Category Archives: Legislature

Sunlight Foundation looks at unregistered lobbyists

If you’re at all concerned about the regulation of lobbyists and lobbying, you will want to check out this article from the Sunlight Foundation, “What is shadow lobbying? How influence peddlers shape policy in the dark“).

The basic premise, backed up by some data and anecdotal evidence, is that lobbyist registration and disclosure requirements have loopholes that are being exploited by many to avoid disclosure. The article is focused on the national level, but I’m sure if we dig down a bit, we’ll find applies to state and local lobbying in Hawaii as well.

Both the article and its rich set of references are worth careful reading.

Shadow lobbying refers to someone who performs advocacy to influence public policy, like meeting legislators or their staff, without registering as a lobbyist — and it’s a big problem for anyone who cares about transparency in Washington. (For further reading on this topic, you can’t do better than to read Lee Fang’s 2014 investigation of shadow lobbying at The Nation.)

At the Congressional level, lobbyists are supposed to register if they spend 20% of their time lobbying for a client, or make two or more contacts with legislators, their staff, or certain executive agency officials.

The article refers to this 20% criteria as “reasonably easy to get around.”

The same seems to be true of Hawaii’s lobbying law, which defines a lobbyist as someone who is paid and spends at least a certain amount of time and/or money lobbying.

It’s widely recognized that Hawaii’s lobbyist law is a mess. The State Ethics Commission has publicly discussed the problems of enforcing the law’s requirements on several occasions. Unfortunately, SB3024, which would have provided funding for a task force to review the lobbyist provisions, appears to have died in conference.

In any case, thanks to the Sunlight Foundation for their excellent review of the issues.

Good reporting on Senate President Kouchi’s financial ties to developer

Just back from the mainland, and digging through the backlog of email and newspapers.

I enjoyed Kevin Dayton’s story in Sunday’s Star-Adveriser, which raised questions about possible conflict of interest in Senate President Ron Kouchi’s financial ties to developer Kevin Showe, part-owner of thousands of acres of Big Island land being proposed for a state purchase or land swap in SB3071.

Dayton traces Kouchi’s ties with Showe through the Senate president’s financial disclosure statements.

Dayton reports:

Kouchi’s annual disclosure form filed with the Hawaii State Ethics Commission shows he was a shareholder in a real estate company called Leahi LLC from 2011 to 2015, and Kouchi’s 2016 ethics filing values that investment at between $100,000 and $150,000.

Leahi LLC lists Showe Land & Marine LLC and Kauai Development Manager LLC as its members, and Kevin Showe is listed as member and manager for both of those companies.

Leahi was involved with a group that was formed to purchase the site of the former Kyo-ya Restaurant at 2057 Kalakaua Ave. in Waikiki, which was sold to Japanese investors last year for $30.5 million. Kouchi said the $100,000 to $150,000 in value listed on his ethics filing this year represented his share of the proceeds from that sale.

In addition, Kouchi reported being paid between $175,000 and $350,000 as community relations director for Showe Land & Marine since his election to the Senate in 2010, according to my own count.

Kouchi lost a bid for Kauai County mayor in 2002. He was elected to the county council in 2006, but narrowly missed reelection in 2008. In 2010, he was appointed to the State Senate by then Gov. Linda Lingle, and elected in his own right in that year’s General Election.

During his 2008 run for the council seat, Kouchi’s campaign material said he had worked for Showe’s company beginning in 2005. At that time, Showe was a partner in the Kauai Lagoons project, what was expected at the time to be a $1 billion resort development.

The proposed project is a multi-faceted resort featuring 520 acres of
residential oceanfront property, a Jack Nicklaus Signature Golf Course,
breathtaking coastline views, full-service spa, restaurant, and a 38-acre
freshwater lagoon with marina.

Kauai Lagoons is a collaboration with Marriott Vacation Club
International (MVCI) — a subsidiary of Marriott International, Inc. (NYSE:
MAR) — an affiliate of The Ritz-Carlton Hotel Company, LLC, and Kauai
Development LLC.

An estimated 750 homes will be developed, including Ritz-Carlton
managed, private ownership condominiums and townhomes; bungalows and
condominiums managed by Grand Residences by Marriott; Ritz-Carlton Club
deeded, fractional ownership residences; Marriott Vacation Club timeshare
villas; and estate home lots.

The Kauai Lagoons development project became one of Hawaii’s casualties of the recession, and is now getting off the ground under new ownership.

I don’t know how Kouchi managed that apparent conflict of interest as he served on the county council while also representing Showe’s interests in the development. That’s another bit of political history that needs to be sorted out.

Dayton reports that Kouchi facilitated at least a couple of meetings to discuss the possible Big Island land deal.

Kouchi said he set up a meeting between the late Sen. Gil Kahele and Showe shortly after Kahele (D, Hilo) took office in 2011 to allow Kahele to make a pitch for the deal, and attended a meeting last year between Kahele and state Board of Land and Natural Resources Chairwoman Suzanne Case to discuss the Kapua lands.

Exactly who stands to benefit isn’t clear, since the state seems to have a legitimate interest in protecting the area from development, while Showe and his partners will obviously stand to benefit from a sale or land swap.

From Civil Beat: Illegal Lobbying Machine Was Hidden in Plain Sight

As promised, here’s the column I did for Civil Beat on the 30th anniversary of the scandal that rocked the State Judiciary in 1985. I couldn’t make it available at the time to those who don’t subscribe to Civil Beat, but that restriction is lifted three months following publication.

Ian Lind: Illegal Lobbying Machine Was Hidden in Plain Sight

Civil Beat, July 15, 2015 · By Ian Lind

It seems appropriate to note, for the record, that it was 30 years ago this month — July 1985 — when critical questions were first raised publicly about an extraordinary political machine that had been organized and powered by key officials of the state court system, utilizing diverse personnel and resources of the judiciary in extensive but improper lobbying and campaign activities.

I posed those first questions in a July 3, 1985, report written while I was serving as executive director of the local office of the public interest lobbying group Common Cause. The brief report was the result of an investigation over several months prompted by questions our office had received during the 1985 legislative session. The report described, in broad brush, a routine agency lobbying effort in support of its budget requests that had developed into something completely different and more dangerous.

The externals of the court’s lobbying had been known and praised as modern, efficient and effective. And the courts benefited from the results, which could be seen in expanding budgets, new buildings, additional personnel and the latest equipment statewide. But what perhaps wasn’t so apparent was how the machine was fueled and held together.

In 1985, Ian Lind was executive director of Common Cause/Hawaii when he produced a report alleging corruption and violations of the state’s ethics laws by a lobbying group associated with the state judiciary.
As I wrote at that time: “While state law does not prohibit public workers from participating in politics, the creation of an agency-based political machine goes far beyond the simple participation of individual government employees in political affairs. It is reasonable, then, to ask whether it is proper for any state agency to move from routine lobbying into wholesale political action?”

The political group — which was only nominally independent of the courts — was initially known as Hui o’Kokua and, later, Employees for Good Government Service, or EGGS.

At its center was the late Tom “Fat Boy” Okuda, who came up through the ranks until he was the judiciary’s deputy administrative director and, at the time, acting director.

Like many lobbyists, the colorful Okuda often delivered gifts of food to legislative offices while making his rounds at the Capitol.

Okuda turned this “local style” lobbying into an art and, in the process, established himself as a major lobbyist, and the judiciary as a political force to be reckoned. This was accomplished by turning court clerks, secretaries, probation officers, deputy sheriffs and others into campaign volunteers, and court kitchens into production lines where salad, stew and sushi for many candidate’s campaign fundraisers were prepared.

Okuda eventually oversaw an extensive underground food operation, with plate lunches delivered on a daily basis to members and staff of key legislative committees during the crunch times of the session when work extends late into the evening.

Recruiting the ‘Volunteers’

A former Senate Judiciary staff member told me at the time that while the budget conference committee was meeting, someone would call the committee office every afternoon to get a head count of those working late and, a bit later, the food would appear.

“There was lots of food,” this person said, “and lots of leftovers.”

Some meals appeared to have been donated by plate lunch restaurants, while others — stew or chicken, rice, and salad — were reportedly cooked in court offices.

The “volunteers” who prepared these meals were recruited through sign-up sheets circulated by supervisors in various court offices. Several court workers told me they had been told in no uncertain terms that those who “volunteered” to help would be rewarded, while those who failed to participate would find themselves in dead-end jobs, or worse.

“I volunteered, but I resented it,” one court employee told me. Her sentiment was echoed by many others.

“There have been reports of peer pressure, implied threats of lack of advancement in employment, and subtle suggestions of being reassigned to unpleasant tasks at work for lack of participation,” a subsequent investigation found. “Conversely, there have been reports of promotions of some EGGS’ activists to positions of power within the Judiciary in return for involvement in political activities.”

Several court workers told me they had been told in no uncertain terms that those who “volunteered” to help would be rewarded, while those who failed to participate would find themselves in dead-end jobs, or worse.
And the same food production lines were made available for campaign fundraisers, where court personnel would — on request — provide food, tend bar and handle all the general arrangements for campaign events of favored candidates of both parties.

By mid-1985, EGGS had prepared food for the campaign fundraisers of at least 17 lawmakers, according to my count at the time.

One senator told me that when he had first been elected, Okuda came by to talk and to deliver the message, “if you ever need help, just give me a call.”

And there were many ways Okuda could offer to help. He could arrange groups of court employees to campaign, doing everything from sign waving and going door to door for candidates to reviewing voter lists and sending out personalized “friend-to-friend” postcards pitching the candidate of the day.

Okuda at some point along the way gave himself the title of “High Sheriff” and took administrative control of the Sheriff’s Office.

He then used his authority to mobilize sheriff’s deputies in his political machine.

A nod here to then-Rep. Fred Hemmings, who began lobbing his own pointed allegations of misconduct in the Sheriff’s Office. We were at opposite ends of the political spectrum, but we both independently found ourselves very publicly at odds with the judiciary’s political shenanigans.

A subsequent investigation by a “blue ribbon” panel appointed by then-Chief Justice Herman Lum found many of Hemming’s critiques to be on point, and also found deputy sheriffs had been assigned to drive legislators to various functions, provide massages to legislators, and to provide parking and other services at functions “connected with raising money for EGGS …”

The various judiciary offices were also expected to turn out volunteers to run food booths at the state farm fair and at Honolulu Stadium, with proceeds going to fund the judiciary’s political activities. Court workers were also asked to buy tickets for raffles and other internal fundraisers for EGGS, apparently in violation of basic ethical standards.

Some of these things you just couldn’t make up.

Wearing his unauthorized title of “High Sheriff,” or “Chief Sheriff,” Okuda “distributed Deputy Sheriff’s badges to numerous legislators, business persons, close friends and others whose connections to the Sheriff’s Office are either tenuous or nonexistent,” the blue ribbon panel’s investigation found.

Key legislators, including chairs of committees that handled the judiciary budget, were given badges that allowed them free parking at the airport and other state properties, as well as the right to carry firearms. Okuda argued that distributing badges to legislators made them more aware of issues impacting the Sheriff’s Office, a view soundly rejected by subsequent investigations. Whether it accomplished that isn’t clear, but it did create deep and long lasting personal loyalty that led many legislators to stand by Okuda throughout the evolving scandal and beyond.

Disappearing Acts

And there was another bit of magic Okuda could produce for the favored few. He could make traffic citations disappear.

Legislators, business people, influential insiders and their family and friends were directed to Okuda when they were ticketed and wanted to avoid going to court or paying fines. It was widely believed that businesses that contributed food or supplies for the judiciary’s lobbying and campaign activities were able to have traffic citations given to their own employees or customers dismissed with Okuda’s assistance.

At the Legislature, it was more routinized. At one time, legislators’ tickets were simply delivered to the House Clerk, who in turn sent them to Okuda for dismissal.

The blue ribbon panel later reported: “Legislators have had their tickets ‘dismissed’ when legislative immunity does not apply. Tickets have been dismissed or discounted for many other people who have no legitimate reason for requesting an administrative dismissal.”

Okuda was ultimately convicted of 13 misdemeanor counts for fixing tickets, including a total of 3,400 from 1982 to 1986. He died in 2001 at age 73.

While the range of improper, unethical, and illegal activity alleged in the Common Cause report, and later confirmed by independent investigations, was breathtaking, this was no ordinary conspiracy hidden in the shadows or behind closed doors along the corridors of power.

The heroes of this whole affair were the regular workers who came forward and told their stories, despite the same kinds of threats and intimidation that kept elected officials on the sidelines.
This was, instead, an open and widely known conspiracy, directed by the judiciary’s deputy director and stretching over at least a decade, something that hundreds of judiciary employees must have known or participated in, while others, including legislators and other elected officials and candidates, benefited from, while the news media watched but failed to see.

In late October 1985, nearly four months after the scandal broke into the open, I noted the overwhelming silence in the political community. With the exception of Hemmings, most elected officials of both parties had avoided addressing the allegations.

“These are powerful people in a powerful agency with powerful friends,” I said at the time.

But two things did happen. First, the judiciary instituted its own internal reforms, despite the lack of support from elected officials. For this the courts should be given public credit, since at the time, and for years to follow, they paid a political price.

There was a backlash from legislators loyal to Okuda, who punished the judiciary with results that have lasted for decades, refusing to fund judicial raises and reversing the favor that prior court budgets had enjoyed.

As a result, the 2007 State Commission on Salaries reported that Hawaii judges were the lowest paid in the country, ranking No. 51 among the 50 states and District of Columbia. Worse, even after their recommended salary increases, Hawaii’s judges still remained at the very bottom of the salary heap.

That turns out to have been the lingering legacy of Fat Boy Okuda, who said everything that he did had been for the good of the judiciary.

The news media, especially Honolulu’s two competing newspapers at the time, did a tremendous job covering the scandal and moving the story forward. They threw lots of reporting power into the different threads of the story, which ultimately proved very important.

And, finally, the heroes of this whole affair were the regular workers who came forward and told their stories, despite the same kinds of threats and intimidation that kept elected officials on the sidelines. While they didn’t want their names made public because of the threats of retaliation, they shared details such as sign-up sheets distributed by court supervisors, that investigators could follow up on.

We were the scribes who compiled and shared their stories. They were the whistleblowers who took the personal risks, and never were in a position to be publicly thanked. I wish they could have been given the credit that was certainly due.

Note: You can read more about this scandal in newspaper clippings about Common Cause during 1985 and 1986, available online here.

Ethics director poised to take over as state auditor

The House and Senate are scheduled to meet in a joint session on Friday to consider HCR 207 which would appoint the state auditor, the ombudsman, and the director of the Legislative Reference Bureau.

I’m interested in the choice of Les Kondo to take over as the auditor. Marion Higa, who served as auditor for two decades, retired in 2012. The position has been filled on an interim basis since that time.

I’ve been a supporter of Kondo during his tenure at the State Ethics Commission, where he has come under fire from legislators, some powerful interest groups, and from the commission itself. The former litigator has been a stickler for detail and strict interpretation of provisions of the ethics law, pushing harder than previous directors, and getting push-back as a result.

If Kondo is approved, I know he will dive into his new position and do a good job.

But I have to wonder what legislators see as the most important qualifications that Kondo, an attorney and former litigator, will bring to the top job in the state auditor’s office.

There is nothing in HCR 207 regarding the qualifications of those being appointed, so neither the public nor most legislators apparently have any basis for evaluating the nominees.

According to an article by Kevin Dayton in the Star-Advertiser:

When asked about Kondo’s appointment Friday, Souki said lawmakers had an internal agreement that Souki would choose the state ombudsman, Senate President Ron Kouchi would select the auditor and they would make a joint decision on hiring the head of the Legislative Reference Bureau.

Souki said he reviewed Kondo’s background and concurred with his appointment, and “I believe he has the capability. I have no problem. I’ve met with him a few times even prior to this appointment, and think we reached some understanding.”

Likewise, Article VII, Section 10, of the State Constitution, which establishes the auditor position, doesn’t provide much guidance. Like most state constitutions, it is silent on the minimum qualifications to serve as auditor.

The legislature, by a majority vote of each house in joint session, shall appoint an auditor who shall serve for a period of eight years and thereafter until a successor shall have been appointed. The legislature, by a two-thirds vote of the members in joint session, may remove the auditor from office at any time for cause. It shall be the duty of the auditor to conduct post-audits of the transactions, accounts, programs and performance of all departments, offices and agencies of the State and its political subdivisions, to certify to the accuracy of all financial statements issued by the respective accounting officers and to report the auditor’s findings and recommendations to the governor and to the legislature at such times as shall be provided by law. The auditor shall also make such additional reports and conduct such other investigations as may be directed by the legislature.

However, the duties of the auditor are established by statute.

§23-4 Duties. (a) The auditor shall conduct postaudits of the transactions, accounts, programs, and performance of all departments, offices, and agencies of the State and its political subdivisions. The postaudits and all examinations to discover evidence of any unauthorized, illegal, irregular, improper, or unsafe handling or expenditure of state funds or other improper practice of financial administration shall be conducted at least once in every two years after the close of a fiscal year, and at any other time or times during the fiscal year as the auditor deems necessary or as may be required by the legislature for the purpose of certifying to the accuracy of all financial statements issued by the respective accounting officers and of determining the validity of expenditures of state or public funds.

(b) Each department, office, or agency of the State or political subdivision thereof that is the subject of an audit performed pursuant to this chapter shall provide updates on its progress in implementing the recommendations made by the auditor, at intervals prescribed by the auditor.

(c) The auditor, in conducting postaudits, to the extent practicable and applicable to the audit scope and objectives, shall review and assess the audited agency’s rules as defined in section 91-1.

According to the auditor’s website:

The 1978 Constitutional Convention clarified these duties, making clear that the office’s post-auditing functions are not limited to financial audits, but also include program and performance audits of government agencies. While financial audits attest to the accuracy of financial statements and adequacy of financial records and internal control systems of agencies, program and performance audits assess the performance, management, and effectiveness of government agencies and programs providing information to improve operations, facilitate decision-making, and increase public accountability. Click here for a more complete discussion.

The Auditor also undertakes other studies and investigations as may be directed by the Legislature. In addition, Hawai?i Revised Statutes, Chapter 23, gives the Auditor broad powers to examine all books, records, files, papers, and documents, to summon persons to produce records and answer questions under oath, to hold working papers confidential, and to conduct post-audits as the Auditor deems necessary. These powers in their totality support the principles of objectivity and independence that the 1950 constitutional drafters envisioned for a fearless watchdog of public spending.

Like Kondo, Marion Higa did not have a background in auditing when she joined the auditor’s office. Higa graduated from the University of Hawaii, earned a Masters Degree in Illinois, and worked briefly as a teacher before landing a job in the auditor’s office. But unlike Kondo, she had twenty years experience working on audits before being named auditor in 1992, after a short interim appointment.

In a PBS Hawaii interview, Higa stressed the importance of the need to get to the source of problems that have been identified.

When you start looking at the problem that’s brought to you, and when you do program or performance audits, you have to get to the cause of the problem. You can’t make a good recommendation until you identify the cause of the problem. And so, much of the time, when you start peeling the onion to see what caused this problem, where should the problem be traced to, it’s not necessarily staff incompetence or recalcitrance. It’s very often at the management levels; and higher and higher you go, and then very often it’s at the governing level. So, it’s at your board, your board of trustees, your board of regents; your boards, whoever is setting the policy, which trickles down to the operational level. So, we tried not to get mired in the operational level, because you couldn’t very often find the cause of the problem at that level.

Q: You could probably find a lot going wrong, but not why.

Yes; not the why. And if you don’t get to the why, you can’t help them solve the problem.

In his ethics position, Kondo has taken a very different approach, focusing on a literal interpretation of the requirements of the ethics law, and declining to delve into the way agencies deal with practical problems of coming into compliance.

He and the commission were criticized by the Department of Education and teachers union officials for failing to provide more practical guidance and assistance as they struggled to comply with a commission ruling that at least temporarily has blocked educational tours organized by public school teachers for students and parents.

I know from past experience that there are professional auditors who say state audits are too often “gotcha” reports that focus on problems rather than working to guide agencies to solutions, although I don’t know how widely those reservations are shared.

In any case, after administering both the ethics commission and the Office of Information Practices, Kondo is well versed in tackling politically sensitive situations while maintaining independence from external political demands, skills that will serve him well as auditor.

But knowing more about why the Senate selected Kondo for the auditor’s post, and what parts of his experience and past performance were considered most important, will also serve to illuminate the legislature’s view of what the auditor’s office should be doing in the future.

And now the search begins for a new executive director of the State Ethics Commission.

Another bill targeting judges up for public hearing tomorrow (March 15)

Thanks to a reader who pointed out another bill targeting state judges that was introduced by Sen. Gil Keith-Araran. This one would hit judges appointed after June 30, 2016, directly in the pocketbook by cutting retirement benefits from their current level, and extending the time they must work as a judge before qualifying for any retirement allowance through the state’s retirement system.

SB2244 passed the Senate last week, and has a triple referral in the House (Labor, Judiciary, and Finance). That’s a tough climb for any bill, so it’s fate is highly uncertain.

Several other bills introduced by Sen. Keith-Agaran also targeted judges, apparently in response to an unpopular ruling held the Legislature’s failure to provide sufficient funding to the Department of Hawaiian Homes was a violation of the state constitution, and directed the Legislature cease its unconstitutional action, presumably by providing the required budget appropriation to DHLL.

Three other bills were killed in the Senate after public attention was called to them, but this measure has managed to fly under the public’s radar so far this session.

The bill would require judges appointed after June 30, 2016 to serve 12 years and reach the age of 60 before being eligible for retirement.

Judges currently are appointed to 10 year terms. Senior attorneys appointed to serve on the Intermediate Court of Appeals or the Hawaii Supreme Court would be most likely to be impacted by the bill. Even after serving out a full ten year term, they would not qualify for any retirement unless reappointed and serving at least two more years.

According to testimony by Rod Maile, administrative director of the courts:

(Judges appointed) at age 59 or older will not meet the more stringent vesting requirement of 12 years as the Hawaii State Constitution requires mandatory retirement for judges at age 70. Some very experienced attorneys could thereby be deterred from applying as they would not be eligible for any pension benefits upon retirement and would give up actively earning more from their present retirement plan.

And the bill also reduces the way their retirement benefits are calculated. Currently, elected officials of the state or counties, along with legislative officers (“…a chief clerk, an assistant chief clerk, a sergeant at arms, or an assistant sergeant at arms of either house of the legislature”), and judges all accrue retirement benefits at the same rate.

SB2244 would reduce the retirement earnings for each year of credited service for judges appointed after June 2016 by one-third, while benefits of legislators and other elected officials, as well as top legislative employees, continue at the current, higher rate.

Like the other bills that targeted the Judiciary, it isn’t apparently where this bill originated.

The Senate Judiciary and Labor Committee’s report on the bill simply notes:

Your Committee finds that there have been various revisions to the Employees’ Retirement System, and implementation of this measure is necessary to maintain reasonable and fair benefits under the Employees’ Retirement System.

However, the executive director of the state’s Employees’ Retirement System testified that the ERS board had not had an opportunity to review the bill, clearly showing that it had not originated as an ERS recommendation.

The bill drew strong opposition from the Judiciary, as would be expected.

HGEA director Randy Perreira also expressed his union’s “strong concerns.”

Maintaining a fair compensation and benefits package for judges can incentivize experienced attorneys to public service to serve as judges. Adopting this legislation may dissuade those most adept and impartial from serving and will hinder the Judiciary’s ability to recruit the most qualified.

SB2244 is scheduled for a public hearing Tuesday morning, March 15, before the House Committee on Labor and Public Employment.