Posted on: Sunday, November 21, 2004

Official's role in friend's contracts probed

By Jim Dooley
Advertiser Staff Writer

A city employee who has helped award and supervise janitorial services contracts had a personal relationship with the owner of a janitorial company that received city contracts, raising conflict-of-interest questions in the awarding of thousands of dollars worth of work.

Chang Yoo, a supervisor in the city Department of Facility Maintenance, was the best man this year at businessman Nelson Aguinaldo's wedding and vacationed in the Philippines two years ago with Aguinaldo and his family, according to Aguinaldo's ex-wife.

City records show Aguinaldo's company, Diversified Janitorial Services, this year held 18 city contracts for janitorial and groundskeeping work worth $344,879. Since 1999 the firm has received more than two dozen city jobs worth at least $461,000.

Many of the contracts were worth less than $25,000 apiece and were awarded in an "informal" bidding procedure in which competing firms submitted price quotes by faxing unsealed paperwork to city personnel.

In at least five of those contracts awarded to Diversified Janitorial, Yoo was the city official who met with interested bidders at the job sites and discussed contract specifications with them. Yoo also directly recommended award of at least two of those contracts to Diversified and recommended that other contracts held by Diversified be extended, city contract files show.

The Corporation Counsel's Office is conducting an investigation, "relating to the Chang Yoo matter," said city spokeswoman Carol Costa, adding that officials would not respond to specific questions until the investigation is complete.

Yoo declined to discuss his dealings with Aguinaldo in a brief telephone interview.

"I've got no comment on that," said Yoo, who is a member of the Hawai'i Army National Guard's 29th Support Battalion, which was activated last month and is now training in Texas in preparation for deployment to Iraq. Yoo was contacted via cell phone at Fort Bliss, Texas.

Aguinaldo also declined to discuss his relationship with Yoo when reached on his cell phone, saying he was too busy to talk. Repeated attempts to reach him again at his office and via cell phone were unsuccessful. His lawyer, Pablo Quiban, said, "Neither myself nor Mr. Aguinaldo have any comment for your story."

Charles Katsuyoshi, head of the Purchasing Division in the city Department of Budget and Fiscal Services, which processed the award of some two dozen Facility Maintenance Department contracts to Aguinaldo's company since 1999, said no one in the purchasing office was aware of a personal friendship between Yoo and Aguinaldo.

Mary Lantano, a city employee in the Department of Community Services, helped run Diversified before she was divorced from Aguinaldo last year. She claimed that Aguinaldo purposely befriended Yoo to improve Diversified's business dealings with the city.

"Chang Yoo was a straightshooter. He always went by the book before Nelson started working on him," said Lantano.

Yoo traveled with Lantano and Aguinaldo to the Philippines in late March 2002, said Lantano. Yoo "paid his own airfare, but we paid for his expenses on the ground for the two weeks he was there," she said.

She estimated those ground costs to be between $500 and $700.

Lantano provided photographs of the trip showing Yoo socializing with Aguinaldo's family. One photograph shows Yoo marching behind a banner welcoming Aguinaldo's family home to the Philippines.

Lantano said she is publicly discussing her complaints about the company "because what was done on those city contracts was wrong and I can prove it."

She said she was not motivated by animosity toward her ex-husband, although the divorce case included acrimonious disputes over money and child custody issues, according to court files. Lantano accused Aguinaldo of financial irregularities; he accused her of mental instability, according to court records.

City rules on gifts

The City Charter prohibits city officials or employees from soliciting or accepting any gift when "it can reasonably be inferred that the gift is intended to influence the officer or employee in the performance of such person's official duties."

City ordinances also prohibit any city official or employee from accepting gifts worth more than $200 from one source during one year.

City Ethics Commission director Charles Totto, while declining to specifically discuss the Yoo-Aguinaldo situation, said any city employee with a "close personal relationship" to a contractor would be in "a real or apparent conflict of interest" if the employee took official action affecting the contractor.

The employee would be "required to disclose the relationship in writing to his superiors and to the Ethics Commission," Totto said.

Yoo's job required him to oversee contract compliance and to recommend whether the city should exercise annual options to extend some contracts or to cancel them and put them out to bid again.

Larry Hirano, head of Metropolitan Maintenance, a company that has competed with Diversified for city contracts, described Yoo as "a very strict guy" in enforcing the terms of city contracts. He said he was surprised to learn of Yoo's personal connections to Aguinaldo.

"Everything should be on the up and up," Hirano said.

Philippine vacation

Aguinaldo was among the bidders interested in the city contract to provide cleaning services at the Honolulu Police Department's Kuhio Beach substation in Waikiki, meeting with Yoo at the substation less than a month after the men returned in April 2002 from the Philippines trip, according to city records. Diversified won that contract in May 2002 with a bid of $24,996 — four dollars under the $25,000 threshold that would have required formal, sealed competitive bidding.

A year later, the city Purchasing Division, acting on Yoo's recommendation, extended Diversified's Kuhio Beach contract for one year, city records show.

Yoo recommended that another contract, for cleaning services at the Fire Department's Fire Support Services Facility in Waipahu, be awarded to Aguinaldo's company at the same $24,996 price last December. Aguinaldo was the only bidder to show up at a pre-bid inspection of the facility conducted by Yoo, and his company submitted the sole bid for the job, city records demonstrate. That contract expires at the end of this month.

Lantano alleges that Yoo and Aguinaldo became so friendly that Yoo would give the contractor advice on how much to bid for city contracts.

"I was there. I heard them talking," Lantano said.

Former Diversified employee Lourdes Belik alleged that Yoo "purposely overlooked" cleaning requirements in Diversified's contracts "unless a complaint is made at the work site."

Belik and Lantano claimed that Diversified regularly assigned fewer workers than were required under Diversified's contract to clean the Kapolei police station.

Lantano alleged that HPD complained that the company was not fulfilling its contractual obligations at Kapolei.

Kapolei HPD Lt. Darren Asuncion told The Advertiser he couldn't comment on the matter because "it may become a matter of investigation by the white collar crime unit or the general theft detail."

Worker payment

Belik, Lantano and another former Diversified employee, William Agustin, also complain that Diversified underpaid employees who worked on two larger janitorial contracts the company held with the city, at the HPD Kapolei station and at the police Training Center complex in Waipahu.

City procurement rules require that on contracts worth more than $25,000 per year, private companies must pay their employees the same wages as unionized city workers performing the same tasks. For janitorial work, that prevailing wage is now $11.81 per hour.

The United Public Workers Union, which represents blue-collar city employees, has claimed in the past that the city failed to enforce the prevailing wage requirement when it outsourced janitorial and landscaping jobs to the private sector. Attempts to reach the union for comment on this story were unsuccessful.

Lantano said Diversified twice received 3 percent price increases on its Kapolei and Waipahu police contracts after city janitors received collective bargaining pay raises. But the company never passed that money along to its employees, she claimed. The company "just kept it," Lantano said.

Last December, the city Purchasing Division asked Diversified for payroll records demonstrating that it was paying workers the then-required $11.75 per hour on those two contracts.

Aguinaldo told the city Dec. 23 that some workers had been underpaid and some had been overpaid and that the company would supply paperwork showing that underpaid workers had been fully compensated.

Aguinaldo told the city he suspected that Lantano, who "was responsible for preparing the company's payroll," had caused the under- and overpayments.

"After reviewing the payroll records, we are satisfied that Mr. Aguinaldo has taken the necessary corrective action," city official Katsuyoshi said on Dec. 26.

Two months later, Lantano wrote to the city Customer Services Department, claiming that 13 Diversified employees who had been underpaid at the HPD Kapolei and Training Center were still waiting for their money. She said in the letter that several of the employees were willing to speak to the city about the matter.

Since that letter was written Feb. 20, 2004, "no one from the city ever contacted us" and none of the employees received the money from Diversified, Lantano said.

In March, Diversified Janitorial filed lawsuits in Small Claims Court against former employees Belik and Agustin, claiming that they had been overpaid $1,543 and $504, respectively, in 2003.

Belik and Agustin filed counterclaims, alleging they had been underpaid by the company.

Both sides later agreed to drop their claims.

Late last year, Diversified lost its contract to clean the HPD training facility when another firm, Federal Maintenance, submitted a lower bid for the work.

Last month, the city decided not to exercise a renewal option in the contract and put the training facility job out to bid again. Diversified won the contract with an apparent low bid of $6,800 per month, according to city records.

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