The state Campaign Spending Commission plans to re-investigate whether former Honolulu Mayor Frank Fasi or his campaign committee unlawfully accepted an estimated $1.6 million in the form of dramatically reduced rent on his campaign headquarters from a group of foreign nationals.
The Chinatown Cultural Plaza Shopping Center offices were leased from Longevity International Enterprises Corp., which is owned by Taiwan’s China Airlines.
Robert Watada, the commission’s executive director, estimated the $1.6 million total based on the $800 monthly rent Fasi paid for 15 years versus the far higher rate tenants paid for comparable space over the same period.
Fasi, through his son and attorney David Fasi, declined comment.
"We categorically deny we did anything wrong,’’ David Fasi said. "We are ready and willing to fight all allegations.’’
The Federal Election Commission, which sued Frank Fasi and his campaign committee over the same issue in February 2000, found that Fasi broke federal campaign laws that prohibit candidates seeking federal, state or local office from accepting any form of campaign contribution from foreign nationals. Although Fasi rented the space in 1981-96, the FEC was constrained by a five-year timetable under a federal statute of limitations and therefore could only impose fines for 1995 and 1996.
Last month, Fasi’s campaign committee paid a $15,000 fine to FEC. Before that, Longevity International Enterprises Corp. was fined $75,000. The Advertiser was unable to reach Longevity’s principals for comment.
Fasi, in a January 1989 interview with The Advertiser, said he was aware of the federal prohibition against accepting contributions from foreign nationals and in October 1998, returned about $22,000 in personal and corporate campaign contributions from the Japan-based developers of a golf course in Maunawili Valley.
In its recent suit, the FEC alleged that Fasi and his campaign committee, "Friends of Fasi," violated federal law when they accepted an in-kind political contribution in the form of reduced rent for office space at the Cultural Plaza from Longevity International. The company has owned the Cultural Plaza since 1979. Longevity’s shareholders, who are all citizens of the Republic of China, have included top executives of China Airlines and presidents of two Chinese banks.
"We disagree that we got a reduced rent," David Fasi said. "The FEC didn’t take into account that we had a month-to-month lease on the space and could be asked to leave on 30-days’ notice.’’
David Fasi said the campaign committee first leased the 3,437-square-foot space in 1981 when his father was not in office and eventually vacated it in November 1996 when his father was defeated by Jeremy Harris.
Frank Fasi served as mayor in 1968-80 and 1984-94. He unsuccessfully campaigned for mayor in 1996 and 2000 and failed in bids for governor in 1994 and 1998.
David Fasi said the campaign only needed about a quarter of the office space and only used it a few months every couple of years when his father ran for office. The rest of the time it was used for storage of campaign equipment.
At one point, Frank Fasi’s other son, Chuck, who was the campaign photographer, used the space in part for his photography business. David Fasi said his brother was not charged rent because the campaign asked him to locate there so that he could watch over copy machines and other equipment.
David Fasi said that in 1984 they decided to leave the Cultural Plaza, and Longevity offered the month-to-month lease which was paid by "Friends of Fasi."
According to documents filed in the FEC federal court case, Frank Fasi held a written lease from 1981 to 1984. The court papers said "although Fasi’s written lease provided that he was to pay a base rent of $1,546 per month ... , he paid only $800 per month." The rent remained at $800 per month until 1996. The court documents said that during that time "other similarly situated rental space at the Cultural center increased exponentially in price.’’ All other tenants held written leases.
The FEC stated in court records that a "conservative gross rental rate’’ for 1994 to 1996, the years under the agency’s review, was about $1.50 per square foot. At that rate, the Fasi committee should have been paying $5,155 a month, the FEC said. The FEC concluded that between 1994 and 1996 the Fasi committee paid $145,242 less than the market rate and that it was an illegal and unreported in-kind political contribution from foreign nationals.
In court documents, Longevity contended that the "violation was not knowing and willful.’’ It also said that the rental rate "was based on the poor condition and undesirable location of the office space."
David Fasi said that his father would have prevailed in federal court against the FEC but that paying the fine was cheaper than the $50,000 he estimated it would cost to fight.
"We’re ready and willing to fight all the allegations, but this came down to an economic decision," said David Fasi.
Watada said it is now the commission’s turn to review the case using a state law that mirrors the federal one. However, since the state law was enacted in 1995, the commission’s investigation and any potential fines will be confined to 1995 and 1996, the same time limitations the FEC faced.
The commission, which turned over the case to the FEC in 1996 when it realized it didn’t have enough resources, has the power to impose a fine of $1,000 to $3,000 for each "occurrence’’ of state campaign spending violations. Watada said it was too early to estimate potential fines but that theoretically a fine could be imposed for each month it could be proved that a reduced rent was paid.
If the commission suspects any criminal activity, it can refer the case to the attorney general for prosecution.
"The FEC clearly came to the conclusion that there were in-kind contributions made by foreign nationals which is illegal and that Fasi had also not been reporting (the contributions),’’ Watada said.
He also noted that if he concludes Longevity was making an in-kind political contribution of more than $1,000, it should have filed a report with the commission but did not.
"If they violated federal law then they violated state law. And the commission needs to address this,’’ said Watada.
Watada also noted that the Cultural Plaza paid lower property taxes than comparable commercial property during the time Fasi received his reduced rent. In a 1996 letter Watada wrote to the FEC to bring the issue of the reduced rent to the agency’s attention, he noted that the Cultural Plaza paid taxes of $220 per square foot compared to nearby properties that paid $345 per square foot in taxes.
David Fasi said there is no connection between the reduced rent and the lower property tax.
