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The Honolulu Advertiser
Posted on: Thursday, September 5, 2002

Harris aides to testify today before grand jury

 •  Key players in the inquiry into donations, city contracting

By Johnny Brannon and Robbie Dingeman
Advertiser Staff Writers

An investigative grand jury is set to convene this morning at Circuit Court to hear testimony from past and current members of Mayor Jeremy Harris' Cabinet about how city contracts have been awarded during the mayor's tenure.

The panel is also scheduled to hear testimony from employees of at least four engineering companies that contributed heavily to Harris' mayoral and gubernatorial campaigns and which won lucrative consultant contracts with the city and state.

Investigators have asked whether any contracts were awarded in exchange for contributions or were solicited with that understanding or expectation, and whether contractors were pressured by anyone to hire certain subcontractors for government projects. About two dozen witnesses have been subpoenaed to testify.

Harris declined to comment on the proceedings or the fact that his Cabinet members have been subpoenaed. He has insisted that there is no connection between campaign donations and city contracting — and that the system for selecting contractors is set up to preclude favoritism, cronyism, and political kickbacks or bribes.

"I'm looking forward to testimony under oath before the grand jury because that should put to rest any suggestion that's there's been some quid pro quo of contracts for political contributions," said Harris' attorney, William McCorriston.

"I think it's necessary to wind up this investigation, and if this is leading toward that end, it's a good thing."

The criminal investigation began in January when the state Campaign Spending Commission voted to refer an administrative probe of the Harris campaign to Honolulu Prosecutor Peter Carlisle.

Robert Watada, the commission's director, said investigators working for his agency have found evidence that Harris campaign officials hid the source of political contributions by attributing them to people who never donated to the campaign.

Investigators from the San Francisco district attorney's office have assisted Honolulu prosecutors by questioning several residents of the Bay area who say they never donated money to Harris but were listed on Harris campaign reports as contributors.

Chris Parsons, attorney for the Harris campaign, said he is confident that neither the mayor nor campaign officials would be charged with any wrongdoing.

"I continue to be confident that when the dust settles, no one who was involved in any key way with the campaign was involved in anything criminal," said Parsons, who has been subpoenaed to present campaign documents to the grand jury and to vouch for their authenticity.

He declined to describe the nature of the records, but said he would cooperate fully with prosecutors and the grand jury.

"People in key positions in the campaign have not done anything to violate the law," Parsons said. "We're cooperating. They've asked for documents, and we're providing them."

Witnesses subpoenaed to testify before investigative grand juries are generally not suspected of wrongdoing, but they can be granted immunity from prosecution and be compelled to provide evidence that incriminates others, legal experts say.

The proceedings are closed to the public. Witnesses may be represented by attorneys, but they cannot be present during questioning.

Investigative grand juries do not generally levy criminal charges against suspects, but instead gather evidence that can be presented to a second grand jury later if prosecutors elect to seek charges. The same citizens who serve on an investigative grand jury can be impaneled as the grand jury that considers whether to hand down indictments.

The city officials who have been subpoenaed to testify have been in charge of managing taxpayer money for the city or awarding contracts for city construction projects.

They include former Department of Budget and Fiscal Services directors Roy Amemiya and Caroll Takahashi; Department of Design and Construction director Rae Loui; and a former director of that department, Randall Fujiki, who now heads the Department of Planning and Permitting.

The companies with employees who have been subpoenaed include R.M. Towill Corp., ParEn Inc./Park Engineering, SSFM International Inc., and Thermal Engineering Corp. All four firms contributed to Harris' campaigns, as did many company employees and their family members.

The state Campaign Spending Commission fined Thermal Engineering $31,000 earlier this year for improperly reimbursing members of the company's board of directors for money they donated to Gov. Ben Cayetano, Harris, Maui Mayor James "Kimo" Apana, and gubernatorial candidate Linda Lingle. Neither those politicians nor their campaigns have been accused of any wrongdoing connected with the contributions.

Commission director Robert Watada said his agency has also been investigating the donations made by people associated with Park Engineering, R.M. Towill and SSFM, to see whether the companies improperly reimbursed contributors. Company officials either could not be reached or declined to comment.

The Harris administration awarded several major nonbid consultant contracts to those three firms, which have also performed work for the state. Thermal has worked on state projects, but has not been the prime contractor for any recent city projects.

Police and prosecutors have also questioned a tax attorney, Michael Shea, who helped establish two nonprofit groups that raised money for high-profile environmental conferences that the city sponsored under Harris.

The tax-exempt groups are chaired by Harris' chief political campaign fund-raiser, Peter Char, and received contributions from city contractors and companies that contributed to Harris' campaigns. One of the groups also received $100,000 from the city for a 1999 conference that drew hundreds of participants from dozens of Pacific Rim nations.

Char said that the nonprofits were not involved in Harris' political campaigns and that all the public money was spent appropriately and has been fully accounted for.

"The federal tax code is very clear: We cannot engage in anything that smacks of political activity," he said.

Char, who has not been subpoenaed or accused of any wrongdoing, said he had not expected that his dual roles as Harris' campaign fund-raiser and chairman of the nonprofits would raise questions about where he drew the line between the two.

"If history judges that I made a mistake from a public relations point of view, that's history's judgment," he said.

Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.

• • •

Key players in the inquiry into donations, city contracting

• Deputy City Prosecutor Randal Lee: The white-collar crime specialist is lead prosecuting attorney for the probe of campaign contributions to Mayor Jeremy Harris and the awarding of city contracts. With the city prosecutor's office for 20 years, Lee has handled such high-profile cases as the 'Ewa Villages contract scam, the police cellblock food scandal, and the theft case involving former Councilwoman Rene Mansho.

• Maj. Daniel Hanagami: The Honolulu Police Department's top white-collar crime detective is the lead police investigator for the Harris campaign case. The 24-year HPD veteran has also worked with Lee on the 'Ewa Villages scandal, cellblock food case and Mansho prosecution. In 1999, Hanagami was named the city's employee of the year; in 1992, he received the bronze medal of merit for saving the life of a 3-year-old boy who nearly drowned.

• Caroll Takahashi: As head of the city's Department of Budget and Fiscal Services, she was the Harris administration's top finance official from January 2001 until her resignation in July. Under Harris, she was the person who gave final approval for city contracts and signed them. Takahashi said she resigned because she needed more time to care for her ailing father.

• Rae Loui: She heads the city's Department of Design and Construction. Appointed in 2000, Loui oversees contracts for planning and building city projects. She said she has never been pressured to consider politics or campaign contributions when making recommendations about contractors. Loui was appointed in 1998 to the state Public Utilities Commission after serving as deputy director of Water Resources Management for the state Department of Land and Natural Resources.

• Randall Fujiki: He has been head of the Department of Planning and Permitting since 1999. The department is responsible for enforcing city ordinances and regulations governing development, land use, and building codes. Fujiki was first appointed to Harris' Cabinet in 1994, to head what was then the Building Department.

• R.M. Towill Corp.: The engineering company, founded in Honolulu in 1930 by Roswell M. Towill, is headed by CEO William E. Spencer Jr. The Harris administration awarded the company contracts worth at least $23 million for work at the Sand Island Wastewater Treatment Plant, 'Ewa Villages revitalization project, and numerous other sewer system, canal, park and road projects. The company, its employees and their relatives donated more than $40,000 to Harris' campaigns since 1996.

• Roy Amemiya: He was head of the Department of Budget and Fiscal Services from 1998 until December 2000. Before that, Amemiya headed the city's Finance Department until a city reorganization merged the agency with the Budget Department. He is now City Bank's vice president for business and consumer lending.

• SSFM Engineers Inc.: The company, founded in 1959, has worked on a variety of city and state construction projects, such as sewer outfalls at Sand Island and Barbers Point, and terminals at the Honolulu and Kahului, Maui airports. The company is headed by CEO Michael Matsumoto and has been awarded city contracts worth at least $7,039,000 during Harris' tenure as mayor for work on projects such as the Ha'iku stairs renovation, Bus Rapid Transit corridor and Central O'ahu Regional Park. Since 1996, SSFM employees and relatives contributed at least $85,000 to Harris' campaigns.

• ParEn, Inc./Park Engineering: The company, founded in 1958, has worked on state highway projects and city parks, sewers, walkway and traffic improvements, and Honolulu Zoo projects. The firm is headed by CEO Larry Matsuo and has been awarded contracts worth at least $5.9 million by the Harris administration. Employees and their relatives contributed more than $40,000 to Harris' campaigns.

• Thermal Engineering Corp.: The company was founded in 1978 and has worked on a variety of state projects, but has not been the prime contractor on any recent city work. Headed by CEO Ken Mashima, the company was fined $31,000 this year by the state Campaign Spending Commission for improperly reimbursing employees for $37,000 in political contributions to Gov. Ben Cayetano and Mayor Harris, as well as much smaller donations to Maui Mayor James "Kimo" Apana and gubernatorial candidate Linda Lingle.