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The Honolulu Advertiser

Posted on: Friday, January 24, 2003

Airport contracts questioned

By Jim Dooley
Advertiser Staff Writer

A friend and past political supporter of Ben Cayetano stands to make as much as $119,500 this year under a Honolulu International Airport security consultant contract renewed in the waning days of Cayetano's term as governor.

The contract — first awarded in 1997 to former Honolulu police major Rudy Alivado and renewed annually since then — is under review by Gov. Linda Lingle's administration. Lingle said yesterday she was unfamiliar with the specific terms of Alivado's contract but has asked Attorney General Mark Bennett to look into it.

"I can tell you that an arrangement like this is not appropriate," Lingle said last night.

The Alivado contract, as well as another airport security consultant contract held by former Honolulu Police Department officer Ernest Moritomo, were supposed to expire Jan. 15, but were renewed in advance on Nov. 15 by then-Transportation Department director Brian Minaai, about two weeks before Lingle took office.

Repeated attempts to contact Alivado and Moritomo yesterday were unsuccessful.

The contract calls for Alivado to receive $82,500 in annual salary, as well as up to $25,000 in overtime payments and $12,000 in expenses. Moritomo's salary is $70,000, plus the same overtime and expense allowances, for a total of $107,000.

Lingle said the information she has received about the contracts makes her think the arrangements "are intolerable — something we will not do in this administration."

The governor said her administration "will look for other instances where this is occurring and government employees should know that this kind of thing won't be tolerated."

Alivado and Moritomo also receive 21 days of vacation and 21 days of sick leave each year. The overtime, vacation and sick-leave benefits are very unusual allowances in non-bid personal services contracts awarded by state government, according to Kathleen Watanabe, nominated by Lingle to head the state Human Resources Department.

Watanabe told The Advertiser she "raised serious concerns" about the contract renewal last year when she was a deputy attorney general in the Human Resources Department.

"I can't say too much without violating the attorney-client privilege, but I can tell you I had quite a lot to say about that contract renewal and I said it," Watanabe said yesterday.

She did not know, until informed by The Advertiser, that Minaai had renewed the contracts. Nobody from the attorney general's office signed off on them.

Cayetano told The Advertiser by e-mail yesterday that the attorney general's office review is for "form, not substance" and "is advisory, not mandatory."

The former governor defended the contract renewal and praised the abilities of Alivado and Moritomo.

"The work by these two investigators at the airport has been outstanding — well worth the money spent," Cayetano said. "It was because of their work that we were able to end overtime fraud and abuse by HPD officers working at the airport."

Cayetano also credited Alivado and Moritomo with uncovering alleged fraud at the airport between airport employees and private contractors "which led to the arrests and convictions of several workers."

Language in the contracts awarded to the two men also point out that they uncovered "a fraudulent scheme using purchase orders in which millions of dollars were being funneled to certain contractors for shoddy work or for non-existent work never done."

But numerous airport and law enforcement sources, who asked not to be identified because the investigation is continuing, said the evidence was first discovered by Ross Higashi, chief auditor at Honolulu International Airport, who began looking into the contract awards because of a tip from an anonymous whistle blower at the airport.

Higashi turned over the findings of his audit to Alivado and Moritomo, who investigated the matter for more than six months before turning the case over to the attorney general's office last year.

Only one contractor has been charged to date in the case although various airport employees and contractors have been arrested and numerous records seized by the attorney general's investigators.

The Alivado and Moritomo contracts also say the two men are working on a new investigation of sealed-bid construction contracts at the Honolulu airport "and from the onset it looks like another fraudulent scheme had been conceived by the same state workers and contractors" even larger than the first investigation.

Construction contracts worth more than $25,000 must be awarded through a competitive sealed-bid process. The jobs can be worth millions of dollars apiece.

Multiple airports and law enforcement sources told The Advertiser that the attorney general's office and federal law enforcement agencies including the FBI and U.S. attorney's office, which have pledged cooperation in the airports probe, were not included in the sealed-bid investigation undertaken by Alivado and Moritomo.

And two sources said state officials yesterday informed Alivado and Moritomo to cease the sealed-bid investigation and turn over their findings to the attorney general's office.

Attorney General Mark Bennett said yesterday: "The investigations into any alleged irregularities at the airport are going forward and are being properly coordinated."

Bennett said he was not aware of the Alivado and Moritomo contracts until contacted by The Advertiser.

Cayetano said yesterday he knew nothing about the sealed-bid investigation described in the Alivado and Moritomo contracts and could offer no opinion as to whether it was proper for contract employees to receive overtime, vacation and sick-leave benefits.

"I can't answer your questions about the contract details because I did not get involved at that level," he said.

But he did suggest that such payments would be proper if investigators for the attorney general's office receive similar benefits.

"If so, I see nothing wrong with the provision, if not, I don't think it should have been allowed," Cayetano said.

Donald Wong, chief investigator for the attorney general's office, said there are about 25 investigators now working there as contract employees and none receive vacation or sick-leave benefits.

Overtime is occasionally paid but "severely restricted" for contract investigators, many of whom are retired Honolulu police officers, Wong said.

"Those 25 investigators wouldn't have made $50,000 in overtime as a group," Wong said.

Cayetano declined to answer questions about the timing of the contract renewals or whether his friendship with Alivado had anything to do with the contracts. Alivado has accompanied the governor to the Philippines and served as a deputy director of the Public Safety Department for Cayetano before moving to the airports for security work.

According to public records, then-Transportaion Director Minaai asked Budget Director Stanley Shiraki on Oct. 15 to approve the contract renewals.

Shiraki approved the request Oct. 29 and Cayetano did likewise on Oct. 31 — five days before Lingle won the gubernatorial election.

Minaai, Alivado and Moritomo signed the new contract documents Nov. 15 — two months before the old contracts expired and about two weeks before Lingle assumed office. The new contracts didn't take effect until Jan. 15.

If the contracts are suspended or terminated by the state before they expire, Alivado and Moritomo still must be paid their full annual salaries, according to language in the documents.

Reach Jim Dooley at jdooley@honoluluadvertiser.com or 535-2447.