I SING THE
HAWAIIAN ELECTRIC
Sightings from The Catbird Seat
~ o ~
November 30, 2007
Former American Savings Bank Assistant Manager Indicted on 10 Counts of Theft, Embezzlement and Fraud
Ewa Beach Resident Marilyn DeMotta Is Being
Apprehended by Federal Agents in Las Vegas
Hawaii’s U.S. Attorney Ed Kubo today announced the indictment of Marilyn DeMotta, 41, a former operations manager at American Savings Bank accused by a bank security manager in 2004 of stealing more than $1 million from 91-year-old bank customer Ada Lim.
DeMotta, a resident of Ewa Beach, was indicted in Hawaii’s U.S. District Court on Nov. 15, 2007, on 10 counts including bank fraud, embezzlement by a bank employee, and theft of public funds, but the indictment was sealed until she could be located and apprehended in Las Vegas, Nevada, where she also has a home.
The 18-page indictment alleges that DeMotta:
> Became involved with the personal financial affairs of Lim (referred to in the indictment as “A.L.”);
> Used her position with the bank to access the accounts of Lim and move funds belonging to Lim into other accounts at American Savings as well as other financial institutions;
> Used a variety of financial transactions to redirect Lim’s funds into accounts, which DeMotta controlled at American Savings Bank as well as other financial institutions;
> Altered checks belonging to Lim, so that the money was deposited into DeMotta’s father’s account, which DeMotta had opened;
Falsely endorsed the reverse side of the cashier’s checks as “refunded to customer” which were to be used for Lim’s payment of federal and state tax.
Spokesperson for the U.S. Attorney's office, Larry Butrick, says the federal agents are speaking with DeMotta’s attorney to determine whether she will surrender on her own or if a warrant will be issued for her arrest. Either way, DeMotta will be brought back to Hawaii so she can be arraigned next week.
DeMotta Took Advantage of Her Position
As Hawaii Kai Branch operations manager for American Savings Bank, DeMotta could easily befriend Lim, a frail elderly widow living in an East Oahu retirement home. Lim had no reason to distrust DeMotta when in 2003, the polite bank employee offered to help her with her finances.
Despite declaring bankruptcy in 2001, DeMotta offered to manage the upcoming sale of Lim’s $1.4 million property in Wahiawa, to prepare Lim’s federal and state tax forms, and to act as her “financial manager.” DeMotta even told Lim to get rid of her accountant because he was “too expensive.”
Lim allowed DeMotta to take control of the $668,000 netted from the sale of the property previously rented to Zippy’s Restaurant for $7,000 a month and to prepare her 2003 tax forms. Signing blank checks, Lim gave her banker full access to those funds and more totaling $900,000.
Alarmed at DeMotta's actions, Dennis Kohara, Lim’s long-time accountant, told Hawaii Reporter that he twice took his concerns to an American Savings Bank branch manager who he knew personally, because he believed an investigation was in the best interest of his client and the bank. Angie Ho, Lim’s Realtor, says she also was worried because Lim had a simple lifestyle with few expenses, but her money was rapidly being depleted.
Meanwhile, DeMotta continued as the bank’s assistant manager.
In late 2004, DeMotta allegedly used Lim’s money to open an I-Plan account at the Hawaii Kai Bank Branch under her own father’s name.
The indictment alleges that this money was supposed to go to the Internal Revenue Service and State Tax Collector to pay Lim’s taxes.
But instead, DeMotta allegedly deposited more than $200,000 from the money into an American Savings I-Plan account.
As a result, DeMotta’s Hawaii Kai Branch won a company-wide competition in December 2004, and employees and management personnel subsequently received bonuses of $1,000 and $5,000 each.
Bank Security Manager Bert Corniel pushed for the bank’s senior management to aggressively pursue an investigation into DeMotta and to reimburse Lim the full amount that was stolen.
Instead, the bank’s senior officials claimed they believed DeMotta’s claim that she borrowed the money and that it had all been repaid.
American Savings management wanted to make sure it was on record that DeMotta “borrowed” the money from Lim.
On February 2005, DeMotta picked up three bank employees from the legal and human resources departments and took them to meet with Lim.
Bank general counsel Stanley Chong, who suggested the meeting, went along in hopes that Lim would sign a statement saying she had in fact lent DeMotta the money. With big smiles, and candy and flowers in hand, the four bank employees arrived at Lim’s home with the release. She signed it.
“Mrs. Lim was in no condition to turn them down. She would have agreed to anything to anyone who was nice to her,” attorney Lyle Hosoda said about his client Ada Lim, maintaining his client was improperly manipulated.
DeMotta was fired from the bank in 2005, but was able to secure a job with a local mortgage company.
Corniel filed a complaint with the FBI in 2005 saying DeMotta alleged stole more than $1 million from Lim between 2003 and 2005. It was his report that triggered a federal investigation by four federal agencies.
Corniel was fired from the bank in June 2006.
Two Lawsuits Filed Against Bank Aug. 2, 2006
Corniel filed a lawsuit on Aug. 2, 2006, in First Circuit Court, alleging that he was fired in retaliation for blowing the whistle on the cover-up of DeMotta’s theft by the bank’s top senior officials.
Ten days after Corniel was fired, FBI agents seized his computer and files from the American Savings Bank security headquarters. Sources say federal agencies investigating the case feared evidence might be lost or destroyed. Hawaii Reporter broke that story on Aug. 12, 2006.
Federal agents also issued at least a half-dozen subpoenas in the fall of 2006 to American Savings Bank senior management officials in preparation for a grand jury proceeding at Hawaii’s U.S. District Court.
Federal agents from at least four departments have been involved in the case, including the FBI, U.S. Attorney, Office of Inspector General for Tax Administration and Department of the Treasury. U.S. Attorney Ed Kubo says in his Nov. 30 release that these federal agencies continue their investigation.
Corniel’s lawsuit against American Savings was settled in 2007 for an undisclosed sum on the condition that Corniel agree to strict confidence in terms of the settlement and what he uncovered during his investigation while at the bank.
Meanwhile, Lim also sued American Savings Bank, filing her lawsuit on Aug. 2, 2006 -- the same day as Corniel’s in First Circuit Court.
Lim’s attorney, Lyle Hosoda, said that American Savings, which had been notified twice about DeMotta before she took Lim’s money, did not take action to stop her -- at least not in time, and as a result, DeMotta transferred Lim’s money to a series of accounts benefiting DeMotta and her family members.
Specifically, Lim’s lawsuit alleged that $304,000 went to DeMotta’s account at the Bank of Hawaii; $212,000 went into DeMotta’s father’s retirement fund in American Savings; $110,000 in cash was used to purchase a condo in Waipahu in DeMotta’s own name. In addition, records show another $57,000 going to pay DeMotta’s credit card debt, and several thousand dollars both transferred to the Philippines and set up in a local account for DeMotta’s children.
Hosoda says the bottom line is Lim’s money disappeared within a few months and the 91-year-old is penniless. She once made $9,000 a month from rent and social security and believed she was set financially for life. But Lim was left unable to afford the rent in the East Oahu elderly care home and was forced to move out into low-income housing in Red Hill.
Worse, Lim’s taxes were not even paid, even though she believed the $304,000 was going to pay her taxes and signed cashiers checks prepared by DeMotta for that amount. Today, Lim owes nearly $500,000 in back taxes and penalties for the sale of the property and at this point, has no way to pay the government.
Bank president and Chief Executive Officer Constance Lau, who also serves as president of the Hawaii Bankers Association, and was named by U. S. Banker magazine as one of the top 25 most powerful women in banking and “Business Leader of the Year” in 2004 by Pacific Business News, did not speak publicly about either the civil lawsuits or criminal federal investigations into American Savings Bank.
But in a series of press releases, Lau adamantly denied American Savings Bank has done anything illegal.
On Tuesday, Aug. 22, 2006, American Savings asked the state’s First Circuit Court to dismiss the two lawsuits against the $6.9 billion financial institution and subsidiary of the state’s second largest company, Hawaiian Electric Industries.
In a 10-page filing, the bank attorneys maintained “there have never been any actions by American Savings Bank to conceal any improprieties by bank personnel." The filing also states former security manager Corniel was never coerced or kept from submitting any reports required by law.
After considerable negative press in the local and national trade press, however, American Savings Bank, in a dramatic turn, agreed to a settlement with Lim.
Neither Lim’s attorney, nor the bank, would discuss the terms of the arrangement, which was announced on Sept. 18, 2006, but her settlement is reportedly more than $1 million.
Bank Hires Top Guns, Fights Federal Inquiry
American Savings Bank, Hawaii’s 3rd largest bank with $6.7 billion in assets, retained Washington D.C.-based law firm of Fried, Frank, Harris, Shriver & Jacobson LLP to defend the bank during the federal inquiry.
One of the attorneys hired was former U.S. Department of Justice Inspector General Michael Bromwich, who since entering private practice 7 years ago, has defended both financial and other corporations under investigation by government agencies.
While working with the Department of Justice, he attempted to prosecute Oliver North during the Iran-Contra controversy in the late 1980s and investigated government agencies for their management of such crises as Oklahoma City bombing and the 1993 terrorist attack on World Trade Center.
Bromwich’s experience and that of his co-counsel, Thomas Vartanian, who is an expert in banking law, makes the firm the ideal one to defend the bank against any criminal or civil charges, sources say.
Behind the scenes, the bank’s board and attorneys brokered a deal with the federal U.S. Attorney’s office to delay any indictments while the bank conducted its own audit.
After the bank’s audit was completed and turned over to the U.S. Attorney, key bank employees involved with this case suddenly left the bank.
That includes Abel Malczon, senior vice president of operations, who was considered one of the bank’s most powerful and politically connected officers; and Stanley Chong, general counsel for the bank, who sent the delegation of four employees including DeMotta to get Lim’s signature on the form that stated DeMotta had borrowed the money from her. Wilson Ho, the bank branch manager supervising DeMotta during her alleged crime spree, was transferred to another branch and ultimately demoted. Ken Newman, brought in to replace Corniel when he was fired, also left the bank in recent weeks.
Financial experts familiar with the case say the federal investigation could lead to criminal charges against bank officers, and if they are proven serious enough, the bank could lose its federal charter.
DeMotta Maintains Her Innocence
All along, DeMotta has dismissed any allegations of wrongdoing.
In an interview with Hawaii Reporter in the fall of 2006, DeMotta explained that she was not responsible for Lim losing nearly $1 million.
DeMotta says that she befriended Lim while Lim lived in a Hawaii Kai elderly care home and “became like family.”
DeMotta told Hawaii Reporter that she did not steal any of Lim’s money. She says she merely "borrowed" $304,000 from Lim to “help her out” and paid her back on time and in full. She admits she put $212,000 in her father’s retirement account during a related bank promotion, but she says that money was part of the $304,000.
“Mrs. Lim wanted me to invest her money and I could not find anything that was good in the short-term so I borrowed it and gave her 2 percent interest. I did not need the money. I have plenty of my own.”
DeMotta says she took the $110,000 from the Lim family for a Waipahu condo purchase. DeMotta bought the condo in her name, even though she says she did so as an investment on behalf of the Lims. They were repaid $125,000, DeMotta maintains, saying she kept the additional $55,000 in profit from the condo resale of $180,000 because “she earned it.”
She says she realizes now that she probably should not have borrowed money from a customer, or volunteered to help her with her finances or tax preparation, but that she was not responsible for Lim being forced to move from her Hawaii Kai elderly care home into a low-income housing complex in Red Hill.
DeMotta blamed Lim’s daughter and granddaughter for financially taking advantage of Lim to the point where the senior citizen was impoverished.
But public records show DeMotta emerged from bankruptcy in 2003. She told Hawaii Reporter she was on the financial rebound after her parents’ Waimanalo home was sold. Public records shows the Waimanalo home was sold in 2005, however, not in 2003.
Under bank rules, DeMotta was not allowed to represent herself as a financial planner and tax specialist or to even touch the client’s money. Despite this mandate, DeMotta says she was only going out of her way to make sure Lim was a "satisfied bank customer."
“American Savings is a family-oriented bank, which encouraged employees to go out of their way to help customers,” DeMotta told Hawaii Reporter.
Saddened that she was fired from the bank in 2005 for "unrelated reasons," DeMotta says she realizes that she should not have “helped” Lim with her finances, even though she was only doing so out of the goodness of her heart.
She says because she was generous to Lim, her own family is suffering.
American Savings Bank’s public relations officials did not return calls or emails to Hawaii Reporter by press time to comment on this indictment.
Federal officials would not comment on whether other bank officials will be charged in this case, and would only say the investigation involving four federal agencies is ongoing.
Malia Zimmerman, editor and president of Hawaii Reporter, can be reached via email at mailto:Malia@hawaiireporter.com
April 1, 2007
Big bucks for the bosses
By Rick Daysog, Advertiser Staff Writer
The average pay for Hawai'i's top bosses grew more than 27 percent last year due in part to new federal rules on reporting of stock option awards and other incentive pay.
An Advertiser study of company filings at the U.S. Securities and Exchange Commission found the chief executive officers of Hawai'i's seven largest publicly traded companies earned an average of $2.6 million in 2006, which was up from the year-earlier's $1.8 million.
The pay was equivalent to about $7,420 per day and was more than 59 times the median household income in Hawai'i....
U.S. CEOS AVERAGE $4.9M
ERI said the total cash compensation for U.S. chief executives — which includes figures for the heads of large U.S corporations like Microsoft Corp. — averaged out at $4.9 million, which was up from the year-earlier's $3.9 million.
In Hawai'i, only one CEO topped the $5 million mark: Alexander & Baldwin Inc.'s CEO Allen Doane.
According to A&B's proxy, Doane received $7.6 million in total compensation last year, which was up 55.6 percent from his 2005 pay of $4.9 million....
MILLION-DOLLAR CLUB
The Advertiser survey only includes pay figures for publicly traded companies and doesn't include compensation figures for such companies as Castle & Cooke Inc. and First Hawaiian Bank that are no longer publicly traded.
They also don't include figures for large nonprofit companies like the Hawai'i Medical Service Association, which paid its CEO Robert Hiam $1.1 million in salary and bonus last year.
Six of Hawai'i's seven CEOs received $1 million or more last year. Only two saw their pay drop from the previous year. Here's a snapshot:
Constance Lau, Hawaiian Electric Industries Inc.'s chief executive officer, earned $3.7 million. Lau, who was named HEI's top executive in May 2006 after heading the company's American Savings Bank subsidiary, received $680,667 in base pay.
She didn't get a bonus but was paid $370,204 in options, stock awards and other cash-based compensation and perks.
Lau's total compensation package was skewed by a $2.2 million, one-time gain when she switched from an American Savings' pension plan to one for HEI executives.
Allan Landon, Bank of Hawaii Corp.'s chairman and chief executive officer, saw his pay package drop from about $4 million in 2005 to $2.3 million last year.
David Cole, Maui Land & Pineapple Co.'s CEO, also saw a drop in pay last year. Cole's 2006 compensation as head of the local pineapple grower and real estate company was $1.5 million, which was down 6 percent from the year-earlier's $1.6 million.
Central Pacific Financial Corp. CEO Clint Arnoldus earned nearly $1.4 million last year, which was up 36.5 percent from the $1 million he received in 2005.
Figures for Hawaiian Airlines CEO Mark Dunkerley were not available. The company said it expects to file with proxy with the SEC later this month....
During the past five years, revenue at Alexander & Baldwin's real estate division has grown at a 14 percent annual compounded rate. In 2006, the division's operating profit hit the $100 million level for the first time, even as the local real estate market began to soften.
The company's shipping unit, Matson Navigation Co., lost a profitable shipping alliance to Guam last year but Matson's performance still topped goals set for it....
August 16, 2006
FBI probes bank over
alleged fraud cover-up
By Rick Daysog, Honolulu Advertiser
The FBI is investigating claims that American Savings Bank officials tried to cover up theft, including one case in which a bank employee allegedly took several hundred thousand dollars from a 91-year-old customer.
FBI agents interviewed the bank's former security director Bert Corniel yesterday after he charged in a lawsuit that the bank asked him to stop reporting fraud cases to federal and state officials, said John Perkin, Corniel's attorney.
Assistant U.S. Attorney Ron Johnson, who prosecutes federal crimes in Hawai'i, said yesterday he could not confirm or deny that an investigation is under way. A person at the Honolulu FBI office said late yesterday the bureau had no immediate comment.
The bank said the charges are false and it is cooperating with the FBI investigation.
"Although we cannot comment on the investigation, we can say that we have and will continue to cooperate and provide investigators with all the relevant information as it is requested," said American Savings Bank in a written statement. "Mr. Corniel's concerns ... were thoroughly investigated and found to be without merit."
Corniel and bank customer Ada Lim, 91, alleged in separate lawsuits filed on Aug. 2 that a manager at a bank branch took hundreds of thousands of dollars from Lim.
Lim deposited more than $600,000 into her American Savings account in 2004, only to have most of the money siphoned out of her account by the bank employee, who was helping to manage Lim's finances, the lawsuits allege. The bank employee opened an account with Bank of Hawaii and deposited various sums from Lim totalling $304,000, according to Lim's lawsuit. The bank employee bought a condominium using $110,000 of Lim's money, the suit claims.
Corniel said in January 2005, when he was investigating the Lim case, the bank employee confessed to him that she took the money. American Savings officials said the transfer was a loan from Lim to the employee, Corniel said.
Corniel said American Savings officials told him not to report the fraud as required by law to federal regulators and law enforcement agencies such as the FBI, Office of Thrift Supervision and the Federal Deposit Insurance Corp.
Several American Savings employees went to Lim's house in February 2005 with gifts and to get her to sign a document exonerating the bank, according to the lawsuits.
$200,000 SHORT
Lyle Hosoda, Lim's attorney, said the bank returned most of Lim's money but still owes her about $200,000. No criminal charges have been filed against the bank employee, but Hosoda said an Internal Revenue Service investigation of the employee is under way.
Craig Togami, American Savings marketing and communications director, said yesterday the bank would not respond to specific allegations in the two lawsuits. Togami said he could not comment beyond what it said in the written statement.
"American Savings Bank believes that this entire lawsuit is without merit," the statement said. "There are many factual errors in the complaint. ... We look forward to telling our side of the story more fully at the appropriate time."
The bank's statement also cast doubt on the motivation of Corniel. In June, Corniel resigned from the bank, saying he was pushed out.
"To understand what truly happened, there are some facts to keep in mind: Security today goes well beyond physical security, and so the bank decided to emphasize protection of security of information systems and computers; Mr. Corniel, whose background is in physical security, was not selected for the newly created position of VP Security; Mr. Corniel voluntarily resigned after repeated efforts by the Bank to have him stay," the statement said.
PRESIDENT IMPLICATED
Corniel's lawsuit also charges that Constance Lau, the president of the bank, asked him to "recharacterize" the bank's fraud losses as "potential losses" in his reports to federal regulators.
Lau became chief executive of American Savings' parent company, Hawaiian Electric Industries Inc., in May. Togami said Lau was traveling and could not be reached for comment....
FBI agents seized Corniel's computer at American Savings' downtown headquarters on Friday in search of e-mails and other electronic records, which could demonstrate Corniel's allegations, according to Perkin, Corniel's attorney.
Corniel is a retired Honolulu police officer and a former investigator with the city prosecutor's office who was hired as American Savings' security director in 2000.
In his lawsuit, Corniel mentions a second incident, involving two bank tellers and a customer who allegedly defrauded the bank of $256,000 in April and May 2005. Corniel said he filed reports with federal regulators and law enforcement officials, including the FBI, the Office of Thrift Supervision and the Federal Deposit Insurance Corp.
But bank officials recharacterized the losses as expenses or charge-offs and his immediate supervisor told Corniel that his filings with federal authorities could cost him his job, the lawsuit claimed.
For more, GO TO > > > Behind the Blinds at American Savings
June 26, 2006
Just say 'no' to HECO's addiction to oil
Commentary by Cynthia Thielen, The Honolulu Advertiser
Hawaiian Electric Co. is asking the Public Utilities Commission for authority to build another fossil fuel-fired plant (Honolulu Advertiser, June 19). And a June 21 editorial says this should be the last one.
Hawai'i's consumers lose if HECO is allowed to build this oil-driven power station. Because HECO has dragged its heels on moving to renewable sources of energy, it now cries "wolf" and claims it needs this new fossil fuel plant to provide power to O'ahu residents and businesses.
Wait a minute! What about the vast amount of renewable energy we have in Hawai'i? Wave, wind, solar, and the list goes on.
Do we "reward" HECO for not aggressively pursuing those non-polluting energy technologies by allowing it to stay mired in fossil fuel? Or do we say it is past time for it to stop its oil addiction?
We know the stakes are high. Time magazine's April 3 cover on global warming headlined to readers: "Be Worried. Be Very Worried." Fossil fuel power stations burning oil emit large quantities of greenhouse gases that contribute greatly to global warming. It is irresponsible and, yes, even criminal to let HECO continue to add to this world crisis.
Let's talk about renewable options: The most powerful and commercially available systems use the movements of the ocean to generate power. Called wave energy, this technology is vastly more powerful than wind and solar (but both of the latter still must belong in HECO's renewable portfolio).
Companies from all over the world are looking into this technology and have found that wave energy is the future.
A Portuguese consortium (including a utility company), led by the renewable-energy company Enersis, has contracted with the Scotland-based Ocean Power Delivery for its "Pelamis" wave-energy converters to build the initial phase of the world's first commercial wave farm to generate renewable electricity from ocean forces. Once completed, these wave-energy converters are expected to meet the demands of more than 15,000 Portuguese households, which will lead to the displacing of more than 60,000 tons per year of global warming-producing carbon dioxide emissions from conventional generating plants.
In Denmark, they are working on the Wave Dragon, a slack-moored wave-energy converter that can be deployed in 25-yard water depth. With 15,600 hours of experience, it soon will provide electricity for 40,000 to 60,000 homes, using only seven units.
HECO should now partner with these companies to bring this technology to Hawaiian waters. The economics could work for the companies, as state tax credits exist for investment in non-fossil fuel energy, which is a qualified high-tech business.
The potential for this technology in Hawai'i is enormous. The Electric Power Research Institute in Palo Alto, Calif., has identified Hawai'i as a leading site for wave-energy development and says that coastal wave energy has nine to 10 times the energy provided by U.S. hydroelectric dams. Furthermore, studies have found that wave energy could provide 80 percent of the power on O'ahu and all the needed power on the Neighbor Islands at a cheaper price.
Wave energy can help solve the problem of high energy costs. Once a wave project is developed and in place, it can provide power at under 10 cents per kw hour. HECO's cost to consumers on O'ahu is 20.5 cents per kw hour, and on Moloka'i, the cost is 28.8 cents. The low costs associated with the price of wave energy would be a welcome relief to consumers struggling to pay their bills.
Unfortunately, HECO refuses to move forward in developing wave technology because using oil is easier.
We have already seen some success in developing this technology in Hawai'i. A power-generating buoy anchored near Kane'ohe was able to produce electricity despite relatively calm waters during testing in September 2005 before it was brought ashore for upgrades.
Now is not the time to invest in another costly oil-driven power plant that will only make us even more dependent on fossil fuels. As each day goes by, our further dependence on fossil fuels places our livelihood, our economy and our environment in further danger.
The PUC should say "no" to HECO's request to build yet another fossil fuel-fired plant. There are better ways to solve this problem. The seas that surround us can provide a clean, plentiful, reliable and cheap source of energy that can serve as a solution to our energy problem without adding to the global warming crisis.
Let's ride the tide of ocean energy.
Rep. Cynthia Thielen, R-50th, represents Kailua and Mokapu in the state Legislature. She wrote this commentary for The Advertiser.
February 10, 2006
Clarke stepping down at HEI;
Constance Lau gets 2 top jobs
David Segal, Honolulu Star-Bulletin
Hawaiian Electric Industries Inc. announced today that Robert Clarke, its longtime chairman, president and chief executive, will retire at the company’s annual shareholders meeting on May 2.
He will be replaced as president and CEO by Constance Lau, 53, who will retain her position as president and CEO of HEI subsidiary American Savings Bank. Lau also will become chairman of subsidiary Hawaiian Electric Co. and will add the title of chairman of the bank’s board. She also will be nominated to be elected a director of HEI.
Jeffrey Watanabe, 63, a senior partner of his law firm, Watanabe Ing & Komeiji, was named nonexecutive chairman of HEI. Watanabe has been a director with the holding company since 1987. Watanabe also is a director of Oahu Publications Inc., publisher of the Honolulu Star-Bulletin and MidWeek.
Clarke, 63, joined HEI in 1987 as vice president-strategic planning and was promoted to group vice president-diversified companies in 1988. He was elevated to president and CEO in 1991, and became chairman in 1998.
For more, GO TO > > > Office of the United States Trustee vs. Harmon: Witness Edwina Clarke
January 13, 2005
HECO under fire at hearing
By Deborah Adamson, Honolulu Advertiser
Residents voiced their concerns to state officials last night about Hawaiian Electric Co.'s proposed 7.3 percent rate increase, bringing up issues ranging from its effect on the elderly and the poor to better scrutiny of how the utility would spend the money.
"Where will the elderly and the poor be able to get the extra 7.3 percent?" said Caron Wilberts of Kaimuki. "It really would hurt the people of Hawai'i — 7.3 percent out of the elderly's Social Security is a great increase."
About 65 people attended the public hearing before the state Public Utilities Commission at the auditorium of Kaimuki High School. The commission is considering HECO's proposal to increase rates and will render a final decision within 10 months....
Honolulu users already pay one of the highest electric rates in the country, about 14.4 cents per kilowatt hour. The average rate nationwide is about 8 cents per kilowatt hour, according to the U.S. Department of Energy.
HECO filed for a rate increase in November, the first such request by the company since 1995. The utility said the higher rate, which is expected to bring in $74.2 million in additional revenue, is necessary to meet growing electricity demands across O'ahu as the economy improves....
HECO would formally request a 9.9 percent base rate increase, but that amount includes the transfer of an existing surcharge for conservation programs to the base rate. So the net increase on electric bills would be 7.3 percent.
Kenwynn Goo, a Kailua resident, bristled at the request for the rate increase.
"Why should HECO actually implement a rate increase?" he said at the hearing. "HECO had revenues of $410 million in the third quarter of 2004 and net income was also up by 28 percent to $26.2 million."
To support his assertion that HECO doesn't need to raise rates, Goo cited public comments made by Robert Clarke, chief executive of HECO parent Hawaiian Electric Industries, that a robust economy in Hawai'i should increase the utility's revenues.
"If Hawaiian Electric's own chief executive is making a statement that he foresees increased revenues collected due to a robust economy ... then HECO doesn't need a rate increase," Goo said.
"HECO's absolute power is corrupting absolutely."...
For more, GO TO > > > The Power Vampires & The Ghost of Ken Lay
March 11, 2004
Trust Plans $9M in HECO Office Repairs
The utility leases the downtown
space from Kamehameha Schools
By Rick Daysog, Honolulu Star-Bulletin
Kamehameha Schools plans to spend $9 million to renovate Hawaiian Electric Co.’s downtown headquarters.
Under the terms of a proposed 20-year lease, Kamehameha Schools will spend $5 million over the next year to upgrade the historic Richards Street building, people familiar with the negotiations said.
The $6 billion charitable trust - which owns the 40,000-square-foot structure and the land beneath it - will add $2 million in tenant improvements in the next several years and another $2 million in the 11th year of the lease.
The deal underscores the interlocking relationships between the two organizations, but Kamehameha Schools officials said that trustees who also hold positions at HECO and its affiliated companies are playing no role in the lease negotiations.
Kamehameha Schools trustee Constance Lau heads HECO’s sister company American Savings Bank, and trustee Diane Plotts is a director of HECO’s parent Hawaiian Electric Industries Inc.
A third Kamehameha Schools trustee, attorney Douglas Ing, is a partner in the Watanabe Ing Kawashima & Komeiji law firm, which represents HECO on regulatory matters.
Kamehameha Schools’ internal policies require board approval on all construction projects valued at $1 million or more. But people familiar with the deal said the HECO lease has not yet gone to Kamehameha Schools’ board for review.
Under the Probate Court-mandated conflict-of-interest policy for the estate, trustees Ing, Lau and Plotts may have to recluse themselves if the lease goes to the board, leaving the five-member board without a quorum, people familiar with the trust said.
The estate’s board will then have to petition the Probate Court for instructions on handling the matter.
HECO, which has occupied the Richards Street offices since 1927, said its current lease will expire in November.
Lynne Unemori, HECO’s director of corporate communications, said HEI’s board played no role in the negotiations. One person familiar with the talks said Lau, Ing and Plotts were not involved in any of HEI’s discussions on the matter....
People familiar with the negotiations said HECO’s rent payments, currently set at $650,000 a year, will increase to $775,000 a year during the first five years of the lease. That annual rent will increase every five years to about $1.3 million during the final five-year period covered by the lease.
During the next 20 years, Kamehameha Schools stands to receive about $18 million in rent payments, or double the amount in planned tenant improvements.
HECO said its building requires significant repairs to its ventilation system and elevators. The building also requires major construction to comply with federal guidelines of the Americans with Disabilities Act, according to one person familiar with the discussions...
Kamehameha Schools’ links to HEI are not limited to the boardroom.
HEI Chief Executive Robert Clarke’s wife, Edwina, is Kamehameha Schools’ treasurer, and HEI Chief Financial Officer Eric Yeaman previously served as Kamehameha Schools’ chief financial officer.
HEI board member Oswald Stender is a former Kamehameha Schools trustee, while Ing’s law partner Jeffrey Watanabe is an HEI director.
Watanabe also is a board member of Oahu Publications Inc., the parent company of the Honolulu Star-Bulletin.
www.starbulletin.com/2004/03/11/news/story3.html