Federal probe targets Kaua'i bridge project
By Jim Dooley
Advertiser Staff Writer
The federal government is investigating allegations of fraud, shoddy record-keeping and inadequate oversight of a Kaua'i highway bridge-widening project and may require the state to repay $1.6 million in federal money already spent on the project, public records show.
The Federal Highway Administration and the inspector general's office of the U.S. Transportation Department have been conducting separate investigations of alleged wrongdoing on the project since last fall, according to documents obtained under the federal Freedom of Information Act.
The investigations focus on the engineering firms Mitsunaga & Associates, the construction manager on the project, and Abhe & Svoboda, the general contractor.
In a memo dated April 9, 2002, Pat Phung and Earl Kobatake of the Federal Highway Administration office in Honolulu said they had reviewed the Kaua'i project "and improprieties were noted, with the appearance of fraud."
A separate April memo quotes Tim Parker, an investigator at the inspector general's office, as saying "apparent fraud" had occurred in the bridge project. And the same memo quoted Rachel Moriyama, an assistant U.S. attorney in Honolulu, as saying: "Government may charge 'unjust enrichment,' 'material misrepresentation.' "
The $3 million Kaua'i project adds two new traffic lanes to the two-lane bridge on Kuhio Highway spanning Waikaea Stream. The federal government agreed to pay 80 percent of the project costs and the state 20 percent.
But federal officials last month stopped paying for the work and may demand all their money back from the state, according to government records.
"We are informing you that reimbursements under the subject project will be suspended," Abraham Wong, head of the Federal Highway Administration's office in Hawai'i, said in a May 6 letter to state Transportation Director Brian Minaai.
"Pending the outcome of independent investigations, recovery of $1,603,055 (reimbursements as of April 10, 2002) may be requested," Wong wrote.
Wong said his office reported "construction and construction management discrepancies" on the bridge-widening project to the state Highways Division last October "with a request that corrective actions be taken." But as of May 6, 2002, Wong said, "the Highways Division has not responded."
Attempts by The Advertiser to speak with Minaai last week were unsuccessful.
Construction oversight on the Kaua'i bridge was awarded to an engineering company headed by Dennis Mitsunaga, a friend of Gov. Ben Cayetano. Mitsunaga is also a leading fund-raiser for Cayetano and other Democratic Party politicians, including Mayor Jeremy Harris, Maui Mayor James "Kimo" Apana and Lt. Gov. Mazie Hirono.
The $240,000 consulting contract to Mitsunaga & Associates was routed by the state through the U.S. Army Corps of Engineers. The firm stopped working on the project last November after receiving about $200,000 in fees. State personnel assumed construction oversight responsibilities after November.
Steve Kyono, state Highways Division district engineer on Kaua'i, said the Mitsunaga firm was providing construction support services on a number of jobs managed for the state by the Army Corps of Engineers.
"Mitsunaga had hit the ceiling on money available to pay for those contracts" so the firm stopped working on the Kaua'i bridge project, Kyono said.
The general contractor on the Kaua'i project, Abhe & Svoboda, is a large, Minnesota-based contractor that has been doing business in Hawai'i for many years, including a considerable amount of repair work on Aloha Stadium.
The company bid $2.63 million for the Waikaea Stream bridge widening — $600,000 more than the state estimated the job would cost. But it was the low bidder and was awarded the contract Sept. 30, 1999. Nine change orders and other extra work have added another $183,000 to the price tag.
Ben Nicholson, a local Abhe & Svoboda official, said he knew little about the federal government's investigations of the Kaua'i project.
"I've heard something like that but nothing's been said directly to us," Nicholson said.
He declined to discuss his company's work on the bridge.
Ross Wright, an ex-employee of Mitsunaga & Associates Inc. who worked on the Kaua'i bridge project, has filed a whistleblower lawsuit against his former company and the state, alleging that he was fired for reporting to federal authorities what he calls false billings and construction problems on the part of Abhe & Svoboda.
In his lawsuit, Wright said he refused to engage in improper billing and would not agree to "shoddy construction of the bridge, since, were he to have done so, the bridge would have been built in a fashion that would lead to its collapse."
State and federal officials said the bridge construction work has been closely studied and tested and found to be structurally sound.
Wright also alleged in his lawsuit that he reported stream pollution and labor law violations on the part of Abhe & Svoboda to state authorities and alleges that the state approved the contractor's false billings so Mitsunaga & Associates officials could make political contributions.
William Sink, Wright's attorney, declined to elaborate on the allegations contained in the lawsuit.
Mitsunaga & Associates has denied wrongdoing on the Kaua'i bridge project. The company also said in a written statement to The Advertiser that it "will vigorously defend" itself against the allegations contained in Wright's lawsuit. The company "has earned and enjoyed an excellent reputation during its 34 years of business in the state of Hawaii and has never been subjected to the kinds of unwarranted allegations in Mr. Wright's complaint," the statement said.
In court filings, Abhe & Svoboda and the state of Hawai'i also deny Wright's accusations. Mitsunaga and Abhe & Svoboda have also filed cross-claims against each other, saying the other firm was responsible if wrongdoing existed.
Federal officials declined comment about the ongoing investigations.
Lisa Glazzy of the inspector general's office in San Francisco would only say that the Waikaea bridge project investigation "is pending."
The U.S. Department of Transportation has made investigation of "fraud and other irregularities" one of its top priorities, Inspector General Kenneth Mead told state and federal officials in a speech last month.
Companies or individuals that submit false billings to the government can be prosecuted criminally or subjected to civil fines three times higher than the bills submitted.
Meanwhile, the Kaua'i bridge work, which was supposed to be finished last September, still is not complete.
Glenn Yasui, a former Federal Highway Administration official here and now head of the state Highways Division, said the project is "65 percent done."
Work "was suspended for a while because there was a discussion of construction quality and other matters," Yasui said.
Mitsunaga & Associates has received nearly one-fourth of all state Department of Transportation consulting contracts during the past year — 10 contracts worth about $8.65 million.
Numerous retired state Transportation Department employees now work for the company and their experience as state workers is regularly cited by the firm when it seeks state consulting contracts, government records show.
The executive vice president of Mitsunaga & Associates, for example, is Teuane Tominaga, retired chief engineer in the state Department of Public Works, who is part-owner of TM Designers. That company has received three contracts during the past year worth $2.95 million. Taken together, Mitsunaga & Associates and TM Designers have received nearly one-third of all DOT consulting contracts in the past 12 months.
Dennis Mitsunaga and Terri Ann Otani, secretary/treasurer of both Mitsunaga & Associates and TM Designers, have continued to work as major fund-raisers for the Harris, Apana and Hirono campaigns.
Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.
