing office.
     No more slaps on the wrist here in Hawai‘i. Give public corrupters and their conspirators serious jail time, and hand them a bill to pay back the big bucks they stole.
     Enough already.
     There are honest politicians, dishonest politicians, and those politicians in the middle who turn their heads and hold their noses. Elections are coming right up. You can find out which politicians are which — it’s there for you to see in their voting record on the floor of the Legislature. A willingness to take on corruption is not a matter of party labels, it’s a matter of character. It’s time to breathe some fresh air.

Corruption law in the state of Hawai‘i
Bribery is banned for public officials in Hawai‘i under a single subsection of the law. See Hawai‘i Revised Statutes Volume 14, Title 37, Chapter 10, Part IV, Section 710-1040, subsection (1):
     "A person commits the offense of bribery if: (a) The person confers, or offers or agrees to confer, directly or indirectly, any pecuniary [monetary] benefit upon a public servant with the intent to influence the public servant’s vote, opinion, judgment, exercise of discretion, or other action in the public servant’s official capacity; or
     (b) While a public servant, the person solicits, accepts, or agrees to accept, directly or indirectly, any pecuniary benefit with the intent that the person’s vote, opinion, judgment, exercise of discretion, or other action as a public servant will thereby be influenced."
     Note that if the italicized (for emphasis) segments were deleted, the law would be stronger. The crime is paying off public officials, period. The italicized language clouds this — and contributes to few charges of public corruption ever being filed by state prosecutors, because the crime is so hard to prove once the requirement of "intent" is included.