Woo vs. Harmon - Witness John Garibaldi

David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

U.S. District Court For the District of Hawaii

—

DEFENDANT’S WITNESS

JOHN GARIBALDI

CEO of Hawaii Superferry, Inc. from January 2003; president and CEO of Zephyr Insurance Company, Inc., a Hawaii-based insurer of residential hurricane risk in Hawaii, from July 2001 to December 2002. In May 1996, John Garibaldi joined Hawaiian Airlines, Inc. as executive vice president and CFO, with responsibility for all finance and administrative activities, including finance and treasury, accounting and reporting, purchasing, information technology, legal, risk management and government affairs. Mr. Garibaldi left Hawaiian in July 2000. Prior to joining Hawaiian, Mr. Garibaldi served as a trustee of the Queen Emma Foundation and, beginning in 1992, as vice president and CFO of The Queen’s Health Systems (QHS); former vice president/chief financial officer of both Aloha Airlines and Hawaiian Airlines....

Website: www.hawaiisuperferry.com

E-mail Address: contact@hawaiisuperferry.com

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NEW DISCOVERY (04-17-08) - David C. Farmer’s undisclosed relationships with John Garibaldi:

April 17, 2008

Audit: Superferry drove
state actions

Lingle administration criticized for
bypassing environmental review

By DERRICK DePLEDGE, Honolulu Advertiser

The state may have compromised its environmental policy because of pressure from Hawaii Superferry executives who were worried about financing for the interisland ferry project, the state auditor has concluded.

The auditor found that an internal June 2005 deadline imposed by Superferry executives "drove the process" and pushed the state Department of Transportation to bypass an environmental review. The deadline, according to the auditor, was tied to Superferry's agreement with Austal USA to secure financing to pay the Mobile, Ala.-based shipbuilder to construct two high-speed ferries.

The federal Maritime Administration, which approved a $140 million loan guarantee for ferry construction, wanted confirmation that no environmental assessment of harbor improvements would be required because of the risk that environmental concerns could jeopardize port access. But Maritime Administration officials told the auditor they did not set the June 2005 deadline as a condition of the loan guarantee.

"In the end, the state may have compromised its environmental policy in favor of a private company's internal deadline," state auditor Marion Higa concluded. "It remains to be seen whether these decisions will cost the state more than its environmental policy."

The performance audit was required by state lawmakers as part of a law passed in special session last fall that allowed Superferry to resume operations while the state conducts an environmental impact statement. Legal challenges and public protests had halted ferry service after the state Supreme Court ruled in August that the state's decision to exempt $40 million in state harbor improvements from environmental review was in error.

The auditor's main finding was that the June 2005 deadline was not imposed by the federal government, but related to an agreement between Superferry and Austal. The audit questions whether the state did "sufficient due diligence to verify whether the deadline was valid for the reasons Hawaii Superferry Inc. claimed."

John Garibaldi, Superferry's chief executive officer, said yesterday that Superferry has consistently portrayed the June 2005 deadline as necessary for both federal and private equity financing. He described the agreements with the Maritime Administration, Austal USA and primary investors J.F. Lehman & Co. as interrelated.

"They were all dependent upon each other. No one stood on its own," Garibaldi said. "I think that's what we tried to express to people."

Garibaldi declined to comment on other findings in the audit because he had not yet seen a copy.

Similar accounts

The auditor's descriptions of the chain of events that led the state to exempt the project from environmental review in February 2005 are similar to reports in The Advertiser in September and January.

The auditor and the newspaper received many of the same documents, which were screened by the Lingle administration for attorney-client privilege and executive privilege before being released. The administration is preparing a privilege log for the auditor and the newspaper to describe the documents that have been withheld. The Advertiser requested the documents under the state's open-records law.

Most significantly, the auditor — like The Advertiser — emphasized a late December 2004 meeting at the governor's office that included the governor's then-chief of staff Bob Awana, department officials, and Superferry executives.

Staff in the department's harbors division had wanted to require a statewide environmental assessment of the project and to get Superferry to install a stern ramp on the vessel to give it more flexibility at Kahului Harbor on Maui. But Superferry executives, according an account by a department staffer, told the state that anything but an exemption was a deal-breaker and that they would not install any ramps.

"Decisions made: We need to pursue EXEMPTION; and HSF will not provide any ramps on vessel," one department staffer told colleagues afterward in an e-mail.

The auditor concluded that department e-mails showed a decision was made at this meeting, although who made the decision is not revealed.

"Current and former department officials and employees who worked on the ferry project were either unable to recall who made the decision at that meeting or chose to invoke executive privilege when asked who directed the team," the auditor found.

The department, in its written response to the audit, rejected any inference that a decision was made at the governor's office directing the department to pursue an exemption. The auditor countered that the department's e-mails about the meeting "are self-explanatory."

"Ultimately, a decision involving the governor's office was made that directed the 'ferry project team' to pursue scenarios that would exempt the ferry harbor work from environmental review," the auditor found.

Fukunaga's decision

Awana, who resigned last year, told The Advertiser in January that he had no role in the decision. Barry Fukunaga, who was then the department's deputy director of harbors and is now Gov. Linda Lingle's chief of staff, has said he made the decision in consultation with his construction and engineering staff and then-department director Rod Haraga. The department also consulted with the state Office of Environmental Quality Control and county planning agencies.

Fukunaga told The Advertiser in writing last year that he did not discuss his deliberations or his eventual decision with Lingle, Awana or state Attorney General Mark Bennett.

The audit is also similar to The Advertiser's reporting last September on the Maritime Administration's loan guarantee for Superferry. Maritime Administration officials told the auditor that loan guarantees are typically exempt from environmental review because they just provide financing for ship construction. The vessels typically use port facilities already in place.

Maritime Administration officials told the auditor that harbor improvements for Superferry could have triggered an environmental assessment that could have limited ferry access to ports. So the Maritime Administration added a condition that Superferry provide confirmation that no environmental assessment was required.

"MARAD's position was that it was not willing to finance the construction of any vessel that might be unable to operate because it has no port," the auditor found.

The audit recommends that the Legislature empower a state agency to enforce environmental review laws and require agencies to update exemption lists every five years. The auditor found that the public has little involvement in the exemption process other than the right to file a lawsuit to challenge an exemption.

Higa had complained to lawmakers that she missed a March deadline for a preliminary draft of the audit because of significant delays in obtaining documents from the Lingle administration. Higa repeated those complaints in the audit and said her staff would be preparing a second phase of the audit for a later report.

Higa described the Lingle administration's cooperation as "slow and incomplete, at best." The department called that description "wholly untrue" and said any delays were based on requests by Higa that the attorney general found were "unreasonably broad in scope."

The department chose not to comment on many of Higa's conclusions. Mike Formby, the department's deputy director of harbors, said last night that the administration's wants the opportunity to review the second phase of the audit.

I think what we wanted to do was reserve the right to see the full report, because it's really risky to look at half the report and respond knowing that they're out there still doing field investigation, interviews, reviewing documents," Formby said. "And basically, they look at the response you gave, and they go out and look for a way to rebut your response."

The Honolulu Advertiser

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NEW DISCOVERY (04-19-08) - David C. Farmer’s undisclosed connections with John Garibaldi:

February 5, 2008

Kokua Line

June Watanabe, Star-Bulletin

Superferry has big
hitters as leaders

Question: With the Hawaii Superferry in the news, I was wondering who owns the Superferry? They have a lot of pull.

Answer: J.F. Lehman and Co. is the major investor in the Hawaii Superferry.

"There are a lot of smaller investors, but J.F. Lehman and Co. is by far the major equity investor," said a spokes- woman for the company.

Timothy Dick, named as one of the Star-Bulletin's top 10 people to watch in 2006, was the founder of Hawaii Superferry.

He is still listed as a vice chairman in state business registration records, but left the company late last year, according to the spokeswoman.

He's described as a venture capitalist who focuses on Internet-related and technology businesses. He founded Grassroots.com, WorldPages.com, UseHalf.org and TRUSTe.org. Dick also is a founding member of Reef Check Hawaii.

Dick brought aboard John Garibaldi, the Superferry's president and chief executive officer.

Garibaldi, picked by the Star-Bulletin as one of 10 people who made a difference in 2007, previously was vice president/chief financial officer of both Aloha Airlines and Hawaiian Airlines; chief financial officer/vice president of Queen's Health Systems; and president/CEO of Zephyr Insurance Co.

In addition to Garibaldi, the board of directors includes Chairman John F. Lehman, founding partner of J.F. Lehman and Co. and a former secretary of the Navy; Tig H. Krekel, vice chairman of J.F. Lehman and former president/chief executive officer of Hughes Space and Communications and president of Boeing Satellite Systems; Jeffrey G. Arce, partner in the MacNaughton Group and executive vice president/chief financial officer of the Superferry; David C. Cole, president/chairman/chief executive officer of Maui Land & Pineapple Co. and president of Aquaterra Inc.; and C. Alexander Harman, of J.F. Lehman and former member of the Global Energy Group at J.P. Morgan & Co.

Also, Warren H. Haruki, president/chief executive officer of Grove Farm and Lihue Land Co. and former president of GTE Hawaiian Tel and Verizon Hawaii; Louis N. Mintz, of J.F. Lehman and former member of the Private Equity Investment Group at Odyssey Partners L.P.; George A. Sawyer, founding partner of J.F. Lehman and former assistant secretary of the Navy, Shipbuilding & Logistics; and John W. "Bill" Shirley, former program manager of the U.S. Department of Energy, Naval Reactors Division.

http://starbulletin.com/2008/02/05/news/kokualine.html ~ ~ ~

December 23, 2007

10 WHO MADE A DIFFERENCE

- ISAAC HALL -

ATTORNEY FOR ANTI-SUPERFERRY
ENVIRONMENTALISTS

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Attorney kept boat
tied up in court

By Gary Kubota, Star-Bulletin

Isaac Hall was the Maui attorney who argued before the Hawaii Supreme Court and mounted a successful legal challenge against the Hawaii Superferry and state of Hawaii.

Only a special exemption by the state Legislature upset Hall's challenge and allowed the start of the Superferry.

Hall, 63, has been recognized by the Sierra Club for arguing more cases on behalf of the environment than any other lawyer in the state.

He's provided legal representation to environmental groups who couldn't afford high attorneys' fees and he's won a number of cases.

In Maui Circuit Court in October, the scene seemed out of a movie -- three attorneys, sometimes four, representing the state and Superferry at one table, and Hall on behalf of citizens groups seated alone at the other.

Hall prevailed in his arguments to require the Superferry to do an environmental study before starting operation.

But the state Legislature in a special session in November intervened to exempt the Superferry and other similar vessels from the environmental requirement.

Hall, who practices law with the help of friends and family members including his wife Dana Naone Hall, occupies a modest office on the bottom of a two-story, hollow-tile and wooden building on Wells Street.

Hall worked for several years as an attorney for the Legal Aid Society of Hawaii on Maui and assisted a number of poor native Hawaiians in land and water disputes against major landowners on Molokai and East Maui.

He went into private practice after the Legal Aid Society narrowed its scope of services during the Reagan era, barring him and other attorneys in his office from being involved in environmental and native rights cases.

For more than 20 years, he has managed to run a private practice while continuing to do pro bono work.

Lucienne de Naie, vice chairperson of the Sierra Club in Hawaii, compared Hall to lawyer Atticus Finch in "To Kill A Mockingbird."

"He's a small-town attorney who has taken on some huge issues of our time," de Naie said.

De Naie said Hall's argument about the Superferry was important in trying to uphold constitutional rights.

Alan Murakami, the supervising attorney for the Native Hawaiian Legal Corp., said that while other private lawyers might represent a single public interest issue during their lifetime, Hall has been representing numerous groups on behalf of the environment for decades.

"It's also his longevity. Isaac has been doing it since the 1970s," Murakami said.

Murakami said Hall is the antithesis of the greedy, incompetent lawyer cited in jokes.

"You can't make fun of this guy," Murakami said

http://starbulletin.com/2007/12/23/news/story03.html

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October 14, 2007

Hawaii ferry spent $175,000
on lobbying

By Rick Daysog, Honolulu Advertiser

Hawaii Superferry officials spent more than $175,000 over three years on lobbying and campaign contributions, including dozens of donations to Gov. Linda Lingle, U.S. Sen. Daniel Akaka, U.S. Rep. Neil Abercrombie and other key state legislators.

An Advertiser computer-assisted study of state and federal campaign records shows that the Superferry, its executives and several of its board members contributed more than $39,000 since 2004 to local lawmakers and members of Hawai'i's Congressional delegation.

A review of state and federal ethics filings also found that the Superferry spent more than $136,000 since 2004 to lobby state officials and the federal government.

"You're talking about an extremely large sum of money even by national standards," said Craig Holman, a campaign finance expert with Public Citizen, a Washington, D.C.-based consumer advocacy group. "At the very least, they are trying to buy access, and at the worst they are trying to buy influence."

Superferry officials said there's no connection between the political donations and any legislative efforts pursued by the company.

The Lingle administration decided in February 2005 to exempt the Superferry project from an environmental assessment, which would take months to complete. That decision was reversed by the Hawai'i Supreme Court in August and now the ferry has been banned from operating until the assessment is finished.

Lingle and state legislators may convene a special session to rewrite the law and allow the ferry to operate while the assessment is conducted.

The 350-foot ferry was to carry passengers and vehicles between O'ahu, Maui and Kaua'i and began service in August before being shut down.

POLITICAL DONATIONS

The Advertiser's computer-assisted study examined contributions made to Lingle, Hawai'i's Congressional delegation and all 76 state legislators from 2004. The study found that Superferry executives and its board members made more than 30 political contributions between 2004 and 2007.

Here are the highlights:

Lingle's campaign received the most money from the Superferry and its officials, even though Lingle had directed campaign officials not to accept money from Superferry executives, said Miriam Hellreich, who served as the Lingle campaign's finance director from 2002 to 2006.

State campaign spending records show that Lingle's campaign received six donations totaling $12,000, including $6,000 in donations in October 2006 from Superferry Chairman and former Secretary of the U.S. Navy John Lehman and company Director Tig Krekel.

Hellreich said the Lingle campaign's policy was to refuse contributions from companies that were negotiating with the state for contracts. Lingle also told campaign staffers not to accept contributions from Superferry executives, Hellreich said.

Hellreich said staffers made "an error" by accepting the $6,000 in 2006 because negotiations between the state and Superferry were ongoing. Some campaign staffers were not aware of the internal policy against accepting money from Superferry officials, she said.

Hellreich also noted that the Lingle campaign returned about $10,000 in donations to Superferry officials in 2005 because the state and the company were still in negotiations. Hellreich said the campaign has no plans to return the 2006 donations.

"All the donations associated with people with the (Superferry) were within the law," Hellreich said.

Superferry executives and directors also contributed $9,200 to Abercrombie's campaign, including a cluster of June 2007 donations from Lehman, Krekel and Superferry President and CEO John Garibaldi.

Abercrombie said he receives support from a broad group of interests including environmental groups.

Federal Election Commission records show that the Sierra Club's political committee contributed more than $6,000 to Abercrombie's campaigns since 1998 and that the League of Conservation Voters Action Fund has donated nearly $1,000 to his campaigns since 1998....

Superferry executives made several contributions totaling $8,800 on Aug.25, 2006, and Sept. 11, 2006, to Akaka's campaign. Akaka spokesman Jesse Van Dyke said Akaka has taken no position on the issue since it doesn't involve Congressional action and is largely a state issue.

State House Speaker Calvin Say, a Superferry supporter, received $2,000 from the company on Jan. 24, 2006. That same day State. Rep. Joseph Souki received $1,000 from the Superferry. Say, D-20th (St. Louis Heights, Palolo Valley, Wilhelmina Rise), and Souki, D-8th (Wailuku, Waihe'e, Waiehu), were not available for comment....

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March 27, 2006

The Exchange

By Anthony Pignataro, Maui Times

WHO GAVE: John Garibaldi — President, Hawaii Superferry, Inc.

WHO RECEIVED: Governor Linda Lingle

AMOUNT: $2,800

Lost in all the discussion over what will happen with the state Senate’s compromise bill that requires a full Environmental Impact Statement on the proposed Superferry (at taxpayer expense) but allows Hawaii Superferry, Inc. (HSF) to start operations this July is what will happen if the bill manages to make it all the way to Governor Linda Lingle’s desk. Don’t expect it to be pretty. In addition to Garibaldi’s contribution cited above, here’s what HSF principals and investors gave to Lingle during the 2006 campaign:

• John Lehman (HSF Chairman): $3,000

• Christopher McKenna (Lehman Brothers): $2,500

• Tig Krekel (HSF Vice Chairman): $3,000

• David Cole (HSF Director/Maui Land & Pineapple President, Chairman and CEO): $4,000

• Margaret Cole (David Cole’s wife): $6,000

• Stephen Case (HSF investor): $3,000

When all that’s added to Garibaldi’s $2,800 contribution, HSF, its directors and investors gave Lingle $24,300 in total during her 2006 reelection campaign. Where I come from, that translates into the bill being Dead On Arrival when Lingle gets it.

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October 10, 2007

Ruling boxes in Superferry

A judge prohibits service to Maui, prompting Gov. Lingle and lawmakers to seek a special session

By Richard Borreca, Star-Bulletin

The debate over the Hawaii Superferry appears headed for the state Capitol.

Political leaders are huddling to see whether they have the support to change environmental laws to let the Superferry operate after a Circuit Court judge blocked the service to Maui.

Gov. Linda Lingle is urging House Speaker Calvin Say and Senate President Colleen Hanabusa to act soon because the Superferry company will have to start laying off employees in three weeks.

Maui Judge Joseph Cardoza yesterday blocked the Superferry from using Kahului Harbor facilities without an environmental assessment.

Superferry officials said they were disappointed for the employees and for Hawaii. Their attorney said they planned to appeal the decision.

Sierra Club attorney Isaac Hall said he is sorry the Superferry is losing money but said the company and the state were warned several years ago that they had to perform an environmental assessment.

Cardoza's decision was applauded by residents opposing Superferry stops on Kauai until an environmental study is done. The decision doesn't affect Kauai's Nawiliwili Harbor. But Superferry officials have said the company wouldn't make enough money by going only between Oahu and Kauai.

http://starbulletin.com/2007/10/10/news/story01.html

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October 10, 2007

Environmentalists cheer court

Superferry's attorney signals an intent to appeal the ruling

By Gary T. Kubota and Nelson Daranciang, Star-Bulletin

Kauai residents pushing for an environmental review of the Hawaii Superferry for the Garden Island are thrilled with Maui Circuit Judge Joseph Cardoza's decision.

"This is a victory for all people who believe an environmental assessment should be done before the Superferry can operate," said Jimmy Trujillo, spokesman for Hui-R, the group that organized the protest of the Superferry's maiden voyage to Kauai in August.

But Superferry officials were disappointed yesterday, and Superferry attorney Lisa Munger said her client planned to appeal Cardoza's decision.

Superferry President and Chief Executive Officer John Garibaldi said: "Obviously, we are disappointed. While the ruling is a loss for Hawaii Superferry and our employees, it is a greater loss for the state of Hawaii."

Garibaldi declined to respond to questions after the Maui court hearing.

Cardoza's ruling affects Superferry travel to Kahului Harbor and does not affect Nawiliwili Harbor on Kauai.

Superferry managers have chosen not to operate on Kauai even though there is no legal obstacle. Circuit Judge Randal Valenciano ruled on Kauai last month that opponents failed to file a timely challenge after the state exempted the Superferry from having to do an environmental assessment.

"We're proceeding with our appeal," said Greg Meyers, an attorney for Thousand Friends of Kauai. "We expect the state and the Superferry to appeal Judge Cardoza's ruling. We don't know what they're going to do. We aim to be prepared."

Besides blocking Superferry operations at Kahului Harbor, Cardoza also declared that an operating agreement between the Superferry and state transportation officials was void.

State law requires an environmental assessment before the operation can start and he was compelled to apply Hawaii law as it is written, the judge said.

Cardoza said the Hawaii Supreme Court had already ruled on the merits of the case by ordering that an environmental assessment be done and that he was following the system of environmental review as required by state law.

Cardoza said the decision should not be looked at as a moment of joy but a time for all to bridge divisions. "If we don't work out these issues, things will not get better," he said.

Garibaldi has said the company would have to transfer the Alakai out of Hawaii if it is allowed to operate only to Kauai.

Superferry officials also have mentioned the possibility of laying off 90 percent of the employees during the environmental review process.

Isaac Hall, representing the Sierra Club and other citizens' groups in the Maui case, said he hoped the Superferry does not leave Hawaii and lay off its employees.

Hall said he was sorry that there will be economic harm to the Superferry but that the interisland service and the state were warned years ago about preparing an environmental assessment.

"The message to the state is, 'Don't abuse the exemption process,” Hall said.

He said state transportation officials should do a broader study that requires an environmental impact statement and might take one to two years, compared with an assessment that takes about eight months.

Keone Kealoha of Malama Kauai does not expect the Superferry to return to Nawiliwili Harbor until after state lawmakers meet in special session -- if they decide to do so.

http://starbulletin.com/2007/10/10/news/story01.html

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October 5, 2007

Superferry can’t wait
for report, says CEO

'I can't guarantee the vessel will
return if it leaves the state'

By Wendy Osher, Special to the Star-Bulletin

WAILUKU » The Hawaii Superferry would transfer its vessel "elsewhere to generate revenue" if it cannot operate while an environmental study is prepared, President and Chief Executive Officer John Garibaldi testified in court yesterday.

"I can't guarantee the vessel will return if it leaves the state," said Garibaldi, adding that the Superferry is losing about $650,000 a week because its vessel, the Alakai, sits idle.

Garibaldi was called to testify yesterday in a Circuit Court hearing on an injunction to stop the company from operating at Kahului Harbor while an environmental assessment is conducted.

In August the Hawaii Supreme Court ruled that the state should have done an environmental assessment for Kahului Harbor improvements....

Garibaldi said the events of Sept. 11, 2001, "brought home the fact that we were relying on one mode of transportation." ...

Garibaldi pointed to his experience as an executive with Aloha Airlines in 1985 and later with Hawaiian Air in concluding that "the establishment of the Hawaii Superferry meets the needs of providing a public purpose."

When asked about previous testimony from other witnesses on invasive species, Garibaldi agreed that occasional random high-intensity inspections of vehicles utilizing the ferry service would not be objectionable....

Garibaldi said 12 meetings were called for, but they conducted 22 statewide, with seven of them on Maui.

Isaac Hall, the attorney for environmental groups seeking the injunction, objected to the line of inquiry, saying, "Any public involvement is irrelevant to the argument because the Hawaii Supreme Court has already ruled that the public was deprived of their participation rights by the failure to prepare an EA (environmental assessment)."

Judge Joseph Cardoza overruled the objection because the two sides will later argue the information's relevance.

http://starbulletin.com/2007/10/05/news/story01.html

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John Garibaldi is expected to testify regarding his business, professional and personal relationships with Steve Case; Linda Lingle; John Waihee; Ben Cayetano; Calvin Say; Earl Anzai; Lyn Anzai; Nainoa Thompson; Robert K.U. Kihune; Peter Savio; Judge Robert Faris; Zephyr Insurance Co.; Mark Hastert, Hawaii Superferry, Kazu Hayashida, Hawaiian Airlines, The Queen Emma Foundation; Colbert Matsumoto; Wayne Arakaki; Linda Chu Takayama; Wayne Metcalf; Rey Graulty; J.P. Schmidt; Dan Inouye; Daniel Akaka; Norman Mineta; Neil Abercrombie; Ed Case; Jeffrey Case; Aon Insurance; Suzanne Case; The Nature Conservancy; The Ocean Conservancy; U.S. Fish & Wildlife Service; Judith Neustadter Fuqua; Maui County Council; Maui Planning Commission; Robert Kessner, James Duca, Kessner Duca Umebayashi Bain & Matsunaga, James B. Nicholson, Dan Case, James Cribley, David Farmer, General Eric Shinseki, Donald Rumsfeld, Robert Gates, Jesse Van Dyke, Sherry Broder, Jon Van Dyke, Robert Bruce Graham, David Banmiller, and others to be named upon discovery.