Liquor licensees' gifts probed

By Robbie Dingeman
Advertiser City Hall Bureau

The city's Ethics Commission is investigating allegations that businesses regulated by the Honolulu Liquor Commission donated thousands of dollars in liquor and gifts during a statewide conference of liquor commissioners in September.

Ethics Commission Executive Director Chuck Totto confirmed that the investigation began after his staff received a complaint that the Honolulu Liquor Commission allowed liquor licensees to donate beer, wine, liquor, food, and restaurant and hotel gift certificates.

The Honolulu Liquor Commission, which oversees some 1,500 restaurants, bars and other businesses that sell liquor, gets its money from fees paid by licensees. Its performance standards specifically prohibit solicitation and acceptance of such gifts in most cases, and employees are specifically cautioned to "avoid any and all appearances of impropriety."

Wallace Weatherwax, the liquor control administrator, and John Spierling, the commission's chairman, both signed a letter of invitation to the conference at the Kahala Mandarin Oriental Hotel last summer. Members of liquor commissions from across the state and staff members of those agencies, as well as representatives of the regulated businesses, were invited.

Weatherwax said that the conference has been organized the same way for years, with the liquor and gift donations handled by the Hawai'i Hotel Association, and that no ethics standards were violated.

Because each donation goes first to the hotel association, he said, "it was never a gift to the commission." He said his role in the donations is usually ceremonial, such as in September when he was the person pulling the lucky numbers for the door prize giveaways.

"We don't solicit it or actually become the recipients of it," Weatherwax said. "It was for the conference, which is a separate entity."

Weatherwax said the conference fees covered the seminars and the meals for approximately 100 people who attended. "We try our hardest to keep the line segregated certainly between what is commission business versus what is conference business," Weatherwax said.

He said the industry wants to provide the donations, so "they wouldn't look at it as a gift." And organizers haven't discussed increasing the conference fees to pay for the items now solicited as gifts, he said.

The Ethics Commission declined to provide details of its probe. "We have an ongoing investigation," Totto said. "We hope to conclude it as soon as we can. I would hope within the next couple of months."

Tina Yamaki, executive assistant for the Hawai'i Hotel Association, said she has helped set up an industry reception at the annual conference for 11 years and has asked for donations to be given to participants at liquor commission conferences.

"It's a more friendly atmosphere, and we get to network with these people," Yamaki said. "It's the industry that sponsors it, not just the hotel association."

Yamaki said she attended the conference as well. "I went there to represent the hotels and to find out what was going on with the liquor laws," she said.

"We ask people if they would like to participate. If they want to participate then they can, if they don't then, that's fine," Yamaki said. "There's no pressure" to require people to provide a gift or service, she said.

Yamaki said there's no problem if liquor licensees donates gifts and then her group turns them over to the commission.

"The gifts come direct from us," Yamaki said. "I know the commission cannot ask them, but if we ask them, the commission never asks."

She said she had no estimate of the value of the gifts and donations. "I don't keep a running total," she said.

The conference invitation indicated that those who attended paid $225 each to attend the conference and that they would receive "a very special group rate of $100 per night (plus tax and porterage) with an option of the same rate for three days prior and three days after."

Hotel reservations staff said the kama'aina rate for a mountain-view room currently is $195. Hotel communications director Debora Bridges said rates offered to any group remain confidential. "We don't share our guest profile with anyone else."

The Ethics Commission investigation is examining if that rate is a preferential one that would also be considered a violation of commission standards or city ethics standards.

George Szigeti, Better Brands senior vice president and general manager, said his company, which distributes liquor, frequently gets requests for donations from Hawai'i's hotel association, a restaurant association and community organizations. He said his company generally gives when it can.

A commission memo indicates his company provided six cases of wine and some hard liquor for the September conference, but Szigeti said he didn't have immediate access to specific information about the size of the donation.

He said he saw nothing wrong with the idea.

"We're very involved with the hotel association, and they orchestrate the Liquor Commission meeting over here," Szigeti said. "We do participate and go and join it, and if they ask for donations we certainly will accommodate them on that."

Conference participants also received gift certificates for free dinners and hotel rooms in lucky-number drawings during the conference. A copy of one of the gift certificates for a seafood buffet for two in the Surf Room of the Royal Hawaiian Hotel — worth $83.90 — and the recipient is labeled "48th annual state Conference of Liquor Commissioners Sept. 25, 2000."

B.J. Whitman, director of public relations for Sheraton Waikiki and Royal Hawaiian Hotel, said company records indicate that the request for donation of the gift certificates came from the Hawai'i Hotel Association.

"We do it for a lot of conventions; it's pretty much standard procedure," Whitman said. "So, we didn't feel any pressure or anything like that."

Internal documents from the Honolulu Liquor Commission indicate that a conference-planning meeting was held at the commission offices in the 711 Kapi'olani building on Aug. 30 that included Weatherwax and other commission officials as well as representatives of Anheuser-Busch, 7-Eleven and the Hawai'i Hotel Association.

Yamaki confirmed that she attended the planning meeting in August to coordinate the event.

Jim Boersema, a spokesman for 7-11 Hawaii Inc., acknowledged that the company paid $900 for one night's room rate for the hospitality suite and donated no more than $50 worth of paper goods.

Boersema said that a 7-Eleven representative also served as chairman of the golf tournament, but said that those who played paid for the event and some prizes for participants.

According to the commission documents, other companies that provided donations to the conference included: Safeway, Paradise Beverages, Better Brands and Southern Wine & Spirits of Hawai'i.

Representatives of Anheuser-Busch and Paradise Beverages said the donations were handled by people in their company who were not available to comment last week on the matter. Safeway representatives did not respond to a request for comment.

A memo provided to the Ethics Commission estimates the value of donated goods at a little more than $4,000 for some 50 cases of beer, six cases of wine, sodas, crackers, cheeses and two nights at $900 a night to pay for a hospitality suite for participants. The value of at least a dozen gift certificates presented as door prizes was not estimated.

Bob Morse, spirits vice president of Southern Wine & Spirits of Hawaii, said he doesn't recall donating any hard liquor, but he said he did drop off some small items to be given away at the conference. "I know I delivered some T-shirts and caps and stuff for the group that was going to golf."

Morse said he doesn't see a problem with the donation. "It was like five caps, maybe 10 T-shirts, the quantities were relatively small."

A look at the Honolulu Liquor Commission

• What is the Honolulu Liquor Commission?

It is a semi-autonomous agency that oversees businesses that sell liquor.

• Who runs the commission?

The five-member commission is made up of John Spierling, Avis Jervis, Clyde Eugenio, Chulan Shubert Kwock and Orlando Soriano. Liquor Control Administrator Wallace Weatherwax acts as executive director of the agency, overseeing a department of about 50 employees.

• How are commissioners appointed?

The Honolulu mayor appoints members to five-year terms.

• What do they do?

The commission oversees liquor purchasing and sales records and assesses fees through its auditing section. Its field enforcement division prepares investigative reports on people who apply for liquor licenses. The commissioners use these reports to determine whether to grant, renew or revoke liquor licenses. An enforcement sections oversees all licensed businesses. These staff members, commonly known as liquor inspectors, go to businesses and issue citations when they find businesses violating the liquor laws.

• What about the other islands?

Each county has its own version of a liquor commission.

• What are the Honolulu commission's main concerns?

The commission has focused on cracking down on underage drinking and regulating strip clubs, hostess bars, noise complaints and the selling of illegal alcohol.

• What is the annual budget?

For this fiscal year, the Liquor Commission reported a total operating budget of $2,562,552 and projected a budget of $2,533,912 for the upcoming year, with no increase in fees.