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certificate, and since no other bids were accepted or even offered, therefore it was a <br />violation and gave the Bank of Hawai `i an advantage over all other financial institutions, <br />and therefore is a violation of the County Code of Ethics and also a violation of the <br />Securities and Exchange Commission and is also a violation of Title 18, United States <br />Code, 1433, bank fraud. <br />DILL: Okay, so you're saying this plus -90 BPS rating applied only to Bank of Hawai `i <br />and if the County had gone out and considered sub -90 scores, or institutions with sub -90 <br />scores, the results might have been different in terms of what they're offered? <br />COLE: No. <br />DILL: Okay. <br />COLE: The 90 basis points was part of the master issuance certificate, a maximum that <br />the County of Hawai `i would entertain. <br />DILL: Okay. <br />COLE: By not going to any other institutions, no other financial institutions were able to <br />bid for a better or lesser basis points, therefore disadvantaging the County of Hawai `i at <br />the advantage of sole advantage of the Bank of Hawai `i. It is also noted that the <br />treasurer for the County of Hawai `i, Mr. Okumoto there, was a senior executive with the <br />Bank of Hawai `i for the 20 years prior to coming to Bank of Hawai `i [sic]. It is also <br />noted that the Bank of Hawai `i, through its Hawai `i Tax Free Trust, Capital Pacific <br />Investment Trust, and a number of others, holds the majority of municipal securities for <br />the state of Hawai `i. It is also known that on the 281h of June last year, the governor of <br />Hawai `i signed into law Act 182, which is trust protection legislation which would also <br />impact with these bond anticipation notes for the payment of securities and monies, and it <br />actually would provide for money laundering by paying into—buying tax free trusts and <br />taking out tax free federal and state dividends from these bonds. <br />DILL: Okay. Welcome, Arne (Board member Arne Henricks arrived). Okay, any Board <br />members have questions, any further questions, for Mr. Cole? <br />BALSIS: Not at this time. <br />DILL: Thanks, Mr. Cole. We might have some more follow -up questions. Mr. Okumoto, <br />do you mind coming up? Thanks for joining us. Mr. Okumoto, if you could quickly give <br />the Board a rundown on protocol and the due diligence in place for these types of <br />issuances by the County. <br />OKUMOTO: Let me give you some background information on how we got to that stage <br />where we're looking for such a facility. Back in late 2004, we got an audit by the IRS. <br />Because we issue tax- exempt paper, the IRS is interested in making sure that we comply <br />with all their regulations, because when you issue tax - exempt paper, the treasury is <br />losing money versus something taxable. Under advice of our counsel, he recommended <br />that we retain a firm that specializes in dealing with the IRS, so we did so and in <br />3 <br />