Indictments prompt Council to seek audit of Liquor Commission
By Treena Shapiro
Advertiser Staff Writer
The Honolulu Liquor Commission could be the subject of a city audit next year in the wake of federal indictments of eight employees and an ethics commission ruling.
The City Council Executive Matters committee, made up of all nine councilmembers, unanimously passed a resolution yesterday urging the city auditor to review the commission's investigative and enforcement functions and make recommendations on how to improve them.
However, commission administrator Wallace Weatherwax told the council it would be better to wait six months to a year to give the commission time to address the problems within the organization.
"We are proceeding along with these improvements, and to have the added burden of the audit of coming on board may be more disruptive," he said.
City Auditor Les Tanaka said the earliest his two auditors could audit the Liquor Commission would be March 2004, because they are tied up with audits that need to be performed before the next budget cycle.
As an independent arm of the City Council, Tanaka accepts recommendations but is not bound to follow the Council's request.
"It's a viable audit that I think we might undertake down the road, but it's probably going to be next spring, if we take it on," Tanaka said.
The resolution calling for the audit cites several media reports, including a Honolulu Advertiser editorial in July calling for a management audit of the Liquor Commission and its employees.
The Liquor Commission is responsible for licensing almost 1,500 bars, restaurants, wholesalers and retailers that serve liquor. The commission also investigates possible liquor law violations, such as selling liquor to minors or gambling, prostitution and drug use in bars and nightclubs.
In May 2002, eight inspectors and supervisors were indicted by a federal grand jury for charges that include accepting cash bribes ranging from $40 to $1,080 to overlook violations at 45 hostess and strip bars between October 2000 and December 2001.
Five of the inspectors have pleaded guilty and three are set to go to trial next month.
Weatherwax described the ways the Liquor Commission is trying to prevent such abuses from ever occurring again. For example, he said the commission has toughened its hiring standards to mirror the Honolulu Police Department's practices, which include a psychological evaluation.
In addition, noting that two supervisors were among the indicted employees, Weatherwax said, "there was a puka right there at ... the supervisory level." Weatherwax said they have stiffened that component, requiring supervisors to check on inspectors who at work a night.
Describing a climate from 20 years ago where liquor license holders chased inspectors into the parking lot to offer bribes, Weatherwax said the commission is hoping for a rules change where they can cite licensees for bribery, instead of having to call the police to do it.
"We're looking at trying to create that in terms of stopping the culture that says it's OK to offer a bribe and also strengthen the investigators to say, 'If you give me a bribe you will get reported and you will come before the commission,' " he said.
The Liquor Commission has also changed some policies in response to an Ethics Commission ruling that the Liquor Commission created the appearance of conflict of interest when it accepted $9,000 in gifts from hotels, restaurants and stores for an annual statewide industry conference it hosted in 2000.
The ethics ruling did not find evidence that the liquor inspectors were influenced by the gifts, but Weatherwax said, "the fine line has been drawn." Now conference attendees must pay to enter the hospitality suite.
"We've tried to make it clear that any of the social activities (at the conference) are not handled by the commission," he said.
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
