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DILL: Okay, and gentlemen do we have Mike here? <br />OKUMOTO: Yeah. I'm Mike Okumoto. I'm the treasurer, and I'm here to answer any <br />questions that you may have regarding this matter. <br />DILL: And you're here on behalf ofMs. Crawford, correct? <br />OKUMOTO: That's correct. <br />DILL: And you, sir? <br />SCOTT KNOWLES: I'm the risk management officer from the Finance Department, and <br />I'm here not in a representative capacity but just as an observer. <br />DILL: Okay. Okay, again this petition is referencing Section 2 -83 of the Hawai `i County <br />Code of Ethics regarding fair treatment, specifically item (b), no officer shall use or <br />attempt to use the officer's official position to secure or grant unwarranted privileges, <br />exemptions, advantages, contracts, or treatment for oneself or others. Mr. Cole, if you <br />could step up and quickly give us your side of the background on this petition, and then <br />we will have questions for either you or Mr. Okumoto. Again, just to remind everyone, <br />this is an initial review by the Board of Ethics to determine future actions on this petition. <br />Mr. Cole, you have the floor. <br />COLE: Yes, well thank you. I would like to note that my statements on this matter were <br />included in my testimony of the previous session of the Board of Ethics for February. <br />Also in that note, I would like to note that there are items missing. However, I've already <br />made the statements. Apparently, the information I have is the Hawai `i County is <br />offering general obligation bonds and municipal securities in violation of the 1933 <br />Securities and Exchange Act, Section 17(a(2), by not disclosing fully the risk of the <br />bonds. In reviewing the violations and racketeering activity in the County of Hawai `i, I <br />had the opportunity to have a conversation with Ms. Crawford on approximately the 201h <br />of October last year in Mayor Kenoi 's outer office, where she informed me in reference <br />to Bill 311, the $56 million obligation bond, that the County of Hawai `i was not going to <br />float any bonds. That was the old way of doing things, and the new way is they had a <br />very special short -term arrangement with Bank of Hawai `i. Querying further, insofar as <br />I do have a background in securities and exchange, I tried to find out why bonds were not <br />being floated and to demonstrate and to profess the risks to the bonds to the rating <br />agencies of Standard & Poor's, Moody's & Fitch. Upon reviewing farther, I found out <br />that a master issuance of certificate was made by the Department of Finance and Ms. <br />Crawford, and she began issuing bond anticipation notes solely to Bank of Hawai `i. The <br />certificate of issuance identified a maximum of 90 basis points about the mean municipal <br />data rate. The County of Hawai `i offered only to one agency, that was the Bank of <br />Hawai `i and Mr. Stephen Rodgers, the sole bidding on these bonds. These bonds could <br />have been bid on other financial institutions and a lesser basis point arrangement, i. e., a <br />better advantage to the County of Hawai `i, could have been obtained. That would be <br />similar to going out to contracting in your business, and you go to a sole source contract, <br />and the contract would give you the maximum amount of interest drawn. The Bank of <br />Hawai `i charged 90 basis points, which was the maximum allowable under the master <br />2 <br />