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The Honolulu Advertiser

Posted on: Thursday, March 21, 2002

Political slush fund alleged

By Curtis Lum
Advertiser Staff Writer

Officials with a leading Hawai'i engineering firm are under investigation for allegedly developing a system to make illegal campaign contributions through a special bank account.

The state Campaign Spending Commission in court documents say that officers and directors with SSFM International Inc. asked people to make contributions to Mayor Jeremy Harris' and Gov. Ben Cayetano's campaigns and reimbursed them to evade the legal limits of contributions. The payments were made between 1996 and December 2001 from a special account held by SSFM chief executive officer Michael Matsumoto, according to the documents filed in Circuit Court last week.

Matsumoto could not be reached for comment yesterday. His attorney, Steven Hisaka, also could not be reached.

In October 2000, the commission contracted Goodenow Associates, a private investigation firm, to look into allegations that SSFM set up a slush fund to reimburse or advance money for campaign contributions. Campaign spending laws prohibit contributions made in any name other than the person who supplied the money.

The Campaign Spending Commission wants to subpoena records of the special account, which officials say may verify whether contributions made on behalf of others can be traced.

SSFM International has filed a motion to quash the subpoena. A hearing on the motion is set for March 25 before Circuit Judge Sabrina McKenna.

Goodenow president Terry Pennington said in an affidavit that he interviewed "numerous witnesses" who said that between 1996 and December 2001, Michael Matsumoto asked them to make political contributions, told them which candidate to contribute to and either advanced or reimbursed them the money.

Witnesses also testified they were asked by other SSFM officials to make contributions and that they would be reimbursed by the special account, according to the affidavit.

Pennington said that bank records of these witnesses showed they received money in the exact amount of their contributions by checks written on the special account.

Several family members and close friends have said no one asked them to make a contribution and no one reimbursed them the funds, Pennington said. He said an examination of the special account is needed, "given the apparent false testimony of some witnesses who in fact were given funds for political contributions from the 'special account' of Michael P. Matsumoto."

While thousands of dollars were being funneled through this account, Pennington said, actual contributions by SSFM and Michael Matsumoto totalled only $2,800 since 1997. He said no other SSFM officer or director has made a contribution in his or her own name.