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HomeMy WebLinkAbout2012-12-12 Board of Ethics minutes HAWAI‘I COUNTY BOARD OF ETHICS MINUTES – REGULAR SESSION Wednesday, December 12, 2012 10:00 a.m. to 11:33 a.m. County Council Chambers 25 Aupuni Street Hilo, Hawai‘i 96720 Members and Staff Present: Bernard Balsis, Vice Chair Arne Henricks, Member Glen Hisashima, Member Renee N. C. Schoen, Deputy Corporation Counsel Mary E. Fujio, Secretary 1. CALL TO ORDER Mr. Balsis called the meeting to order at 10:00 a.m. 2. STATEMENTS FROM THE PUBLIC ON AGENDA ITEMS Mr. Balsis called up Dan A. Cole, who had signed up to testify on Petition No. 2012-08 (agenda item 4b). He reminded testifiers that testimony was limited to three minutes. MR. COLE: As far as your last statement about testimony, the information I am bringing before you is of such importance to the health, safety, and welfare of the people of the County of Hawai‘i that I request you relax such regulations as you are authorized. First of all, on clarification. I’d like to bring to the information of the Board here an article by Nancy Cook-Lauer in today’s paper. The petition I have before the Board is for the fact that the mayor of Hawai‘i, Billy Kenoi, allowed proprietary use of the people’s assets, i.e., $10 million, for the sole purpose of the First Hawaiian Bank. That is the violation of the ethics charge. Nancy Crawford states, or actually states in the article, that the $10 million in question was in fact authorized by the County Council for the issuance of the bonds. This is a false statement. The Hawai‘i County Charter explicitly states that all bonds must be authorized by the Council prior to the issuance. I questioned, under the State Office of Information Practices act, UIPA act, for the actual information on the issuance of these bonds. In a reply from Lincoln Ashida, I was told that the $10 million bonds were in fact issued—the $10 million bonds that Mayor Kenoi sold on March the 2nd of 2011 for $10 million to Bank of Hawai‘i—were not authorized until May the 4, two months later, by the Council under Bill 311, draft 3. I questioned this. I got the electronic _________. I questioned the Corporation Counsel on this because this could not be, because therefore the County of Hawai‘i, the mayor and Nancy Crawford and our treasurer, would have in fact illegally sold $10 million worth of bonds in municipal assets, having filed federal IRS forms and state forms, and that would be a major violation of the Security Exchange Commission rules and bank fraud, along with racketeering. Lincoln Ashida again confirmed that it was in fact Bill 311, and he actually sent me the deposit slip that the mayor had bought the $10 million bonds from the Bank of Hawai‘i—or loaned them—on March the 2nd. On March the 2nd, $10 million was transferred to First Hawaiian Bank to purchase a time deposit with a maturity date of September the 2nd and transferred back to Bank of Hawai‘i for payment of the bonds. The item before the council here is what value did the people of Hawai‘i get for the $10 million that was the sole use of the Bank of Hawai‘i? In clarification, many people think that it was me involved in a lot of these FBI operations. I contacted Peter Ho, CEO of Bank of Hawai‘i, and I contacted George Horner, CEO, First Hawaiian Bank, in June, July of last year, notifying them of the information that I had received from the Corporation Counsel in a direct email from Lincoln Ashida, confirming the fact that they had purchased fraudulent bonds. From there apparently the Securities and Exchange Commission got involved and the public corruption section of the FBI headquarters got involved. That headquarters was under the direction of a special agent, Vida G. Bottom, and as you’ll all remember, in May of this year FBI director Robert Mueller assigned special agent Vida G. Bottom to head the Honolulu Division of the FBI, as their expertise is public corruption, civil rights, international corruption, bank fraud, and money laundering. The item before this Board is did the mayor violate the ethical code of the County by authorizing or giving propriety use of County assets. The criminal aspects of this are not of the purview of this Board. I’m bringing it before the Board so formal testimony and formal hearings under Hawai‘i Revised Statutes and Rules of Evidence may be engaged, where sworn testimony may be obtained, and evidence so that if any criminal activity does come forth, it can be referred to the County Council for their action and to federal and state agents. Thank you very much. Mr. Balsis called up Tim Rees, who had signed up to testify on agenda items 5a and 5b, the draft orders dismissing Petition Nos. 2012-03 and 2012-04. MR. REES: Good morning, Mr. Chairman, and Ethics Board committee members. Sir, if I could I would also—I forgot to write down number 6 on the executive session. I just had a few comments on that one actually, complimenting the Board for the way that was agendized. To begin with, 5a, this is “Review draft order dismissing petition submitted”—excuse me, sir. Can I hold the clock for a second here? Is there a problem with this microphone boom or can I actually bend it a little bit down? SECRETARY: Not too much, though. MR. REES: Thank you very much. I noticed it was going in and out. Okay, back to this petition, 2012-03. Basically I don’t think this should be on your agenda today. I don’t think this commission should be dismissing the petition submitted by Cheryl King. I read through her petition, and I understand that this is kind of an unusual type of situation. I guess I’ll preface my comments by stating when great authority is given to a body, great responsibility obviously comes along with it. I don’t need to school any of you people on that concept. This body is given the ability to define the very words of our Ethics Code— not necessarily the same language, or very similar language, to the County Charter. But clearly our Ethics Code prohibits what occurred at the various public sites. And to me, if those properties, such as West Hawai‘i Civic and the civic center over here in Hilo, amongst others, if they were used for campaigning and electioneering purposes as is prohibited to my reading of the County—Hawai‘i County Ethics Code—I see a clear violation. Now is there mitigating factors? Has there been prior opinions rendered by the State Ethics Commission? Sure. I haven’t read through those yet. I’m at a disadvantage. I read through everything I could find on your Board’s website last night and the night before, but what’s going on here is you’ve got so many protections, equal protection of the law issues happening here. Now if the union went and rented those facilities, which they may have—I’m ignorant of those facts now—then it would have been more of a private function. However, if they were given permission to use those facilities, and the entities that gave the permission were aware that there would be campaigning and electioneering going on, this is all about the knowledge, the foreknowledge of what would be occurring there. I question whether this Board—and again I’m speaking from some ignorance here, as I haven’t been able to review all of your deliberations on this matter—those minutes were not posted up yet. I understand they will be soon. Shoot, I lost my train of thought there, excuse me. I’m trying to bring that back. Oh, the point was whether union shop stewards who are County employees who may have facilitated the use of those facilities, knowing the exact language in our particular Hawai‘i County Ethics Code—were they questioned? Were they investigated as to their foreknowledge of what would be occurring? Did they bring those matters forward to their union higher ups and say, did you guys miss this in a collective bargaining agreement? Because no matter what happens, no two people, or further entities more, can contract an illegality and then expect the court to uphold that illegality. In other words, you can’t defeat codified law by writing a private contract of any sort and expect it to be judicially enforceable. So I think what occurred here was just oversight in the collective bargaining agreement. They weren’t aware, possibly, of Hawai‘i County’s Ethics Code, but that does not negate the fact that Hawai‘i County’s Ethics Code still prevails. Now since you are given the ability to determine what the actual words and language of our Ethics Code means, I would hope that this draft order would go into, since you’re dismissing the case, some new interpretation of what that plain language now means. I think the public is owed that. And I’m going to review all these documents that I mentioned. I hope that they were introduced in an open meeting, these other prior State Ethics Commission opinions. And I will be reviewing those, and if need be, I will put together a private citizen’s group, and I would hope that this Board did all their due diligence and looked into all these matters. There are so many equal protection of the law issues here that it is extremely complicated without knowing who did what and what their foreknowledge was. So I only hope that this Board properly investigated all those matters. Thank you, sir. I have a comment on 5b, the Tiffany Edwards Hunt petition, the draft order dismissing that petition, would be that I would hope also that in this draft order—I tried to review it and I can’t find it anywhere, so it’s not publicly available at this time—I would hope that you put in there your findings, your reasons for dismissing, and then the public will know, did you investigate that one far— excuse me—far enough. The last thing I wanted to mention is number 6, your executive session. Actually, I want to commend this Board for the way that you have formatted the executive session. When I look here at this chart of the 1 through 10 ending with Charmaine Shigemura, members of the boards where you’re investigating—you’re looking into the review of the confidential financial disclosure form. This is appropriate. You have met, in my opinion, the minimum threshold of what every executive session should have under the rules, under Chapter 92. And basically, if I were interested in any of these people’s disclosure forms, I have the knowledge that you will be reviewing those. So to me, I’ve been battling this at County Council forever, saying you need to do a little bit more than just the generic statement in the higher paragraph that says you’ll be reviewing with the board’s attorney on questions and issues pertaining to the board’s powers, duties, privileges, immunities, and liabilities. That covers every possible item that you could ever have on any one of your agendas, so it’s far too broad to be used as just a blanket overall listing of what you actually will be reviewing. Here you have properly reviewed the items under b, and with that chart that you put in there, the people, I would hope that all other boards and commissions would take that very simple step. It takes a little bit more paper ______. It properly informs the public what will be discussed in that session, and that’s the way to do it. So my hat’s off to you all for whoever instituted that. Thank you. Mr. Balsis called up “Sativa,” who had signed up to testify on agenda item 4a (Petition No. 2012-07). SATIVA: Aloha, good morning. Thank you for this opportunity to speak. I’ll be discussing this. The reason I came is I think it’s important to make a statement about politicians who are caught lying. It’s important. It’s kind of a dead issue with Fred, but it’s for future politicians who want to lie while they’re in office, and certainly want to lie from the seat of the Council. So just to alert you of what happened, the newspaper reported that Kahakai Elementary School was opening two hours late for the elections for people to vote, and Mr. Blas got confused with Keonepoko, because it’s on Kahakai Boulevard. And so he came into the Council that day. Usually he doesn’t speak, but on this agenda he pushed his button first. He was raring to go. And he basically tried to explain to the county clerk—I’m hoping you all saw the video—that the reason people couldn’t vote at Keonepoko, because it was opened late, and he was standing right there and they came up to him and said Fred, we can’t vote, we’ve got to go to work. And then when it came out afterwards that the paper had reported Kahakai Elementary School, which is in Kona, not Keonepoko, which is in Puna and which is in Fred’s neighborhood. So he was really trying to let everybody know, I won the primary but only by a hundred votes, because my people couldn’t vote. That’s what he was really trying to say. And in order to prove that, he made up this little lie that he was standing out in front and people were telling him they couldn’t vote. And then even after the newspaper reporter, Nancy Cook-Lauer, went up to him and said Fred, were you in Kona? Because that was the school that was opened late. Fred said oh no, that report is in error. So even a lie to cover up another lie was then told. And it’s so important, I think, because this is an ethics decision. This is a question of lying to the people to make a point. And so I’m really hoping that this Board will find that Fred did lie and it was unethical, because it’ll send a message out to every other politician, okay, you’re going to lie, but don’t do it from the Council seat, don’t do it on video, because we’re watching and we’re listening. So that’s why I came to testify today, to express that point. Thank you very much. Mr. Balsis called up RJ Hampton, who had also signed up to testify on agenda item 4a (Petition No. 2012-07) and 4b (Petition No. 2012-08). MS. HAMPTON: First of all, I bought these two books today. One is the transcripts of the Watergate and the other is the Tower Commission, and this is to prove to every historian that has ever seen history go by that attorneys lie, that people cover up, and that even at the highest points of power, people can take one small lie and turn it into an incredible experience. I used to throw bricks at the TV as I was watching Dan Inouye and other people from Hawai‘i conduct the investigations and the intelligence commission hearing. So I know people lie, and I know that we later on in history get vindicated, and presidents and people can lose their positions. Today I’m just here to remind you as to why I did this, because I take a lot of slack, and I wanted to say to you that the core of the complaint is the fact that the councilman was fabricating his story that simply was not true. It took place on August 20th, 2012. To hear the county clerk’s report, what happened on August 11th, 2012, that necessitated the governor extending the closing of the elections. What we know today--and the attitude of most people out there that I talk to is that ethics in politics is perceived as an oxymoron, a figure of speech which attempts to link two contradictory concepts. I don’t believe this. Politicians are generally seen—and these are the stereotypes about politicians—are considered to be the least trustworthy profession in, next to maybe something else we won’t talk about. I even found a quote that kind of really says it all, from George Orwell. It says “political language is designed to make lies sound truthful and murder respectable and to give an appearance of solidity to pure wind.” Nothing demonstrates more vividly the absence of ethical values in conduct of government and the loss of trust of our political representatives than the recent events of the 2012 election in Hawai‘i County. We are asking for a determination of facts and a ruling on Mr. Blas’ conduct. We are also asking an opinion on the ethics of publicly lying or committing perjury to councilmembers and public. The complaint asks the Board of Ethics to compel Mr. Blas to explain his public accusations and comments and to produce proof voters at his polling poll stations were unable to vote and that the polling station in District 4 did not open on time. If for some reason this kind of intentional deception is exempt from the Ethics Code and all rules governing the Council, it will be, in our opinion—it will call into question the very credibility of the process. The purpose of the Ethics Board—and of your Ethics Board, is to determine and to set a standard. And if I can go to Chapter 15, and I don’t find—and I can put Control-F and I don’t find lying, I don’t find dishonest, I don’t find misrepresentation, I don’t even find anything than can address itself to when a politician is lying to the public--I think that we need to rewrite the ethics or add something in there to make it quite clear, if we catch them in a lie, this is where we go. We catch them in a lie, then we take it to the criminal justice system, wherever it is. I need guidance on this, because we seen too much, and I want it all to stop. So I’m asking you to set a standard, and if that’s not your job, God, please tell me, who will? Because the decent-minded people are watching today. And I realized a long time ago that I may take a lot of flack from surfers who come into my district or my community and tear it apart. I want to know that when they step out of line, whether it be a nonprofit or a commission or an appointed or an elected official, that there is someplace I can go that I can talk about it, because these things do happen. And the last thing I want to remind you is that yes, I am a living part of history, and that a long time ago my father asked of Jim Jones, why are you all calling him father and why are you putting him on the redevelopment commission? Two years later, 913 people are dead in a foreign country and nobody gave a damn. So don’t tell me that this is statute of limitations. This is ethics, the moral standard and fiber of this country. It’s up to you, and I don’t want you to pass this on because Fred’s not here. There’s a whole lot of other people. And let me tell you something, and I’ll say this to you and I don’t have to raise my hand. I am not done with Zendo Kern and that whole incident before the Planning Commission. Now that he is the committee chair of the Planning Commission, I believe that that appointment smacks of conflict of interest. It’s indecent, and I hope, and I swear hostility to it. So you all do your duty, because I’m telling you something. I got proof, and I don’t want to spend my whole 2013 looking like some kind of fool out there in the community only to come back here and be vindicated by you. So I thank you for the leniences that you gave me on this. The other thing that I want to say, that number b, please do your best to sort it all out. Please do your best to sort it all out. Thank you very much. 3. APPROVAL OF THE REGULAR SESSION MINUTES OF NOVEMBER 19, 2012 Motion and vote: Mr. Henricks moved to approve the minutes, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. 4. NEW BUSINESS a. Petition No. 2012-07: Initial review of petition alleging violation of Section 2- 83(a)(3) (under fair treatment) of the Code of Ethics where a County officer allegedly stated at a public hearing that the officer’s polling place did not open on time on the primary election day, that he saw cars turned away, and that when he asked what was going on, he was told by voters that the poll was closed and they could not vote. Petitioners contend that “the poll opened on time, all voters were able to vote, and there was no drive through of cars that were turned away.” MR. BALSIS: The petitioner, RJ, if you could come forward please. RJ, you had made some statements during the general discussion. Do you have anything you’d like to add at this point? MS. HAMPTON: Well, to be brief, I try to put all my points on one piece of paper, so – I believe that I did ask, what I am asking of you, is that you look into this. If for some reason intentional deception is exempt from the Ethics Code and/or rules governing the Council, it will be in our opinion—call into question the very credibility of the process. So I’m looking at—the reason we did this is because I actually believe that it was intentional, that even if it was a thing called—it’s a thing in psychology that we call, a thought process called misremembering. And misremembering, it’s a nice way of saying remembering incorrectly. And to give the councilman that kind of latitude, to say that you misremembered, would be—it would have been okay. I know that now that he has lost the election that this had an impact upon the people and that the people are feeling the way they feel, and they took it to the voters’ poll. But there was 2,000 other people out there that did continue to support Mr. Blas, and I need for those people who are still out there, and for the people who have been elected because of Mr. Blas’ politics and the people surrounding him, that I plan to also build upon the case. This is not the end. This is only the beginning, because it was an incident and an event that triggered something that is systemically wrong with the 2010-2012 County Council. And so I don’t want to get into that now. I would say to you that I really am looking for you all to set the standard. If I can’t find it in the Ethics Code, anything about lying, because when I type in the very word lie or dishonesty or deception and I don’t find a word that even mentions these particular high standards—we’re talking about Socrates here. We’re talking about the very foundation of law. We’re talking about—I don’t want to _____. So if you get it, and I know Renee gets it, there’s a resolution. There’s something you all can do to shore it up and to make a statement, from this moment forward to the new Council, to the future Councils, to anybody, that if you cross this line, you in trouble. So think about crossing that line. I had to. I gave up a radio show when I was a legislative aide. I gave up all kinds of things to keep the appearance of no conflict of interest so that if I had to come before you, I could defend myself with the truth. You see what I’m saying? And that is not what happened. The reason we have these election things, and Dominic Yagong before us, and the County Council, is because they have a low standard. And they were desperate to get elected, and they meddled in other people’s district politics. And they were all over the place with their special this and their special that. It all backfired. And you all saw it. Chairman Dill saw it. You saw it, and you addressed it. And now everybody’s back in the corner trying to figure it all out and distance themselves from the cancer. I took the shots in the newspaper calling Fred Blas a cancer, and I was right. And the cancer has metastasized. And so therefore it’s going to take a radical, radical treatment. And that’s what I’m looking for here. So I’m looking for you all not to dismiss this because Fred left, but since he’s not here and he doesn’t have to answer to himself because it’s on video and it’s a matter of public record, that you should take it from here. And I would like to see you all put out an opinion, put out a warning, put out a standard that we can all set. Because you remember me—my boss was before you for throwing a pencil. My boss was before you for calling someone wacky. My boss was before you, splashed all over the newspaper. So tell me it’s not political. That didn’t happen with Blas. Blas got a side thing over here and a back thing over there, so I know—and that’s not your fault—but with all that I’ve just said, and I’m raising my hand under oath, that the truth I tell you about the district politics in this community is the truth and nothing but the truth and not my opinion, but it’s hidden and all the public transcripts for every goody that they ever came to the Council or the Planning Commission or anywhere and got. They’re so stupid, commissioner. These people are so inept that they are good to be caught, to the point where a recall and an election, a new election, may necessitate to set it all right. It’ll make June 16, 2008, when they had to recuse—they had to do it all over again with the County Council and all of the laws that they had passed. It’s going to pale in comparison if you do your job, because there’s a cancer and it’s spreading. And now they’ve divided into two districts. I’m not going to let it go by. Thank you. MR. BALSIS: Thank you, RJ. MS. HAMPTON: Ethics. MR. BALSIS: Does anybody here have any questions for RJ? MR. HISASHIMA: No. MR. BALSIS: RJ, I must say that I do agree that, as an individual, that to come out and lie and to manipulate words, especially in a high position, is wrong. But I’m sorry to say, but we have—at least as far as my opinion, and I’m going to refer to counsel for a minute—we no longer have jurisdiction over Mr. Blas. Counsel? MS. SCHOEN: Mr. Chair, you’re correct. The Hawai‘i County Code of Ethics only applies to officers and employees. Mr. Blas is no longer an officer and employee, so you don’t have jurisdiction over him. Additionally, there is a Hawai‘i Supreme Court case entitled John Doe vs. State Ethics Commission, 53 Hawai‘i 373, where the Supreme Court actually enjoined the Ethics Commission from considering a complaint, making an investigation, and prosecuting a charge with respect to an individual that was no longer employed by the State. MR. BALSIS: With that in mind, and no longer having jurisdiction over Mr. Blas, even though we can agree with the type of statements and things that RJ has mentioned before us, the chair moves that we dismiss this petition based on having no jurisdiction over Mr. Blas. MR. HENRICKS: I second the motion. MR. BALSIS: There’s a second to the motion. Is there any discussion on this matter? Hearing no discussion, I’ll call for a vote. All those in favor of the dismissal of Petition No. 2012-07, say aye. MR. HENRICKS: Aye. MR. HISASHIMA: Aye. MR. BALSIS: Aye. The decision is unanimous. Thank you, RJ. b. Petition No. 2012-08: Initial review of petition alleging that a County officer violated Section 2-83(b) (under fair treatment) of the Code of Ethics when the officer, “in conspiracy with others, illegally obtained and used $10 million dollars of the people’s money for the sole advantage of Bank of Hawai‘i, First Hawaiian Bank, and/or a RICO Enterprise of the ‘old boy network’ and/or ‘unmentionables.’” MR. BALSIS: Mr. Cole? MR. COLE: Yes, I believe I’ve been trying to bring this to the attention of this Board since November the 8th of 2008. Unfortunately, Chairman Dill is not here, or I’d remind him that currently there’s an ongoing investigation out of the State Attorney General’s Office and the Office of Information Practices identified as S- INVESTIGATION-G 10-1. As none of you would recall, because you weren’t here in June of 2009, I appeared before this Board only to find out that secret letters of extortion had been sent to Board members prior to my appearance, and apparently information confidential to this Board had been released to the public, where public statements were made prior to the Board. So in order to caveat this, I would like to ask any of you if you’ve received any letters of extortion or letters explaining or requesting you to make a certain decision, or if the decision has already been made prior to this meeting. This will be investigated and added to the current investigation as per my email from Linden Joesting, staff attorney of the OIP. Hearing none, I assume that you haven’t made your decision or decided to recuse yourself from this meeting. I come before you—it’s not a question, as I said before, of the criminal actions identified by Corporation Counsel Ashida. Corporation Counsel Ashida, in electronic verification of emails under the Uniform Information Practices Act, sent me the very documents of the issuance of the bonds, of the issuance of the IRS tax form exemption of bonds, identifying $3 billion of refinancing bond series B, issued me—gave me the copies of the actual bond issued with the CUSIP number, bearing the signatures of Billy Kenoi and Nancy Crawford, the communications between Bank of Hawai‘i and County of Hawai‘i, bearing the signatures of Michael Okumoto, the treasurer. It must be noted that Michael Okumoto, prior to becoming treasurer, County of Hawai‘i, in 2000 was a senior executive at Bank of Hawai‘i. In continuing, the question before this Board is one of ethics. Did Mayor Kenoi violate the Ethics Code by giving proprietary and sole proprietary access to assets of the people, identified as $10 million that was obtained through the verified and defined illegal actions by the very Corporation Counsel of the County of Hawai‘i? In verification, I questioned the very fact that this could not have happened. Mayor Kenoi could not have sold $10 million of series B bonds on March the 2nd of 2011 under the authorization of Bill 311, draft 3, because Bill 311, draft 3, had not been approved or authorized by the County Council. As required by the Charter, all sales of bonds must be authorized by the Council. In response, Mr. Ashida, in electronic verification, did in fact confirm that the $10 million bonds were in fact sold prior to being authorized by the County. That is not a question of a fact here whatsoever, okay? The question of the fact is, what value did the people of Hawai‘i get for this $66,000 they paid to Bank of Hawai‘i for the purpose of having that $10 million wire-transferred from Bank of Hawai‘i on March the 2nd of 2011 to the First Hawaiian Bank on March the 2nd into bank account—and here’s the exact deposit slip, here’s the exact bond sold, with the CUSIP registration number as on file and held in New York Mellon Bank, One Wall Street, Third Floor, Window 8, on March the 2nd, 2011, CUSIP number 41969CAE6, with a maturity date of September the 2nd, 2011. On that very same date, the money, $10 million, was used to open a certificate of time deposit, First Hawaiian Bank account number 20010201, for a period of 184 days with a maturity date of September the 2nd, 2011, identical to the maturity date of this bond, March the 2nd 2011, at an interest rate of 0.1225%, which is one-tenth the interest rate that the County of Hawai‘i, the people of Hawai‘i, were paying to Bank of Hawai‘i. I guess we’d make a profit on the volume on this, wouldn’t we. In addition, I was sent the actual copy of the bill with the signature of the mayor on it. Again we go, all right. Now what we don’t know, or what isn’t said here, is the information I got is there is also a set of series A bonds issued for $10 million. When questioned as to what happened to all the information ________ of bonds, the County of Hawai‘i only offered bonds to Bank of Hawai‘i. The County of Hawai‘i did not offer bonds to any other financial organization to see if we could get a better rate. That in itself is a violation, but unfortunately, due to a bowling conflict on a team membership, that couldn’t be heard by this council apparently. Now Chair Blalis—Balser—excuse me, you are a financial manager, so you are very much aware of the violations of the Securities Exchange Commissions, the state and federal laws on bank fraud—I have no point here. What I’m asking, and what I’m requesting under the pureness of the jurisdiction of this body, is to allow this case to go forward, this hearing to go forward, into a formal hearing where individuals may be subpoenaed, and sworn oath taken, where Mayor Kenoi may sit here before you, swear an oath, and tell the people of Hawai‘i why he sold $10 million worth of bonds without the authorization of the Council, why it was in the County’s interest—in the people’s interest—that he was elected to support. How was it in their interest that Bank of Hawai‘i was able to use $10 million of their money at 1/8th of a percent interest while they were paying one point and a quarter interest. What value does it have to them? So I request that you approve this petition to go forward for a formal hearing so that rules of discovery under the Hawai‘i Revised Statute and the court rules may proceed. However, I understand, and I would be entirely shocked if you actually went through—but I cannot understand that this committee, or this Board, would allow this to go forward due to personal or the influence of racketeering and corruption and public corruption. Do you have any questions? Mr. BALSIS: Are there any questions from any of the members of the Board at this time? MR. HENRICKS: None. MR. BALSIS: I have a question for you. You’re referring to the sales of the bonds, and I remember, not extremely specifically, when the matter came up as to how the County structured the short-term monies before the long-term bonds were being purchased by others. Are you referring to the short-term bond, or are you referring to the long-term issuance? MR. COLE: That has no bearing here whatsoever. However, I will answer your question. The County Charter states that under Section 6-6-1 [sic] organization, Department of Finance, under Section 6-6.3, Powers, Duties, and Functions, under (c) of that section it states “negotiate loans and issuance and sale of bonds and notes when authorized by the council; maintain records of county indebtedness and have charge of the payment of interest and principal thereon.” MR. BALSIS: Okay, but the question has to do with the—if I recall, there were two facilities that were structured by the County of Hawai‘i. MR. COLE: The facility of the sale of bonds was a traditional bond float. The sale of bond anticipation notes, by its very definition, is a short-term sale in anticipation of the sale of the bonds, and that was clearly defined in today’s article in the Tribune-Herald by Nancy Crawford—Nancy-Cook Lauer. MR. BALSIS: So the issue that you have is with the bond anticipation notes. MR. COLE: The issue I have is the fact that the bond anticipation notes were sold prior to the authorization. In other words, there were no bonds upon which you could sell an anticipation note to. MR. BALSIS: Was the facility or the—was the facility approved in terms of a function that the County could go by? MR. COLE: No. I just stated— MR. BALSIS: --So what you’re saying is the County Council had absolutely no knowledge of the bond anticipation notes prior to that issuance. MR. COLE: My discussion with Dominic Yagong-- MR. BALSIS: --I’m not talking about the specific transaction, but I’m talking about the approval of the facility— MR. COLE: In my discussion with Dominic Yagong, he did not know, he did not know that Mayor Kenoi had sold $10 million of bond anticipation notes prior to May the 4th, when the bond was approved for sale. In other words, what you’re trying to do—I mean, I believe what you’re trying to do is say that in order to sell a bond anticipation note, you are selling a note in anticipation of a sale of a bond float, a general float. The anticipate note is used for basically arbitrage or for short-term monies needed for a project. If there has been no bond authorized for future sale, then the sale of a bond anticipation note upon an authorized bond cannot be sold legally. In other words you have—if the County did not approve the sale of the $56 million bond for the projects identified, then there would have no bond upon which an anticipation note could be issued. In addition, the County explicitly and pointedly stated that the monies for the bond of Bill 311, draft 3, were identified specifically for the projects. Therefore, the mayor must identify how, or what specific project, upon the authorization of the bond was used to justify buying a $10 million time deposit bond—or time deposit note—from the Bank of Hawai‘i. There is no authorization. It did not go to any approved use of the money. So therefore, it would be illegal on multiple counts. And since the money was not used, as required for the specific bond issuance—in other words, what item of the bond—in fact if you’d like to, I could read the actual bond here— MR. BALSIS: --That’ll be okay. MR. COLE: Okay. What item of the bond did the $10 million that the bond anticipation refinancing notes series B—series B, I understand, is a refinancing note, okay. So we have never issued a series A, apparently, because I found out they said it was a typo, and Bank of Hawai‘i issued the County of Hawai‘i $10 million loan on a typo. That’s stretches the imagination. So not only do we have to determine what value the people of Hawai‘i got for their $66,000 interest, but what item of Bill 311 did in fact the bond anticipation note be issued for. That can never be answered, because there was no authorization. MR. BALSIS: Any comments or questions from the rest of the Board? MR. HENRICKS: None. MR. HISASHIMA: No. MR. BALSIS: Is there any thoughts on where we shall proceed with this? MR. HISASHIMA: Mr. Cole? MR. COLE: Yes. MR. HISASHIMA: The documents you refer to, Bill 311, and the email from Lincoln Ashida— MR. COLE: --Emails from Lincoln Ashida, yes. MR. HISASHIMA: Did you submit any copies of that? MR. COLE: Yes, I have. In fact, if you look at my petition, I actually had presented those to you in public, and you had received those documents numerous times, as a matter of fact. I think I actually stated here are the documents, that I approve this, and that I have issued them to you, I think. Okay, _______. In fact, I refer to page 2 of the minutes of the Regular Session of Wednesday, July the 11th, 2012, where I state, quote, here’s the exact illegal bonds being sold by the mayor and Nancy Crawford, the deposit slip from the Bank of Hawai‘i to First Hawaiian Bank, the return of principal of the First Hawaiian Bank, and the federal IRS forms of tax-free obligation. They’re on file with your Board here. So if you review the actual filings and the testimony I’ve made, you will see all these are in there. You will also notice that there are also in there, as identified, from my petition for Nancy Crawford. So you are well aware of all this information. However, if you’d like more copies, we can have them electronically transferred to you. But this should be brought up in a formal hearing. MR. BALSIS: I wanted to point out, I believe the reason we don’t have that right at this time, when they were submitted in the past, and please correct me if I’m wrong on this, the matter previously was specific whether or not there were conflicts of interest in deciding who the vendors were going to be with regards to the facility for the anticipation bonds—anticipation notes, excuse me. And so what had happened is one issue, but looking at how the vendors were selected was the issue at hand at that time. So at that time we may have not looked at that particular aspect of the transaction. And so now you’re asking us to look at the specific transaction to determine the legality or illegality. MR. COLE: No. No, the legality or illegality is not the jurisdiction of this Board. MR. BALSIS: Correct. MR. COLE: The legality or illegality would be held with the County Council. If they determine that there was sufficient grounds for a misdemeanor violation of the Hawai‘i County Charter, it is the County Council’s obligation to file a criminal complaint. What I am asking before this Board is what value, what did the people of Hawai‘i get, for the $10 million that Mayor Kenoi gave to, in proprietary, to the First Hawaiian Bank. The people of Hawai‘i paid $66,000. This is no difference than if Mayor Kenoi decided to use $10 million of heavy equipment from the Highways Division and $66,000 worth of manpower and fuel to clear his subdivision that suddenly got approved when he appointed a new planning director. There is no difference. This is what did the people of Hawai‘i get in return for their $66,000 that the First Hawaiian Bank had proprietary use of. Proprietary use. This is not the _______, this is the Ethics Board. So that’s why I’m requesting—in discovery before the Ethics Board, in formal hearings and subpoenas, it will come out, any violations or criminal violations, that would be the purview to be forwarded on, under the United States Code, Criminal Section 18, Subsection 4, Misprision of Felony, that you are obligated to do. However, the ethics complaint states what value did the people get. MR. BALSIS: Are there any further questions? MR. HISASHIMA: No. MR. BALSIS: Are there any comments from anyone? MR. HISASHIMA: No. MR. BALSIS: Any desire on how we should proceed with this? MR. HISASHIMA: I don’t know. MS. SCHOEN: Mr. Chair, the Board’s—just a reminder, the Board’s options today are to--you can set for informal hearing, set it for a formal hearing, request additional information, or dismiss the matter. So those are your options. MR. BALSIS: I would like very simply to ask the Mayor’s Office the same question that Mr. Dan Cole has asked us. MR. COLE: I have asked that already and been denied, many times. MR. BALSIS: Counsel, can we just simply request an answer to that question? MS. SCHOEN: Well, Mr. Cole brought up the fact that he had brought similar allegations against Nancy Crawford last time, and I believe the petition was filed in early 2011, and substantially similar allegations with respect to the bond. MR. COLE: They are not similar allegations, counsel. MS. SCHOEN: Testimony was provided, and the Board did dismiss this matter. So if you want to review those minutes, you want to review the order dismissing, we can provide you with that. Or whatever other questions you have. MR. COLE: Counsel is in error. That is not what the petition for Nancy Crawford was about. The petition for Nancy Crawford— MR. BALSIS: --I understand. MR. COLE: Yes, okay. MR. BALSIS: I would like to review those—what I would like to do is very simply ask the Mayor’s Office, and they can submit it in writing, nobody has to show up—I want to find out the benefit, we’re looking at the benefits of that transaction. Period. MS. SCHOEN: Okay, can you spell out what transaction specifically, so that I can formulate a question? MR. BALSIS: Yes, it would be easier for me to write it down than give it to you. MS. SCHOEN: Okay, so you’re asking to continue this initial review of the petition? MR. BALSIS: Yes, a continuance of the initial review. Do I hear a motion to go with that? MR. HENRICKS: Moved. MR. BALSIS: A second? MR. HISASHIMA: Second. MR. BALSIS: All those in favor? MR. HISASHIMA: Aye. MR. BALSIS: Aye. MR. HENRICKS: For you, aye. Otherwise, no. MR. BALSIS: So we’re very specifically going to continue to get an answer from the Mayor’s Office on this. I think at this point we can move on to the next agenda item. Thank you, Mr. Cole. c. Petition No. 2012-09: Employee’s request for an informal advisory opinion on whether he may work as an independent contractor “providing social work services for an agency providing case management services to individuals with disabilities and the elderly.” MR. BALSIS: Mr. Kita? MR. ELWOOD KITA: Yes, good morning. MR. BALSIS: You have the floor. MR. KITA: Actually, I submitted— MR. BALSIS: --Your letter? MR. KITA: --the questions in my letter. I guess the concern was raised because somebody had approached my administrator, the Executive of Aging, Alan Parker, about a potential conflict of interest. It wasn’t clear if it was specific to my situation, but since I did have outside employment, I did indicate that I would be willing to have this reviewed, if not for the present, at least it’ll kind of set some standard for myself and if there are other employees in the office with outside employment. MR. BALSIS: Are there any questions from anyone? MR. HENRICKS: I don’t exactly understand what your control is, what you do in that. I don’t understand any of it. MR. KITA: Okay. MR. HENRICKS: First of all, I don’t understand what your position with the County is, what you oversee. What do you oversee? MR. KITA: Under the Office of Aging there is a service, the Aging and Disability Resource Center. And part of what the Office of Aging administers is an information and referral service, and part of that service is by telephone calls or by internet or mail, or walk-ins. So individuals come, they present questions or problems, and we try to advise them as to what may be available resources or programs for them. MR. HENRICKS: Okay, now when you’re in that office, when you change your hat and you go into the other side, would you be one of the people that you would be referring to if you were on the other side, doing your other job? MR. KITA: It would actually be—I wouldn’t refer. I would offer information on providers. It would not be myself, it would be— MR. HENRICKS: --But you would be one of those providers, though, in your other job? MR. KITA: I would have been contracted by one of the providers. MR. HENRICKS: Yeah. MR. KITA: Right. MR. HENRICKS: So that puts you kind of in line from one service down to the other, right? A straight—I don’t know, I’m trying to say—I’m trying to say, would you be involved in referring to somebody that would use you on the other side? MR. KITA: I would provide them information so they could choose. MR. HENRICKS: Yeah. MR. KITA: And I would not identify myself as being related to any of the providers. But you are correct. MS. SCHOEN: So then the provider would then—say you tell the person go to “X” provider, then the “X” provider may retain you to provide that service. Is that what you’re saying? MR. KITA: Yes. Well, actually I would say they are provider “A,” “B,” “C,” and “D.” I provide you an actual list of the providers and the contract information, and they can decide to pursue it if they’re interested in receiving that service. MR. HENRICKS: Okay, I guess— MR. KITA: --I am contracted by one of those providers—I was contracted in the past. MR. HENRICKS: It bothers me a little bit, because it seems like that you would have a little bit of an advantage because of your initial County position. You would have an advantage on the other end, of not only being able to say to a provider I’m going to select you, but remember me when you select somebody else for services. You know what I’m trying to say? Somehow I feel like there’d be an advantage there somewhere. MR. KITA: Or at least an appearance of an advantage. MR. HENRICKS: Yeah, because you would say okay—you wouldn’t actually say it, but it would be a tacit kind of saying like okay, you can have the job, but don’t forget me kind of thing. You know what I mean? When you make your decision who to get as a provider in that job, don’t forget that I’m the one that referred you. Does that sound clear to you, what I’m trying to say? MR. BALSIS: I think what you’re trying to say is that while you are giving an individual options, which is the appropriate way to do things, one of the organizations is an organization which perhaps could contract you— MR. KITA: --Correct. MR. BALSIS: And while you are saying, and I have no reason to disbelieve you, that you are being objective in the presentation of these options, there can be the perception of propriety when you present the options. MR. KITA: There could be. MR. BALSIS: And I think that’s the issue. And that perception of propriety is not a good thing. MR. HENRICKS: What I’m trying to say also is even if you don’t say choose the one that selects you, the fact that you’re in the process of being able to do that may give you an advantage when they select somebody to actually make the services. You understand what I’m saying? You must always remember that you have power up there and that you can use this power and then at the same time, it would make them beholden to you in some manner. Those are the things I’d be worried about. Would there be some favoritism for you because of your position? And those are the, as he said, those are the perceptions that people would get because you’re in the whole process on both ends of the process. You’re on the receiving end and on the giving end, too. Does that make sense to you? MR. KITA: Somewhat. MR. BALSIS: Go ahead, counsel. MS. SCHOEN: I guess I wanted to point the Board to the Hawai‘i County Code, the fair treatment section and the conflict of interest section. The operative terms used in both of those sections are “use of the officer or employee’s official position,” or if you are taking any type of official action. So in the conflict of interest provision it says “No officer or employee shall take any official action directly affecting a business or other undertaking in which that officer or employee has a substantial financial interest,” or in “a private undertaking in which the officer or employee is engaged as legal counsel, advisor, consultant, or representative, or other agency capacity.” So it would be the use of your official position, or taking official action over something that you would benefit from. MR. BALSIS: I think what Arne’s saying is that by virtue of you presenting these options, and one of the options being the organization for which you also do consulting, that would be a possibility of influence, especially in that perception. The question I have is, has this been previously discussed with your superiors, and what has been the reaction of that? MR. KITA: I don’t think we discussed it directly, but my superior was aware that I did do some outside contracting. MR. BALSIS: If I’m to give advice at this point in time, my advice would be for you to have a formal meeting with your superior, perhaps another person in the room at the same time, just to make sure there’s clarity of whatever discussion comes about. And come up with a methodology whereby there would no longer be a perception of how you present options. Perhaps someone else at that point in time comes in to present options. But that discussion, in terms of procedures and processes, would I think at this point need to be between yourself and your superior in order to eliminate perceptions of impropriety. MR. HENRICKS: Yeah, I would also—when I look over it all with your supervisor, one thing that you should keep in mind when you look at it is does your position with the County give you an advantage over anybody else that’s contracting on the other end with those providers? You understand what I’m saying? If you have any kind of advantage because of your position with the County, I’d be very careful—whether it be an advantage of influence or you-kind-of-owe-me-because-I did-this-for-you kind of advantage, something like that. You know what I mean? If you see any of that there, then you may be in a problem area, I think. Okay? MR. KITA: Well, there may be a perception, but I guess that would be the concern. MR. HENRICKS: Yeah, but where there’s perception usually means that there’s actually something there. MR. BALSIS: What you want to do is you want to eliminate that perception of impropriety. I don’t think anyone here is saying that there is impropriety. MR. HENRICKS: I don’t think we know enough about it, have to see it in operation to see if it’s an impropriety. MS. SCHOEN: Board members, that’s actually the difficulty I think the Board is having is that it’s not specific, so it’s difficult to say doing this does violate the Code. So if you could come back and be more specific. I see that you say in a few instances, three to four times a year, you provide back-up, in which case you then refer. I mean, there could be a situation where you don’t ever do that, and then your side business may be permissible. So I think you have to be a little bit more specific for the Board. MR. HENRICKS: I think overall what we’re doing is to compromise here, I mean put it together, it’s like he says, go to your supervisor. Discuss it with your supervisor and between the two of you come up with a more concise statement of what actually is going on, and then maybe we can see it better. Right now I just don’t see the picture. MR. BALSIS: They may be able to resolve it themselves, without even having to come back. But I think the issue is sitting down with your supervisor. While he’s aware of it, it needs to be addressed directly with him so there’s a direct awareness and that there’s a meeting of the minds— MR. HENRICKS: --And he might spot some of the problems that we don’t know about, and then put it in writing so we can look at it. We just don’t have a good grasp of the question right now. MS. SCHOEN: I guess in the past, when other officers or employees have come before the Board, they have actually brought their superiors and said I’ve discussed it with them, these are the steps and measures we’re taking to avoid even the appearance of impropriety, Board, is this okay. Then it’s more clear that you have worked out everything, and then the Board can see a clear picture. So right now you coming and saying well, he knows about it--it’s a little bit difficult. So that’s what the Board has done in the past. MR. HISASHIMA: Question to the counsel. Does this County have a supplemental employment policy or rules like the State does? MS. SCHOEN: Not an overall County policy. There are some departments that prohibit certain employees from conducting the same sort of business that they do in their official position, but no overall County policy. MR. HISASHIMA: I would think that they should have a overall--to give gentlemen like Mr. Kita guidelines as to what they can do and what they cannot do, like the State does. I come from the State side, not the County. And with that guidelines, a lot of these questions would be eliminated. So who would be responsible to originate this kind of rules? Because I’ve sat here with many _____ of attendance, management, accountability. And my question always comes back, does the County address each of these issues? If there was set rules or policies, none of this would come up. And that perception, like you folks were talking about, wouldn’t be there because it’s in black and white. So I don’t know—I’m confused as to who is supposed to do it. I don’t know. MS. SCHOEN: Well, I think in terms of—even though there is no County-wide policy, in this type of situation, I think actually your Code of Ethics would be the guiding policy, because it does speak to—which is substantially similar to the State Ethics Commission— I’m sorry, the State Ethics Code, and it talks about taking official action in a business in which you have substantial financial interest. So to me that means if you don’t have a substantial financial interest, then you can. But policy-wise, in the example you gave on attendance, that was more of a Council issue on whether or not they had rules regarding attendance. MR. HISASHIMA: The only reason I ask this question is, as a manager of any department, any division or whatever you may call it, the employee is under my control, if I’m the head. And if the employee comes up to me and asks me--like the supplemental employment, I should have the ability to come out and just say these are what you can and cannot be employed in. And the ethics will show you that--so much reasons, but to me there’s more reasons than that also. And that’s why I’m bringing up that question. MR. BALSIS: I think at this time there’s no specific opinion that the Board of Ethics can provide to you. We can—I believe we’ve given some advice. The first thing is talk to your supervisor very specifically and directly and openly about your situation so that there’s full awareness in your workplace, and if there’s a need to change a procedure or not to do something or to do something, then that could be taken care of so there is no appearance of impropriety. The other thing is, as there are certain codes—not just the Code of Ethics but also policies and procedures on a personnel basis—in your section of the County, check them out to see if there’s something very specific about this. And then if you have further questions, then you’d be able to come back with specifics and with your supervisor. MR. KITA: Okay, thank you. I think maybe the most prudent action for me is to just refrain from outside employment for the present. And if I consider it again, to have a better presentation to this Board. MR. HENRICKS: I think that’s ________. MR. KITA: But also in the meantime, I will speak with my administrator, because there may be other employees who may be involved with outside employment, and there may be at least a perception of a conflict. So I will work with my administrator on that. MR. BALSIS: Excellent. Thank you very much. MR. KITA: Thank you. d. Counsel’s report regarding matters and/or inquiries received by the Board, including Gift Disclosure Statements received from Allison Lee and Lester Seto of the Workforce Investment Board, disclosing no receipt of gifts. Ms. Schoen said she was just reporting that the above two gift disclosures were received, and no gifts were reported. 5. UNFINISHED BUSINESS a. Petition No. 2012-03: Review draft order dismissing petition submitted by Cheryl King, which alleged violations of Section 2-83 of the Ethics Code when County employees were allowed to attend union meetings, on County time, in which political campaigning took place. Mr. Balsis asked if the members had been able to review the draft order, and Mr. Henricks and Mr. Hisashima said they had. Motion and vote:Mr. Henricks moved to approve the order as drafted, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. b. Petition No. 2012-04: Review draft order dismissing petition submitted by Tiffany Edwards Hunt, which alleged that County Clerk Jamae Kawauchi “has been very selective in … dissemination of public information and showed preferential treatment to certain reporters and stonewalling others …” in violation of Section 2-83(a)(3) of the Code of Ethics, that all persons shall be treated in a courteous, fair and impartial manner. Mr. Balsis asked if the members had been able to review the draft order, and Mr. Henricks and Mr. Hisashima said they had. Motion and vote: Mr. Henricks moved to approve the order as drafted, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. Motion and vote: Mr. Henricks moved to go into executive session for review of the confidential matters agendized therein, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. 11:16 a.m.: The Board left regular session. * * * * * 11:30 a.m.: The Board returned to regular session for voting on the executive session matters. 6. VOTING ON EXECUTIVE SESSION MATTERS a. Approval of the executive session minutes of November 19, 2012. Motion and vote: M. Henricks moved to approve the minutes as drafted, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. b. Review of Confidential Financial Disclosure Forms filed pursuant to Section 2-91.1(d), Hawai‘i County Code, by County board and commission members and designated County employees, where personal matters will be reviewed. Motion and vote: r. Henricks moved to approve all the disclosures as submitted, Mr. Hisashima seconded the motion, and they and Mr. Balsis voted aye. 7. ANNOUNCEMENTS Mr. Balsis announced the Board’s next meeting: January 9, 2013, at 10:00 a.m. in the Puna Conference Room at the Hawai‘i County Building or at another location to be determined. Ms. Schoen announced that Chair John Dill had asked her to express his thanks and appreciation for all the help and work the Board members and staff had done. He was unable to attend today’s meeting due to a family emergency, but he wanted to make sure his thanks were conveyed. She said she would be drafting a letter for the Board to review to send to Mr. Dill, thanking him for his service. 8. ADJOURNMENT 11:33 a.m.: The meeting adjourned. Respectfully submitted: Mary E. Fujio, Secretary (with her signature)