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Campaign Scandal in Hawai'i

Campaign donation scandal rocks Hawaii:
Probe proves embarrassment for state's Democrats




HONOLULU (AP) -- Behind his state-issue desk in a small fourth-floor office sits a slightly built, soft-spoken man who has managed to shake Hawaii's power structure to its core.

During the past two years, Robert Watada and his staff at the state Campaign Spending Commission have exposed, bit by bit, a scandal in which respected architects and engineers illegally made political donations in the names of their employees, wives and children, allegedly to win government contracts.

The results of the investigation so far: nearly $1 million in fines, jail time for a prominent lawyer, community service for business leaders, and the resignation of a Honolulu police commissioner.

"It's what I get paid for," said Watada, the commission's executive director. "I believe our system requires all of us in the democracy in which we live to follow the laws."

The civil and criminal reckoning has also been an embarrassment for some of the state's most influential Democrats and played a role in giving Hawaii its first elected Republican governor in 40 years.

Under state law, individuals can donate no more than $6,000 to gubernatorial candidates and $4,000 to mayoral candidates. Watada found that some businessmen were subverting the law by making donations in other people's names.

Watada's persistence has led to a slew of investigations by Honolulu Prosecuting Attorney Peter Carlisle, who says he hopes to end a "pay to play culture" that has plagued Hawaii's Democrat-dominated government for years.

The cases involve such things as $10,500 in donations over a five-year period in the names of three modestly paid Chinese-restaurant workers, and a $2,000 donation that supposedly came from a high school student.

The biggest fine was $303,000 levied against engineering executive Michael Matsumoto for allegedly laundering more than $400,000 in illegal contributions to Honolulu Mayor Jeremy Harris and other Democrats. Matsumoto, chief executive of SSFM International Inc., which won more than $7 million worth of city contracts, pleaded no contest to funneling money to family members and employees to donate to Harris' campaign and was sentenced to 300 hours of community service.

Still, there has been no direct evidence that the illegal contributions influenced the awarding of state and local government contracts.

And so far, the scam's chief beneficiary, Honolulu's mayor, has not been publicly implicated. His attorney has said the mayor never solicited or knowingly accepted illegal contributions.

After a rapid rise in politics, Harris abruptly dropped out of the 2002 governor's race in the midst of the investigation. Republican Linda Lingle went on to win the election. The mayor's term ends in a year.

Lingle made political corruption a top campaign issue and won passage of a government-procurement reform law in her first year in office.

Since the probe began, the commission has levied fines against 75 companies for making illegal contributions to Democrats such as Harris, former Democratic Gov. Ben Cayetano, former Maui County Mayor James Apana and former Lt. Gov. Mazie Hirono. Up to 40 more companies are still being investigated.

Among those convicted was former Hawaii Bar Association President Edward Y.C. Chun, 71. Chun was the first to get jail time -- 10 days. Nearly 20 others have been arrested and booked for investigation.

Also, Leonard Leong resigned as Honolulu police commissioner after being fined for illegal campaign contributions to the mayor.

The scandal has involved mostly design and engineering firms; while county or state construction projects or product purchases require competitive bidding, design contracts have long been decided subjectively by public officials.

Under the new law, however, independent committees of professionals will determine contracts for such things as architectural or engineering work, using published criteria.

Stanley Kawaguchi, former national president of the American Council of Engineering Companies, said that before the scandal, political contributions had "effectively become mandatory."

"The widespread perception was that you had to pay to play," he said. "The old system really gave our industry a black eye."

Apparently it had been going on for decades. Watada said one retired engineering company president told him that when he started 30 years ago, contributions of $25 or $100 would help in getting city contracts.

Watada said the investigations and changes in the law have curbed the illegal practices for now.

"But I'm realistic. When there's money involved and politics involved and power involved, whether it's in Hawaii or New Jersey or anywhere else, it's something the public always has to be vigilant about," he said."


Read at http://www.cnn.com/2004/LAW/01/05/hawaii.corruption.ap/index.html

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