Tag Archives: Hawaii State Ethics Commission

Dang pays $1,000 to resolve potential conflict of interest charge

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[Revised 9:45 a.m.]

Remember the flap during the recent legislative session over SB893? That’s the bill that would have retroactively exempted attorney/lobbyist Marvin Dang from conflict of interest provisions of the state ethics law after he lobbied on bills proposed by a mortgage foreclosure task force he had served on.

There was a big ruckus over the the bill, but in the end, after all was said and done, Dang quietly agreed to pay $1,000 to resolve any potential charges that might have been brought by the State Ethics Commission, according to the redacted summary of an advisory opinion recently made public by the commission.

Here’s what Civil Beat’s Chad Blair wrote about the issue just last month:

Two weeks ago a committee in the state House of Representatives killed a bill that would have retroactively exempted task force members from a conflict-of-interest provision in state law.

As Civil Beat reported, critics said the measure was an attempt to shield one member of the now-defunct Mortgage Foreclosure Task Force from Hawaii’s ethics law.

That member, financial services attorney Marvin Dang, turned up Tuesday before another House committee to ask lawmakers to reinstate key sections of the dead measure — Senate Bill 893 — into Senate Bill 66.

Dang submitted eight pages of written testimony and a draft of SB 893.

He also included written testimony dated March 21 from the Hawaii Bankers Association, the Mortgage Bankers Association of Hawaii, the Hawaii Credit Union League and several former members of the Mortgage Foreclosure Task Force — even though those groups and individuals were specifically testifying on SB 893, not SB 66.

The near flip-flop on the issue by the House reportedly came as Sen. Clayton Hee twisted arms behind the scenes, threatening to hold several House measures hostage if the provisions benefiting Dang were not agreed to by the House.

The issue brought former State Ethics Commission Executive Director Dan Mollway out of the closet to write a scathing letter urging the commission to fire his successor, Les Kondo.

As Star-Advertiser political writer Derrick DePledge reported:

Daniel Mollway, the former executive director of the state Ethics Commission, has urged the commission to fire Leslie Kondo, the current executive director, for allegedly operating in a “rogue and arbitrary fashion.”

In a March 27 letter to the commission, Mollway faults Kondo for publicly suggesting that a former member of a state mortgage foreclosure task force has violated the ethics law when no formal case has ever been brought before the commission.

Lots of high drama, indeed.

The issue goes back at least two years. For example, Kondo explained the ethics law to members of mortgage foreclosure task force at their meeting on August 2, 2011, according to the minutes of that meeting, and it was not the first time Kondo communicated with the task force.

The commission’s consideration of the issue came in response to Dang’s own request for an advisory opinion. In September 2012, the commission drafted an advisory opinion. The draft advisory opinion concluded that Dang’s lobbying, despite repeated warnings from commission staff, violated Section 84-14(d) of the ethics law.

No legislator or employee shall assist any person or business or act in a representative capacity for a fee or other compensation to
secure passage of a bill . . . in which he has participated or will participate as a legislator or employee[.]

The function of an advisory opinion is to provide a guideline for avoiding violations of law. If the legislator or employee who requested the opinion complies with the commission’s advice, they cannot face later charges unless they misrepresented the facts of the case. However, in this unusual case, Dang appears to have initially rejected the commission’s position and instead aggressively sought a political fix.

Meanwhile, another behind the scenes struggle was beginning in court. The ethics commission went to court in November 2012 to enforce a subpoena after Dang failed to appear and produce certain documents related to the matter, court records show.

Dang, represented by attorney Randall Y.S. Chung, filed a number of legal motions over the next several months in attempts to stave off the subpoena. The court files have been sealed and remain confidential, apparently as a result of a motion filed by Chung on Dang’s behalf, but it appears the commission’s subpoena was eventually upheld by the court.

When the attempt to get the exemption bill through the legislature finally ran out of steam, Dang apparently agreed to make a $1,000 payment “to resolve any further action by the Commission” stemming from his lobbying on the mortgage foreclosure bill.

The $1,000 payment was disclosed in footnote #1 to the commission’s Advisory Opinion 2012-2. The summary does not name Dang, but it clearly describes his case.

What remains unclear is why Dang fought so hard to avoid appearing before the commission to discuss the case, since he was evidently very active at the legislature telling his story in official testimony and in private lobbying.

There’s obviously more of a story here that remains to be pieced together.

Senator Hee: “I made a mistake”

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Senator Clayton Hee’s empty financial disclosures got a mention yesterday in the Star-Advertiser’s “Political Radar” blog.

Hee put a smiley face on the issue, and Reporter Derrick DePledge got the comment.

“I made a mistake. I take full responsibility for it. As soon as I was notified of it, I corrected it immediately,” the senator said in an email. “It was human error, and I’m a human being. I apologize for my error.”

A mistake? Well, he made the mistake several times back in 2008 by checking off the boxes claiming to have no sources of income or business connections. Those mistakes were casually repeated in 2009. In 2010. And again in 2011.

Trying to write this off as “human error” is quite a stretch. That’s being quite prone to error.

Hee’s real mistake was assuming that he didn’t need to bother filling out the forms properly by reporting the information required by law.

True, Hee did file an amended return as soon as it became an issue. So far, though, the earlier reports for 2008-2010 have not been amended to provide full disclosure.

It should be noted that the Ethics Commission quickly responded to criticism and now has both Hee’s original 2011 disclosure and the amended version online, although its web site is running very, very slowly, painfully so.

DePledge reports it will be up to the Ethics Commission to determine whether any further action will be taken.

By the way, the state’s business registration records lists The Cowboy Company as a trade name registered by Hee in 1989. It expired on September 5, 1990.

Senator Hee amends latest financial disclosure, questions remain

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Senator Clayton Hee has filed a new personal financial disclosure statement which now includes additional sources of income and other information previously omitted. For years, Hee has filed reports that simply reported “None” for most categories of interests for himself and his wife, shielding his financial interests from public scrutiny and apparently flouting state law in the process.

The omissions became apparent when compared to the disclosure filed independently by his wife, Lynne Waters, after she was appointed to a high-level public relations position in the University of Hawaii system earlier this year.

Senator Hee’s filing of apparently false reports was detailed here on Saturday.

The latest document appeared on the State Ethics Commission web site yesterday.

The senator’s latest disclosure statement, dated May 23, amends an earlier disclosure statement filed just two weeks earlier, but is not identified as an amendment. The earlier report, in which the senator certified that he had no additional items to report, has now disappeared.

Although now removed from the Ethics Commission web site, a copy of Hee’s original report can be found here.

It is not clear whether the commission routinely allows previously certified statements to disappear and be replaced by amended documents without public notice, or whether the previously filed report is still available for inspection at the commission’s office even though no longer available online.

It appears Senator Hee relied on the information disclosed by his wife and simply copied it into his new form. His disclosures filed in 2008, 2009, and 2010 have not yet been amended and still claim none of the income or other interests disclosed in his latest report.

Also a question mark are Senator Hee’s own outside business interests, if any. His own campaign materials described Hee as a “business owner and consultant”, but no such business interests or associated income are reflected in his available disclosures filed with the ethics commission.

The disclosures filed by Hee and Waters also illustrate a significant shortcoming of the disclosure process. Waters reports earning between $50,000 and $100,000 from her private consulting business, but ethics policies do not require disclosure of clients, so the public is left to wonder whether any special interests might have hired Waters in order to influence her husband in his official role as state senator.

Of course, this problem is not unique to Hee and Waters. Elected officials who also own or operate businesses, or hold real estate or insurance licenses, are also able to shield their client lists from public view.

Also unknown at this point is whether Hee will face any sanctions or penalties for the years of filing false and incomplete financial disclosures.

Few UH officials disclose protocol spending

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Back on July 12, I noted that UH Manoa Chancellor Virginia Hinshaw had not yet filed the annual gift disclosure required by the state ethics law. The disclosure statement was due on June 30.

Hinshaw’s statement was eventually received, signed at dated July 14, two weeks after the filing deadline. It was submitted via email and the copy online was not timestamped on receipt.

Hinshaw discloses several gifts, including the usual array of athletic tickets, travel expenses for one meeting of the Western Athletic Conference board of directors, and travel costs for an appearance at the University of Wisconsin-Madison.

The only other gift listed is a 6 foot carpet with a UH Manoa Athletics logo for her office, courtesy of Chevron USA, valued at $1,895.

Absent is any accounting of expenditures from so-called “protocol accounts” provided through the UH Foundation, which can be expended at the discretion of the chancellor.

This is an ongoing issue that is yet to be resolved.

A number of administrators throughout the UH system are provided these slush funds via the foundation, including Hinshaw.

I believe the only administrators to disclose these as gifts are UH President M.R.C. Greenwood, former president David McClain, and Engineering Dean Peter Crouch.

In 2004, an opinion by the State Ethics Commission considered the question of protocol funds controlled by then-UH President Evan Dobelle. The commission opinion was in response to a complaint brought by Rep. Mark Takai.

Takai’s complaint came after the foundation claimed it was not subject to the state’s open records law because it is legally an independent, private entity. In that case, Takai argued, any money the foundation provides for the official use of the president (and, presumably, other officials) is a gift from an outside party and must be reported as such. I summarized the issues in an entry last year.

The commission sided with Takai, and found that the foundation money was subject to disclosure even if intended to further the official functions of the university.

The commission opinion cited the legislative history of the provision requiring public disclosure of certain gifts.

From this legislative history, it is clear that the purpose of the gifts disclosure law is to “promote public confidence” in state government as well as in public officials. The purpose of the gifts disclosure law is to “monitor and prevent any abuse” that might arise with respect to gifts. The Conference Committee Report specifically referred to the public’s right “to know” of certain gifts that public officials receive, in order to take action against any potential abuse.

However, at that time the commission noted that the university’s general counsel had taken the opposite position, putting the top UH lawyer at odds with the commission’s opinion.

I wonder whether similar advice is still being given to officials other than the president, which might account for why all those with protocol accounts at their disposal are not disclosing them as gifts.

The money involved can be significant. Crouch, dean of the College of Engineering, reports a total of $12,714 spent from the University of Hawaii Foundation Enrichment Account. I don’t think any other deans filed gift disclosures.