Honolulu Weekly, July 11, 2001

Sometimes it seems nothing changes.

July 1991. Honolulu Weekly launched its inaugural issue. And over at the Campaign Spending Commission, which was my investigative “beat” at the time for my newsletter, The Hawai‘i Monitor, then-Gov. John Waihe‘e’s campaign committee was trying to explain why a stack of refund checks it had been ordered to send to contributors who exceeded legal limits had never been cashed, in effect leaving the campaign with an “off the books” slush fund.

July 2001. Ten years later. Honolulu Weekly celebrates its 10th birthday. And the now-defunct campaign committee of former Gov. Waihe‘e is again trying to explain why another batch of refunds were never cashed, and how the resulting $80,000 surplus went unnoticed despite bank statements from two separate campaign accounts that had apparently been mailed to the campaign treasurer’s home every month for years.

That $80,000 would certainly grab my attention if it appeared in a bank account I thought was empty, but I guess the stress of campaign high finance can cause even trained professionals to lose their focus.

On both occasions, 10 years apart, Waihe‘e’s treasurer, a certified public accountant, blamed accounting or computer errors for failing to catch the discrepancies and allowing the hidden funds to accumulate. And, in both instances, the CSC initially raised questions, but failed to pursue them in a timely manner, allowing years to drag by while waiting for the campaign to respond.

There’s a disquieting sense of continuity between these two episodes. Disquieting, I suppose, because they seem so similar despite a backdrop of significant change over the 10-year interval.

Back in 1991, the commission’s executive director was the amiable attorney Jack Gonzales, who supplemented his salary with a law practice specializing in small-time collections, while in his day job aimed to keep politicians’ campaigns within legal bounds. At least that was the job description.

If a campaign or contributor were caught operating on the far side of those legal boundaries, Gonzales believed in simply correcting the problem without assigning blame or doling out punishments. If special interests gave more than allowed by law and got caught, “give it back” was the order of the day. Candidates and donors were more than happy to comply, on those rare occasions when so-called “overages” were caught, since there was little risk in trying to get around the law and most violations went undetected anyway.

In Gonzales’ view, disclosure was paramount. He didn’t think it really mattered that the Legislature, under pressure from the public, had passed contribution limits along with penalties for violators, including possible criminal charges. If laws were violated, Gonzales always said, enforcement could be slow and uncertain. Better to just be sure that all transactions were noted in campaign reports, illegal contributions returned and voters allowed to decide for themselves in the next election.

When a slew of contractors, engineers and architects contributed illegal amounts to Waihe‘e’s 1990 reelection campaign, the commission didn’t appear to worry much about it. Just refund the money and let the voters decide, they said. Of course, it was too late for voters to have a say about Waihe‘e, who was not eligible to run again.

I could never figure out whether Gonzales’ laissez-faire approach was a matter of principle or simple practicality, an attempt to stay on the good side of the politicians he was supposed to be reining in.

But Gonzales’ no longer heads the Campaign Spending Commission, because he’s serving an extended sentence in a federal prison in California for his part in a fraudulent investment scheme that bilked a local labor group out of $10 million.

And it’s hard to imagine public officials who diddle with campaign funds or other public coffers ever again enjoying the same wide latitude afforded them in those years.

Today it’s a whole new ballgame, with the conviction of Councilmember Andy Mirikitani just the most recent casualty of a new prosecutorial mood. Other casualties, in recent years, include:

• the late House Speaker Danny Kihano, convicted on federal charges of dipping into the campaign cookie jar and then trying to cover up when a grand jury started looking into the matter;

• Milton Holt, former influential state senator and, at one time, heir-apparent to the Senate presidency, guilty of mail fraud while diverting campaign funds to personal use;

• Maui mayoral candidate and former state environmental official Marvin Miura, and Ross Prizzia, a professor at the University of Hawai‘i’s West O‘ahu campus, convicted of a kickback scheme in which Miura received gifts in exchange for steering consulting contracts to Prizzia;

• Ken Rappolt, former head of Honolulu’s municipal wastewater system, imprisoned for linking the award of nonbid contracts to the receipt of contributions to the mayor’s campaign;

• political fund-raisers Nora and Gene Lum, who gained experience hustling sometimes shady contributions from developers for a string of local candidates and later joined the big time as fund-raisers for the Democratic National Committee, convicted of making illegal campaign contributions;

• former state Sen. Marshall Ige, guilty of campaign violations and facing additional charges of theft, extortion and money laundering;

• Roddy Rodrigues, former aide to Gov. Cayetano during his days in the state Legislature, apparently committed suicide last year after being indicted on federal mail-fraud and tax-evasion charges dating to actions while serving as an official of the labor organization Unity House, charges linked to the same investment scam that took down Jack Gonzales;

• politically influential union leader Gary Rodrigues (no relation to Roddy), facing trial early next year on multiple charges of theft, money laundering and conspiracy after being accused of skimming funds from a series of his public worker union’s insurance deals.

Meanwhile, current Campaign Spending Commission Director Bob Watada has earned a reputation as a tough guy after clamping down on the personal use of campaign funds and taking action against violators, such as the precedent-setting $40,000 civil penalty levied against City Councilmember Rene Mansho for misuse of campaign funds.

So why does the handling of Waihe‘e’s campaign misstep remind me so much of the old days? I think it’s the appearance that the former governor again received special consideration.

Commission records show Waihe‘e was notified in March 1999 that any funds remaining in campaign accounts after July 1 of that year would have to be either returned to the original donors or turned over to the Hawai‘i Election Campaign Fund, which is used to provide limited public funding to candidates who cap their election spending. Prior to July 1, though, funds could be contributed to nonprofit groups.

Waihe‘e duly filed a “final report” indicating the campaign’s last $2,800 had been given away prior to the July 1 deadline, and that no funds remained. But when another $80,000 was found, why wasn’t the full amount turned over to the state election fund, as had already been ordered? That was the recommendation of a commission staffer, according to a handwritten notation in the commission’s files.

Instead, Waihe‘e was allowed to contribute the funds to nonprofit groups, including a whopping $24,000 to a literacy group headed by his wife and another $15,000 to the state Democratic Party.

There might be valid reasons for cutting Waihe‘e some slack, since he’s not a candidate for anything and is no longer in public office, but a review of commission records doesn’t disclose them. [Editor’s note: Waihe‘e is reported to be considering a run for Congress.] There are no investigative files, no records of discussions between the commission or its staff and the Waihe‘e campaign, no notes of what was said or promised, and no indication of whether or not Waihe‘e personally intervened.

Watada was on vacation and could not be reached for comment, but the decision to disregard a staff recommendation, along with an unusual absence of notes, correspondence or other official records, make me uneasy, especially with a costly race for control of the governor’s office on tap next year in which there could be strong temptation to grab competitive advantage by skating dangerously close to the legal edge.

I worry about the old adage, “The more things change, the more they stay the same,” and just hope that over the next decade it’s more of the former than the latter.