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Broken Trusts

Tales of Crime and Corruption in the South Pacific

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February 11, 2007

Rights advocates speak up versus immigration woes, CNMI abuses

By Liberty Dones, Saipan Tribune

Unknown to many, the U.S. Senate Committee on Energy and Natural Resources had invited not only CNMI government and business leaders but also members from local non-government social service and human rights advocacy groups, who spilled the beans on human and sex trafficking cases in the Commonwealth during a hearing Thursday, boosting the argument of a serious lack of an effective immigration system in the CNMI.

Narrating a number of documented cases of human trafficking and labor and immigration abuses in the CNMI before the senate panel were Saipan residents Lauri Ogumoro, social worker at Karidat and manager of Guma Esperanza-House of Hope shelter of battered women, and human rights advocate Sister Stella Mangona of Good Shepherd.

Sitting along with them on the senate panel was a 23-year-old sex trafficking victim in the CNMI, identified as Kayleen Entena from the Philippines.

“There’s something wrong with the system. We can’t continue the way we are. I do know that people’s lives are destroyed,” Ogumoro told the U.S. Senate committee during the hearing.

Human trafficking

Ogumoro, who is originally from Oregon and has lived on Saipan for 25 years, cited that just very recently, as she was leaving for D.C., a Chinese woman who is allegedly a victim of human trafficking, was referred to the House of Hope. Asked by Sen. Daniel Akaka on its prevalence, Ogumoro said Guma Esperance has been serving victims of human trafficking since 2005.

In 2006, it received 30 victims of the alleged crime.

Compared with other U.S. territories, this figure is far way up, with American Samoa recording three last year, Hawaii, two; and Guam, zero, she said.

She cited that the U.S. Department of Justice itself considers the CNMI a hot spot for human trafficking due to its close proximity to many Asian countries and its lax immigration system.

“It’s so easy to bring in tourists [in the CNMI]. The system has to be fixed,” said Ogumoro.

In her 11-page position paper submitted to the panel, Ogumoro said that the 30 victims last year included only four cases identified by local enforcements.

He said those numbers handled by federal law enforcement were referred to Guam for safe shelter.

She cited the following cases:

– First case was a 43-year-old Chinese woman who ran away from her employers after having been assaulted. She arrived on Saipan in late 2004 to work as a babysitter but her contract said she was a waitress on Tinian. She worked on Saipan for 20-21 hours a day, cooking, cleaning, and babysitting, not only for her employer but also for other people who lived in an apartment. She had no day-off. She was promised a $250 salary a month. She was paid twice but deductions were taken from her salary, giving her a total net pay for four months of $255. She ended up paying her boss for her plane ticket from China and CNMI labor processing fee. She had begged to be sent home but was told that if she ran away, she would be found, her body “dumped” in the ocean, and her family would be informed that she was smuggled to Guam.

– In September 2005, two women from the Philippines were accommodated at the center. Both were promised $400 a month salary. They came on tourist permits, informing Immigration that they were niece and the girlfriend of their male employer/trafficker. They came in early morning and were escorted to their rooms in a massage/karaoke parlor. In the afternoon, they were given a box of condoms and a box of yellow pills. Later that afternoon, a Korean male customer knocked on the door of one of the two women, who eventually raped her. The victim said she was terrified and shocked at what was happening. She said that four male customers came that day and raped her. Her companion suffered a similar experience. They escaped the forced prostitution after 10 days with the help of their Filipino customers.

Other cases involved seven women, including two minors, from the Philippines, who who were allegedly asked to perform lewd acts while working as dancers at two nightclubs on Saipan.

The case also involved a number of labor abuses relating to salary and living condition.

Ogumoro also cited the recent arrival of seven Chinese women, who expected to work as commercial cleaners, restaurant workers, and garment worker but were allegedly offered instead by their recruiter to work as prostitutes on Tinian.

“Is this the tip of the iceberg? Are these isolated cases? There is some belief on island that the women who report such schemes .[want] to get benefits and go to United States. Not all victims of human trafficking, contrary to popular belief, want to go to the United States. They are not looking for T-visas, most have never heard of such a thing,” said Ogumoro.

She said there is a seeming complacency in the community over this issue.

“When I talk with community members and tell them about human trafficking and what is happening to these young women., the response is much the same, ‘of he’s been doing that for years, and that’s just the way it is.’ This complacency among community members would no doubt be different if these young women were women from the Commonwealth being trafficked into China or the Philippines.,” she said.

Sponsorship

In her testimony, Ogumoro said that many referred nonresident clients were engaged in an illegal scheme of “sponsorship,” which she said ranges from 500 to 5,000 “depending on who you talk to.”

“Some in the Commonwealth will make the charge that the United States has a lot of undocumented workers, too. While this is true, the situations are not really similar. Unfortunately, the islands of the Commonwealth do not allow an undocumented workers to move freely from island to island to find work. The undocumented worker cannot make it back across the border to his or her homeland. Unfortunately, he or she remains on island, most living in plain sight of Commonwealth authorities,” she said.

She said that in the last two years, 54 percent of women served though Guma Esperanza are immigrant women, most of whom met their husbands on Saipan.

“Sometimes, the battered woman tells us she is illegal and therefore usually chooses to only stay briefly in the shelter. Some battered immigrant women report that they do not have a job but are ‘sponsored’ by friends or relatives. Sponsorship arrangements are strictly prohibited by CNMI regulations, but they are not uncommon nonetheless,” she said.

Under this scheme, the ‘sponsor’ signs documents indicating that he or she will be the employer, even though there is no genuine job or wages.

This gives these women a legal status to remain in the CNMI.

“One woman reported paying $2,000 to a sponsor only to have the sponsor ran away with her money,” she said, noting that there is no provision in the current CNMI immigration law to protect battered non-resident women married to U.S. citizens.

“Therefore, the threats by a U.S. citizen spouse to send an immigrant [nonresident] woman back home is more than just words. These are the kinds of threats that force women to stay in abusive relationships. The threat of taking their U.S. citizen children to Guam or the U.S. mainland so she will not be able to see them is very real,” she said.

She cited that in November 2006, a 39-year old Chinese woman was brought to the shelter as a victim of domestic violence. She came to Saipan as tourist with the purpose of marrying a U.S. citizen so she would become IR or immediate relative and be able to find work.

This woman left the shelter before she could be helped but returned to the shelter two days later, saying her husband continued to hurt her.

“She again left the shelter before we could help her. Is this story indicative of more out there? I do not know. What I do know is that these women are vulnerable and afraid to utilize the system that is designed to protect them,” said Ogumoro.

In her remarks, Oguromo said that her testimony aims “to offer a glimpse of the conditions of many living in the Commonwealth.”

“I will not offer my personal opinions as to the issue of federal takeover of CNMI immigration. I offer this testimony as a social worker and an advocate for women,” she said.

She said her testimony has the support of Catholic Bishop Thomas A. Camacho “in order to share with you some of the stories of the women served by Karidat.”

Karidat operates under the auspices of the Catholic Church Diocese of Chalan Kanoa.

‘Let go of status quo’

During the committee hearing, Ogumoro said that while she understands the CNMI’s hold on the current system, it has to let go of the status quo if it wants a better society.

She likened the situation to a battered woman who finds it hard to leave her husband.

“We often say to women we counsel: I know you love your husband but you can’t continue to stay with him if he is hurting you. The CNMI society is hurting. Change in the system is needed,” said Ogumoro.

In her closing remarks, she said, “Many in the Commonwealth are afraid to speak out, for fear of reprisals to themselves or family members. I believe it is a matter of conscience. The abuses described.are not representatives of indigenous values nor of Catholic social justice. If we do not speak out to correct the wrongs in our islands, we will lose who we are as Chamorros, Carolinians, and Americans.”

Third class citizens

Sister Stella Mangona, fondly called Sister Stella in the community, said in her six-page testimony that the temporary nonresident workers program in the CNMI has “effectively created a permanent underclass of disenfranchised persons.”

“If you have lived somewhere for 20 years, it really is your home, but these workers have no official status of belonging. They are valued employees with stable employment histories, U.S. citizen children going to public schools, deep roots in the community, but no possibility of adjusting their year-to-year vulnerable, temporary status except by marrying a local person,” she said.

Sister Stella, who moved to Saipan from Guam in 1999 as counselor over reports of abuses against immigrant women on Saipan, said that in her counseling, she would encounter five cases of “contract marriages” a year where nonresident workers marry a U.S. citizen after the payment of a fee.

“I believe that the ones I actually see are only the tip of the iceberg,” she said.

‘Please revise requirements’

Entena, who confessed being a victim of sex trafficking on Saipan, asked the Senate panel “to please help change the way the government functions in the CNMI.”

Entena is one of the two women who arrived as tourists on Saipan in 2005 and was forced into prostitution by her employer.

“Four men raped me on my first day in Saipan. This kind of thing went on for almost 10 days to me and the other girl from the Philippines. We tried to run away twice but they were always at the front.” she said.

“I wanted to kill myself, but the girl with me told me, ‘don’t do that, we came here together, God is with us and He will help us. She told me we have to be strong. She said, ‘I have a son and I need to be strong because of my son. You, you are the eldest in your family so you need to be strong, too. When we have the opportunity, we will run away,” she said.

In her two-page testimony, Entena said she hopes that the CNMI Immigration would “revise or make their requirements stricter especially for entering Saipan, Tinian, and Rota.”

“I am hoping that this kind of illegal system will stop, the way it happened to me, the way I was treated. I do not want this to happen to anyone. I know there are women out in the community like me. They are just afraid to speak because they don’t know where to go or just afraid because they have to support their family back home. Please help change the way the government functions in the CNMI. If there is change or people are not held responsible for their actions then it will continue to happen to innocent victims. I hope you will hear my wish. I am forever grateful,” said Entena, who at one point during her testimony appeared teary-eyed and her voice was cracking.

The Senate hearing was led by committee chair Sen. Jeff Bingaman and Sen. Daniel Akaka.

A live telecast of the hearing was seen online on Friday, 1230am to about 3am Saipan time.

www.saipantribune.com/newsstory.aspx?newsID=65614&cat=1

September 29, 2006

Abramoff’s ties to Mehlman extensive

Report shows close ties between lobbyist
and White House official

By Joel Seidman, NBC News

WASHINGTON – A report released in June by the Department of Justice’s Inspector General, Glenn Fine, contained what may have been be the first references of disgraced lobbyist Jack Abramoff’s strong ties to White House Political Director Ken Mehlman, but it was only today that the extent of that relationship was revealed.

Melhman is now the Chairman of the Republican National Committee.

The June report said that Abramoff was receiving information about the U.S. territories in the Pacific — Guam and the Commonwealth of the Northern Marianas — directly from White House information “recommended” to be given to Abramoff by Mehlman. Both territories were clients of Abramoff lobbying firm.

The IG report says White House political official Leonard Rodriguez told investigators he had “kept Abramoff aware of information relevant to Guam … at the behest of Ken Mehlman,” the White House Political Director, who “recommended or suggested that I reach out to make Jack aware of issues related to Guam.”

But the House Government Reform Committee report released today says Abramoff and his team reached out themselves to the White House Office of Political Affairs some 17 times. Six times, Abramoff’s team had direct contact with Mehlman.

The report says, on Oct. 9, 2002, Abramoff e-mailed Mehlman to seek an endorsement from President Bush for Republican candidates running in Guam.

Within two weeks, Susan Ralston, an aide to Karl Rove, e-mailed Abramoff: “Ken asked me to let you know that he has the quote to be approved for your Guam candidates.”

Abramoff also vigorously lobbied the White House to back Benigne Fitial, a garment plant operator and newspaper publisher who was running for governor in the Northern Marianas under the banner of a third party known as the “Covenant Party.”

The Marianas, famous for their low-paying garment factories, hired Abramoff to keep the islands’ workers exempt from U.S. laws like the minimum wage. In the e-mail in May, Abramoff writes: “I met with Rove tonight. They are not going to allow (Juan) Babauta to have his way and they are looking forward to your arrival.”

www.msnbc.msn.com/id/15066329/

April 26, 2006

Destroying Paradise for Profit

By Rebecca Clarren, Ms. Magazine

www.alternet.org/story/35458/

(Editor’s Note: This article is excerpted from the spring 2006 issue of Ms. Magazine,…)

Were abusive garment sweatshops, forced abortions and sex trafficking in Saipan, one of the Northern Mariana Islands, protected by Tom DeLay? How did congressional leaders and the Bush administration succeed in blocking labor and immigration reforms there? And how did Jack Abramoff figure into all of this?

Those are some of the questions we answered after sending an investigative team to Saipan, the main island in the Northern Marianas chain. There, 30,000 “guest workers” — predominately women — from China, the Philippines and Thailand sew clothing for top-name American brands, which are then allowed to label them “Made in USA” because the Commonwealth of the Northern Mariana Islands (CNMI) is a U.S. territory. But workers in these factories are not covered by U.S. minimum-wage and immigration laws.

Coming from rural villages and the big-city slums of poor Asian countries, these garment workers arrive in Saipan with a huge financial debt, having borrowed money (at interest rates as high as 20 percent) to pay recruiters as much as $7,000 for a one-year contract job. In a situation akin to indentured servitude, workers cannot earn back their recruitment fee and pay for housing and food without working tremendous hours of overtime.

At its peak, the factories in the Northern Marianas exported garments worth $2 billion retail annually to the United States. Considering that the success of the industry was tied closely to its low wages and exploitative guest worker program — and the fact that it was exempt from tariffs or quotas on exports to the U.S. mainland — it’s not surprising that both the Marianas’ government and the garment manufacturers have fought long and hard to maintain the deal.

Enter Jack Abramoff, the formerly high-flying Republican lobbyist. First at the Washington, D.C., law offices of Preston, Gates, Ellis & Rouvelas Meeds — and later at Greenberg Traurig — Abramoff and his team brought in nearly $11 million in fees from the Northern Marianas government and Saipan garment manufacturers to block congressional efforts to raise the minimum wage and eliminate the islands’ exemptions from U.S. immigration laws.

His efforts focused on the House Resources Committee, which has jurisdiction over U.S. territories. And he also cultivated powerful allies in the House leadership — notably Tom DeLay, who, as Majority Whip at the time, could keep a bill off the House floor even if the Resources Committee voted in its favor.

One of Abramoff’s favorite tactics for influencing Congress was to arrange Saipan junkets for members of Congress and their staffers. As many as 100 people connected to the U.S. Congress — members themselves, or their staffers — traveled to the islands. Among the islands’ visitors were DeLay, his wife and daughter, and six of his aides. At a New Year’s Eve dinner on Saipan in 1998, he lavishly praised the CNMI governor — a moment caught on camera by ABC’s “20/20:” “You are a shining light for what is happening in the Republican Party, and you represent everything that is good about what we’re trying to do in America in leading the world in the free-market system.”

But the dark underbelly of DeLay’s “shining light” is right across a busy Saipan street and a few yards down a dirt road. That’s where garment workers live in tiny, corrugated-tin-roofed homes, with three women sharing a queen-size bed. Their “kitchen” is a few hot plates and water-filled plastic buckets set outside on a concrete counter. Nine people share one toilet.

If they get pregnant while working in Saipan, workers face another nightmare. According to a 1998 investigation by the Department of Interior Office of Insular Affairs, a number of Chinese garment workers reported that if they became pregnant, they were “forced to return to China to have an abortion, or forced to have an illegal abortion” in the Marianas. These days, many pregnant workers still feel they have little choice but to visit one of Saipan’s underground abortion clinics — or else lose their jobs.

Meanwhile, the garment industry on Saipan has begun to decline with the expiration of worldwide quotas on apparel exports to the United States. Garment makers are moving off Saipan to even lower-wage countries such as China, Vietnam and Cambodia. Desperate to earn money and pay back their recruitment fees, some unemployed garment workers have found themselves turning to another lucrative industry on Saipan: sex tourism. There are no reliable statistics, but an estimated 90 percent of the island’s prostitutes are former garment workers.

Tom DeLay insists that he’s never heard such stories. “Sure, when you get this number of people, there are stories of sexual exploitation,” he told the Galveston County Daily News in May 2005. “But in interviewing these employees one-on-one, there was no evidence of any of that going on. No evidence of sweatshops as portrayed by the national media. It’s a beautiful island with beautiful people who are happy about what’s happening.”

When we contacted DeLay during our investigation, his spokesman Michael Connolly said, “He stands by the things he has said in the past, and he stands by the votes he’s made that pertain to the islands.”

Rep. George Miller, D-Calif., who has championed efforts to raise the minimum wage in Saipan, hopes that Abramoff’s recent indictment offers a chance for real change in the Marianas. He has requested that Attorney General Alberto Gonzales and the House Resources Committee chair, Richard Pombo, R-Calif., launch a full investigation of Abramoff’s dealings in the Marianas.

“It’s so ironic that people who talk about themselves as having family values are allowing these guest workers to be exploited in the harshest possible ways,” says Miller.

“Their money and lobbying allowed the continuation of the worst of human behavior.”

Rebecca Clarren is an investigative journalist based in Portland, Ore.

View this story online at: http://www.alternet.org/story/35458/

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January 8, 2006

DeLay-Abramoff ties go back to Saipan

By Marty Schladen and TJ Aulds, The Daily News

On Saturday, U.S. Rep. Tom DeLay denied that his association with lobbyist Jack Abramoff played a role in his decision to abandon his quest to regain his seat as house majority leader.

“It didn’t play a role,” DeLay said. “The Democrats are going to continue their strategy of personal destruction to gain power.”

But last week, as the scandal surrounding Abramoff mushroomed, DeLay tried to avoid its taint.

He joined colleagues from both parties in either returning campaign contributions from Abramoff or giving them to charity.

But DeLay’s ties to Abramoff run considerably deeper than that.

He has traveled around the world with the now-disgraced lobbyist, and his wife was paid $115,000 by a lobbying firm that received money from Abramoff’s clients.

But Delay’s relationship with Abramoff tracks back to the 1990s, when DeLay was House Republican whip and Abramoff represented the garment manufacturers and the government of the Commonwealth of the Northern Marianas Islands.

Speaking last spring to The Daily News, DeLay defended his efforts to block imposition of the federal minimum wage and immigration laws on the U.S. territory that includes Saipan. Critics said DeLay actually was defending garment manufacturers’ ability to operate sweatshops on the tropical islands far out in the Pacific.

The manufacturers and the territory paid Abramoff $7.9 million to lobby to protect the status quo.

The territorial government flew DeLay and his wife to Saipan for a celebration of New Year’s 1998.

It was on that trip that DeLay made a speech calling Abramoff “one of my closest and dearest friends.”

He also denied allegations that foreign laborers were working in sweatshops there.

DeLay didn’t spend all his time touring garment factories, however. He stayed at the Hyatt Regency and found time for golf.

Also on that trip — on Abramoff’s dime — was DeLay Communications Director Michael Scanlon.

Scanlon, who left DeLay’s employment to work with Abramoff, has also pleaded guilty to lobbying-related felonies and is cooperating with prosecutors.

In addition, Tony Rudy, then a DeLay aide, lobbied to keep federal labor and immigration laws out of Saipan. Now he is a target of the Abramoff probe.

A former DeLay staffer, Edwin Buckham, also made the trip.

ABC News obtained the territory’s lobbying and correspondence records from the period. They show that DeLay and Abramoff spoke more than two dozen times during two years as Abramoff fought to keep Congress from imposing the federal minimum wage and immigration laws on the Northern Marianas.

Abramoff spoke to DeLay’s staff almost every day.

Prosecutors have not accused DeLay of fighting for the Saipan garment industry in exchange for things of value from Abramoff or his clients.

DeLay said he isn’t responsible for Abramoff’s or Scanlon’s misdeeds and his association with them led him to do nothing improper about Saipan.

“I am not responsible for what people do in their private lives or even in their professional lives,” he said. “What I am responsible for is dealing honorably and ethically with these people as they present themselves.

“I have not treated Jack Abramoff any differently than I have any other registered lobbyist in Washington, D.C. I listen to what they have to say and then I consider the merits of the vote. The two do not cross.”

But DeLay has advocated Abramoff’s positions even though congressmen from both parties and two federal agencies found problems with working conditions in the territory.

When they visited Saipan, U.S. Rep. George Miller, D-Calif., and U.S. Sen. Frank Murkowski, R-Alaska, found foreign workers laboring in conditions Murkowski called “appalling.”

And the U.S. Department of Labor filed a lawsuit against a Saipan industrialist accusing him of working employees more than 84 hours a week and paying them less than $2.90 an hour. The suit also accused the industrialist, Willie Tan, of holding employees as virtual prisoners.

As recently as last year, DeLay defended Tan.

DeLay also denied allegations that workers were recruited from the Far East to work on Saipan only to be forced into sex slavery. However, the U.S. Justice Department filed charges and got convictions against individuals engaged in that practice.

www.galvnews.com/story.lasso?ewcd=955d91b8a4f7a3f0

For more on Jack Abramoff, GO TO > > > The Game Birds; Woo vs. Harmon: Witness Jack Abramoff

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American Samoa – From Honolulu Star-Bulletin, 3/24/01:

Feds Uncover
American Samoa Sweatshop

A report details physical beatings,
inhumane conditions and forced labor

The owner of a clothing factory in American Samoa held his Vietnamese and Chinese employees prisoner and forced them to work in inhumane conditions, according to a complaint filed in Honolulu federal court.

An investigation by FBI agents determined that the president of Daewoosa Samoa Ltd. “defrauded, failed to pay and at times deprived of food, beat and physically restrained these workers to force them to work,” said FBI Special Agent William S. Denson…

The criminal complaint charged Kil Soo Lee with involuntary servitude and forced labor, violations of federal law.

The federal investigation into the sweatshop operation in the American territory began after some workers brought their complaints to church workers. The US Dept of Labor launched an investigation earlier this year.

The clothing factory located in the Daniel K. Inouye Industrial Park in Tafuna, American Samoa, employed up to 250 people.

Densen said Special Agent Charles E. Beckwith of the Honolulu office interviewed workers who were flown to American Samoa by way of Honolulu.

“Lee stated to investigators that workers he imported through Hawaii had tried to ‘escape’.”…

According to the FBI complaint:

>> The temperature in the plant reached 104 degrees Fahrenheit during work hours.

>> Workers were not paid for periods of three to six months.

>> Vietnamese workers signed three-year contracts for $408 per month. But they were required to pay $4,000 before leaving Vietnam, and some were charged an “immigration fee” of $1,500.

>> Lee charged them $200 per month room and board, deducted from their pay.

>> They lived in barracks, 36 people to a room, in rooms described as wet, dirty and rat-infested.

When Chinese workers complained about not being paid and given inedible food, “Lee withheld the workers’ food for two days and locked the gate to the facility. Lee called the police to arrest the workers he identified as leaders, claiming that they were being ‘assaultive’.”…

Last November, according to witnesses, “Daewoosa supervisors and other Samoan workers and security guards then assaulted and beat the Vietnamese workers, causing severe and permanent bodily injury.”

One person suffered permanent hearing impairment, and another lost an eye, according to the court document.

Lee traveled to Hawaii to apply for a loan for factory construction, and checks on the company’s Bank of Hawaii account in Samoa were cashed in Honolulu, according to the affidavit.

The FBI investigation found that the clothing made in the Daewoosa factory was shipped to Los Angeles.

See also: Sports Shinko; Yakuza

Central Pacific Bank – one of Hawaii’s largest commercial banks, formerly majority-owned by Japan’s giant Sumitomo Bank. The major financial asset of Senator Daniel K. Inouye (D-HI).

See also: Dan Inouye; Sumitomo Bank; Yakuza

Chris Hemmeter – From Honolulu Star-Bulletin, 11/1/99, by Richard Borreca: Hawaii Land: The Source of Power, the Pot of Gold at Rainbow’s End –

At the time of statehood, ownership was concentrated, with fewer than 100 owners holding half of all the land. – Hawaii’s dream and nightmare dovetailed into one: develop the land, make every parcel as valuable as possible.

“Ten years from now I envision Honolulu to be largely concrete and steel, with some coconut trees sprinkled throughout,” boasted Lowell Dillingham, developer of the Ala Moana Center, in 1961….

While commercial real estate was valuable, it was the tourism boom that echoed through the new high-rise canyons of Waikiki. Jumbo hotels– built to match the lumbering jumbo jets which began coming regularly in 1970.

Between 1968 and 1971, 17,140 hotel rooms were created in Waikiki . . .

The Kalakaua Avenue view of Diamond Head was first blocked by the 1970 Holiday Inn, with its 650 rooms rising 25 stories high. Today, the hotel is called the Hawaiian Waikiki Beach Hotel.

But perhaps the building boom’s crescendo sounded in 1974, when young developer Chris Hemmeter blew up the Biltmore Hotel to build the first super-block, the Hemmeter Center and the adjacent King’s Alley.

The hotel was the Hyatt Regency…

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Honolulu Star-Bulletin, 10/9/99, by Peter Wagner: Grand Developer Down But Not Out – He blew into town, built an empire and lost it in New Orleans. Somewhere along the way, Chris Bagwell Hemmeter became an icon among Hawaii developers and set a new standard for lavish “fantasy” resorts.

His legacy in Hawaii, a mixed bag of opulence and elegance, includes the Hyatt Regency Waikiki, Hyatt Regency Waikoloa, Hyatt Regency Maui, Westin Maui, Westin Kauai, King’s Alley in Waikiki and Hemmeter Corporation Center in downtown Honolulu.

Hemmeter was 22 and just out of Cornell University when he arrived in Hawaii in 1962 to become assistant manager at the Royal Hawaiian Hotel.(which sits on land leased from Bishop Estate). … He parlayed a $10,000 loan from his parents first into retail stores, then restaurants, before turning his energy to resort developments.

Hemmeter’s high-flying fortunes began to plunge in 1995 with two Chapter 11 bankruptcies and a Chapter 7 personal bankruptcy filed in 1997, brought on by the failure of Mississippi gambling boats and an $800 million casino in New Orleans.

The personal bankruptcy, a liquidation now being closed in Los Angeles, showed $847,000 in assets and $87 million in debts.

“We bet the whole company on our project in New Orleans, based on the advice and counsel of the investment community and everybody else involved, and it didn’t work out,” he said Thursday from his Los Angeles home. “I guess that’s what risk-takers do.”

But Hemmeter, who turns 60 Monday, is hard to keep down. He and his son, Mark Hemmeter, are developing a $225 million hotel, lodge and casino in Black Hawk, Colo.

“Jackpot Springs” is due to open in two years. . . .

Dan Inouye – U.S. Senator (D) from Hawaii, called by some Hawaii’s “Political Godfather”.

From AllPolitics:

FISCAL 1997 PORK TOTALS:
Per Capita, Per State, June 9, 1997:

Rank: #1 – Hawaii

Population: 1,183,723

Pork/per Capita: $131.01

Pork Dollars: $155,078,000

(For comparison: Michigan ranked at the bottom of the pork barrel with a Population of 9,594,350, with Pork/per Capita of $0.96, for total Pork Dollars of $9,594,350.)

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ABC News, 2/2/97, by James Walker: The King of Pork . . . “Dan Inouye is the second largest industry in the state of Hawaii,” says Richard Borreca of the Honolulu Star-Bulletin.

That’s because in just the last five years, Inouye has brought home almost half a billion in federal tax dollars. The senator has mastered the recipe for pork: one part seniority, mixed with a choice assignment on a powerful spending committee….

For more, GO TO > > > Predators in Paradise

Donna Tanoue – Appointed by President Clinton to head the Federal Deposit Insurance Corp (FDIC), which oversees the federal banking agency that monitors nearly 5,700 banks and insures $3 trillion in deposits. During her term from May 1998 to July 2001, she oversaw the transfer of Sukamto Sia’s insolvent Bank of Honolulu to Bank of the Orient.

Press Release, Nov 7, 1997:

PRESIDENT CLINTON NOMINATES DONNA TANOUE AS CHAIR OF FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C. — United States Senator Daniel K. Inouye is pleased that President Clinton has announced his intention to nominate Donna A. Tanoue as the Chairperson of the Federal Deposit Insurance Corporation (FDIC).

“I applaud and commend President Clinton on his nomination of Ms. Tanoue as the next Chair of the FDIC. I am most confident that Ms. Tanoue will provide excellent leadership, business and legal expertise to the FDIC. She will serve the people of this nation with integrity, diligence and distinction. This is indeed a proud day for Hawaii,” said Senator Inouye.

The FDIC is an independent agency which insures deposits in federally insured banks and thrift institutions, and resolves and liquidates failed banking institutions.

Ms. Tanoue is currently a partner with the law firm of Goodsill Anderson Quinn & Stifel, and over the last ten years, she has concentrated her law practice in the area of banking with an emphasis on bank regulatory matters. From 1983 to 1987, Ms. Tanoue was the Commissioner of Financial Institutions for the State of Hawaii. She was the chief regulator of State-chartered financial institutions during one of the most difficult periods in the history of the State’s financial services industry. . . .

She is married to Kirk W. Caldwell, a real estate attorney with the law firm of Ashford & Wriston….

For more on Ashford & Wriston, GO TO > > > Buzzards of Paradise

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For more, GO TO > > > Buzzards in the Bank of Hawaii

Gene and Nora Lum – Democratic Party fund-raisers who PARTIED ON!

From freerepublic: Lum Pleads Guilty to Tax Fraud – Tulsa, Okla (AP) 8/13/98 – Democratic fund-raiser Gene K.H. Lum changed his plea in a tax fraud case to guilty Thursday as part of an agreement that seeks his cooperation in other investigations.

Lum, who pleaded guilty in 1997 to making illegal donations to Democratic campaigns, admitted he filed tax returns that claimed more than $7.1 million in false deductions for him and his wife.

Lum, 59, faces up to six years in prison and $500,000 in fines at a Nov 23 sentencing….

Under the pleas agreement, the government agreed not to seek indictments against his wife, Nora, or their corporations….

The Lums, who operated a Tulsa-based gas pipeline company at the time of the violations, pleaded guilty last year to a charge of felony conspiracy for laundering $50,000 in illegal donations to 1994 congressional campaigns.

Their daughter, Trisha C. Lum, pleaded guilty to a misdemeanor violation in a separate campaign finance incident.

Gene and Nora Lum each received 10 months in prison and $30,000 fines in that case.

The tax charges stemmed from information uncovered by independent counsel Daniel S. Pearson during his investigation of Commerce Secretary Ronald H. Brown. Pearson closed his inquiry when Brown was killed in an airplane crash. He transferred his findings about other people to the Justice Dept for continued investigation and prosecution.

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Comments in the freerepublic forum: . . . Of some interest to me was the fact that the golf course Michael Brown (son of Ron Brown) was given a membership to (and which Bill Clinton often uses …) in suburban Virginia was owned by the Bishop Estate of Hawaii. . . . Bishop put close to 100 million into a company called McKenzie Methane Gas a few years before Dynamic. Bishop also bought into a Red Chip bank with Mochtar Riady’s brother in law. Bishop hired as its Washington law firm Verner Liipfert whose lobbyist is ex Gov. John Waihee. Waihee appointed 4 of the 5 Bishop Trustees. Waihee attends Clinton coffees. Waihee appointed Sen. Akaka. Verner Liipfert has another big name partner ex Sen. George Mitchell. Mitchell’s son in law was president of Lum’s company Dynamic Energy. Bishop owns 11% of Goldman Sachs. Sec of Treasury Robert Rubin’s blind trust managed by Bishop, etc, etc. (abwehr, 8/13/98)

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The Lums admitted to FBI investigators looking into allegations that arose during the “Chinagate” investigation that after Clinton was elected, Webster Hubbell (3^rd man in the Justice Dept during the early days of the Clinton administration) pulled the plug….

For much more, GO TO > > > Buzzards of Paradise; Predators in Paradise; The Puna Connection

Goldman Sachs – The Goldman Sachs Group is a leading global investment banking and securities firm with three principal business lines: Investment banking; Trading and Principal Investments; and Asset Management and Securities Services.

From Goldman Sachs, by Lisa Endlich:

GOLDMAN SACHS had been expanding the size of its partnership steadily for decades. There had been fifty partners in 1973; there were seventy-five in 1983 and one hundred fifty by 1993. But as the size of the partnership increased, the profits of the firm had to grow at breakneck speed if existing partners’ income levels were to be maintained. . . .

With his ascendency in 1990, Robert Rubin openly discussed with the partnership the need for an expanding pie . . .

In addition to the firm’s limited partners (retired partners who choose to leave capital in the firm), Goldman Sachs has taken on three groups of financial partners. Sumitomo’s investments in 1986 entitled the Japanese bank to 12.5% of the firm’s annual profits. Kamehameha Schools/Bishop Estate, the giant Hawaiian education trust, which also made two major cash infusions into the firm, first in 1992 and again in 1994, receives about 11% of what the firm makes every year. Finally, a group of insurers has injected $225 million into the capital structure.

Goldman Sachs will go down in history as the last major partnership on Wall Street….

~ ~ ~

Quoting one former partner:

“Greed changed the firm, and the view was to take as
much risk as we can, and make it as fast as we can.”

~ ~ ~

From EQ2048 – Petition of the Attorney General to Remove Trustees…

STANDARDS APPLICABLE TO TRUSTEES

The Trustees owe the Beneficiaries a duty of faithful adherence to the terms of the Will and the purpose of the Trust.

The Trustees owe the Beneficiaries a duty of loyalty. The Trustees are required to administer the Trust without regard to their own interests and solely in the interest of the Beneficiaries and with surpassing honesty….

The duty of loyalty prohibits self-dealing and prohibits a Trustee from acting when there is a conflict between a Trustee’s individual interest and the interest of the Trust and its Beneficiaries….

The Trustees owe a duty to the Beneficiaries to keep and render clear, accurate, and complete accounts with respect to the administration of the Trust.

The Trustees owe the Beneficiaries a duty to furnish upon reasonable request complete and accurate information as to the nature and amount of the Trust property and to permit inspection of the subject matter of the Trust and the accounts and vouchers and other documents relating to the Trust….

A Trustee who violates any duty owed to the Beneficiaries is subject at the request of the Beneficiaries to removal, surcharge, and other available remedies.

COUNT 1

THE TRUSTEES HAVE VIOLATED THE DIRECTIVES
OF THE WILL AND THE PURPOSE OF THE TRUST

Introduction….

The Trustees have not provided the Master unlimited access to the Trust’s books and records. Rather, the Trustees have imposed viewing restrictions and copying restrictions on the Master….

The Trustees have not disclosed the actual or fair market value of the investment in Goldman Sachs & Co.

The Trustees have closely controlled access to employees with relevant information on Trust operations. The Trustees have created an atmosphere of fear and intimidation among their employees….

www.starbulletin.com/98/09/11/news/removal.html

For more GO TO > > > Claims By Harmon; Dirty Gold in Goldman Sachs

Guam – A U.S. Trust territory.

February 21, 1999

A Modern American Tragedy

Guam’s Commonwealth Act is a big disappointment.

By Tony Artero, Pacific News Bureau

AGANA, Guam – This week the people of Guam were again forced to confront a policy of the U.S. Congress that destroys individual initiative and subverts the American Dream of owning your own land. This policy was instituted here by the U.S. Navy following World War II.

Another U. S. Congressional delegation arrived on the island of Guam Tuesday. Talks were held with Island officials about the Island’s Commonwealth status. Remarks given to the press following the meeting on issues affecting our lives and the future of this Island, lacked substance, as usual.

This is an American tragedy for Pascual Saez Artero, and his descendants. Through hard work, he acquired ownership of real property on Guam and operated various businesses prior to World War II. His son, Antonio Cruz Artero was his right-hand man who managed to harbor Mr. George Ray Tweed, the Navy radioman who, like some of us, endured and survived the Japanese occupation of Guam from 8 December 1941 through 21 July 1944.

Antonio Cruz Artero received the Congressional Medal of Freedom after the war. He accepted the medal with dignity, but in his heart he considered the medal a grim reminder of his destroyed lands, and the family’s lost livelihood destroyed by the war and its aftermath. Worse yet, he was charged for property tax on the remainder of his lands that were being used for a U.S. Navy dump for its hazardous waste.

Once Upon A Time, before WWII, the Stars and Stripes were proudly waving over the little island of Guam. It was a model democratic community in the middle of the vast Pacific Ocean. I know these facts because Pascual Saez Artero was my grandfather and Antonio Cruz Artero was my father and because I have inherited a valid claim against the United States Congress for the return of private property seized by them without just compensation.

The name “Guam” is believed to be a derivative of “Guaha ham,” meaning, we have. Corn, citrus, tropical fruits and vegetables, sugarcane, and even tobacco and cocoa were grown. Chickens, pigs, other domesticated livestock and wild games were usually in surplus. Viable commercial ventures included copra, cattle grazing, a slaughter house, auto repair shops, and even a sawmill, to mention a few.

At the same time, the land, the streams, the beaches, and the drinking water were clean, without the myriad of laws we have today that seems to only enlarge the problem. The native people were industrious, resilient, and lived a healthy long life on an island that was in balance with nature. No one needed to be on foodstamps, welfare, or in public housing as the islanders took great pride in their ability to bounce back, on their own, from any and all natural or manmade disasters.

The balance today, if any, found in our political status quo of more than 50 years, is only in the argument by some that they are owned by our federal government, which resulted from the destruction of private property interests since the end of WWII when federal welfare handouts got a political foothold. Those people have actually given up totally and have acquired the belief they are conquered. I question, however, their definition of being a “free” American on American soil.

In fact, many people on Guam since WWII have been in a constant struggle between two conflicting orientations: The common belief that a person must earn his or her keep vs. the pervasive influence of government handouts, which now includes concrete homes for a dollar, and land for a dollar a year for 99 years for a chosen few.

Those are the products of “hard work” by government “leaders” without any planning, yet, are all considered “politically correct,” even if fraudulent like that of the “I Ta-No’Ta Land Use Plan.”

“I’m from the government and I’m here to help you” as reported by the Pacific Daily News front page story of February 23, 1997, on public housing. “People are lucky. They’re well-taken care of, they live here until they die. The only thing I can do is help provide the facilities for their success, hoping to promote self-sufficiency.” quoting a Government official.

With handouts? It’s got to be the joke entering the new millennium. These unfunded mandates together with abortion, the wetland and wildlife regulations, are a cancer slowly eating away our family and community values. I view this abuse as a naked aggression driven by greed, the culprit in the ruin of the cohesiveness of the beautifully structured Chamorro culture of pre WWII Guam and the reason why people today are screaming for help. Our “leaders’ have been very consistent in maintaining the integrity of the status quo since WWII, swelling the government and handouts.

All our life, we hear, “Guam Is Where America’s Day Begins.” But Guam is also where injustice, waste, and abuse begin. That has been the true state of Guam since WWII, regardless of which party is in office. The actions of those in power are repugnant, to say the least, to freedom loving people everywhere. The deck has always been stacked against the working class, which is why many people today have grown bitter and are questioning the celebration of Independence Day and Liberation Day.

To add insult to injury, our government provided opportunity and tax rebates to the Japanese, our former enemy, so that they can improve their quality of life, while suppressing the economic freedoms of our own people and showering them with handouts.

Democracy is a sacred trust for future generations. However, for American taxpayers on Guam, there is no trust and the future is in doubt. Those in power have made a travesty of our fundamental rights and equal justice.

The government has no business in business, yet, government is the biggest business on Guam since WWII.

GovGuam now owns the largest real estate dealership headed by a retired career politician. Similarly, the U.S. Navy lays claim to a very profitable McDonald’s fast food restaurant, off-base, on land taken by force, not to mention without just compensation, taking business away from the private sector. These are the “Thank Yous” to our parents’ sacrifice of life and property in the wars America was in.

We paid our dues, but, today, there is no sense of a future for Western democracy. Guam, to this very day, is denied aviation and ground transportation safety with the airport to be at Northwest Field and a spine highway inland, extending north-south. The excuse has always been, “We cannot afford it.” Yet, billions of dollars have already been wasted, the problem ignored, and has compounded. A really comprehensive land use plan would have addressed safety, conservation in land use, development in harmony with the environment, a sustainable economic growth for the future, and the preservation of our democratic values.

The belief that one is owned by our federal government contradicts President Lincoln’s words, “We cannot have a society when one man owns another,” and more so when the government taketh away.

Being chattel is as absurd as the forceful land-taking by a government that champions freedom. I will never accept that I’m conquered. And I will continue to fight and will fight to the finish, if necessary, for my economic freedom.

Changing Guam’s political status to that of commonwealth, statehood, or even independence is no magic bullet for curing more than 50 years of common greed still running rampant. I regard this push for a change in Guam’s political status as nothing more than buying time to maintain the status quo.

Isn’t ten years long enough? Guam’s dilemma requires Americans to unite and in one voice shout, at the government, ‘Right the Wrong. Restore and protect the Sanctity of Private Property,’ with or without Commonwealth status.

The most recent governmental arrogance and insensitivity is the reoccupation of Tiyan, a potentially lucrative money making asset. Hundreds of billions of revenue dollars could be created with the private use of the old NAS land. Guam is not as crowded as other places, yet, we feel hemmed in and crowded while thousands of acres are held hostage.

On Guam today toxic landfills threaten the supply of drinking water, which shortens our life span. Guam’s highways are dangerously engineered traffic hazards and too many people are dying pointlessly. Increasing crime and failure of the criminal justice system only encourages lawlessness.

This is all evidence that federal and local governmental actions are fraudulent and particularly in dealing with the legacy of Guam’s native people and with private property interests on Guam. We are well aware that since WWII, the people who are benefitting and prospering from the present U.S. status, are those in power.

Indeed, we have met the enemy and our enemies are career politicians and bureaucrats who force the native people of Guam into subservient lives of quiet desperation generation after generation.

There have been numerous scoping meetings on Guam conducted by federal officials over the years. The conclusion on every one of them suggest inexplicable barbarism. In fact, I heard the good Senator Dan Inouye from the State of Hawaii, after one of such meetings said, “Guam is crying out for justice.”

Not so much where are the indictments of all those investigations, but why does the problem continue to be ignored? Is it because people at the top are involved in the land scam? After more than 50 years of finger pointing between local and federal government officials, protecting each other’s turf, the excuse on the land issue now, amidst the downsizing, is that the federal government will not return land to its rightful owner, only to another government entity.

But we also know that to be false because many people have already had their lands returned. That explains how GovGuam becomes the largest real estate dealership on Guam. Because privately owned lands were taken by force and orchestrally covered up all these years, the question for the new millennium is simply: Can anyone find in any of the documents that America and Guam hold sacred that when Party A (the federal government) takes property from Party B (the Guam property owners), then gives it to Party C (GovGuam), Party B is now reconciled? Of course not!

What makes anyone think that a new political status adds to anyone’s long-term good health, wealth, and to the island a holistic land use plan? India was decolonized more than fifty years, but government greed remains intact, which made the largest democratic country in the world the epitome of impoverishment, in spite of all its natural resources.

Both history and reason suggest that individual liberty is the key to social progress. The greater the people’s freedom, the greater the chance of discovering better ways of life. The lands must be returned to the rightful owners now! If no one is demanding, then I am demanding that our elected “leaders” stop ignoring the problem and take this wake-up call seriously once and for all before we find ourselves amidst a civil war on Guam where America’s day will end.

Present and future leaders of our country must understand that land is vital to life regardless of who you are. Without property rights, liberty, and justice there is nothing safe anywhere because order is absent as in the Dark Ages. Everything we have been hearing on Guam since WWII is political rhetoric that is full of baloney, similar to all the talk about commonwealth status.

“Leaders” having anything to do with Guam have abandoned ideals and have compromised principles. No one has yet to deal with Guam in a balanced way. The only thing that will be accomplished from these talks in Washington D.C. will be more time and money spent, at the tax payers expense, for naught.

Governmental leaders must understand that the love of democracy is that of equality, liberty, and justice for all and it begins at our homeland, not at political status talks.

You must remind yourselves the purpose of the Boston Tea Party, of John Paul Jones, of Susan B. Anthony, of Martin Luther King, Jr. and of the Constitution of our great nation. Stay the course and keep it noble. Help foster a greater understanding of private property rights in our country and help right the wrongs of the past.

What is good for Guam is also good for the nation as in the goose and the gander. Helter skelter development on Guam is government’s doing and is prompted by greed, not by the lack of a political status. Greed must be replaced by a plan that is wholesome and complete in order to restore any kind of a balance. Understand that with economic freedom, liberty, and justice Guam will have sustainable economic growth and prosperity, law and order. All the above will help balance the budget. The reverse is terrifying.

We can do what is right on Guam just like what the ancient Chamorros did without the help of a Commission of Self-determination, a Chamorro land Trust Commission, an Ancestral Landowners Commission, a Decolonization Commission, and many other commissions, authorities, bureaus, and agencies doing absolutely nothing, but spending the tax payers’ money while serving their own interests.

As I have repeatedly said over the years, changing Guam’s political status to a commonwealth will not magically remove the dilemma caused by more than 50 years of common greed still running rampant. Solutions are now fragmented and even the experts are confused.

Still, the wrong, of fraudulent land-taking and abusive use of the land have to be righted before we can genuinely “Move Forward,” regardless of what flag is flying over Guam.

[Mr. Atero is the Bureau Chief for the Pacific News Bureau of the Daily Republican Newspaper on Guam. He testified before the House of Representatives Resource Commission on October 19, 1997 on pending HR 100 – Guam’s Commonwealth Act. He is a retired U.S. Navy Submariner, and a Real Estate executive on Guam.]

Investors Equity Life Insurance Company – From the Honolulu Star-Bulletin, 10/14/96: . . . The State of Hawaii will become the owner of thousands of acres of Colorado real estate, in its ongoing effort to recover assets for the 13,000 policy-holders of failed Investors Equity Life Insurance Co…

Gary Vose, who was chairman of Investors Equity when the state took it over in June 1994, has agreed to hand over The Meadows, a 4,000-acre subdivison at Castle Rock, Colo, to Hawaii Insurance Commissioner Wayne Metcalf…

Metcalf and the previous insurance commissioner, Lawrence Reifurth, have been working to recover assets since the state seized the insurance company after its management had run up a $60 million deficit. . . . The deficit, which has since grown to more than $90 million, was incurred largely because Vose lost policy-holders’ money in highly speculative leveraged investments known as derivatives, the state charges….

Vose’s agreement to transfer The Meadows and a smaller subdivision settles the state’s lawsuit against him, Eugene Sprague, an attorney in Denver representing the Hawaii Insurance Division, said today. . . . Neither Vose’s attorney nor Metcalf could be reached for comment, so it was not immediately clear what the value of the Colorado properties might be. Sprague said he could not go into details because of a confidentiality agreement.…

The Meadows was the brainchild of former savings and loan executive Charles Keating and was put up for auction after Keating’s Lincoln Savings & Loan Association became insolvent….

The state alleged that Vose then used $23.3 million of Investors Equity’s money, through one of his affiliated companies, to acquire the property in 1992.

In a civil suit, the state accused Vose of racketeering, fraud and other misconduct in buying The Meadows. The suit alleges that the holding company that controlled Investors Equity conducted sham real estate deals and used the insurance firm’s assets to pay huge fees to Vose and companies connected with him….

ITT Hartford Life Insurance Co. early this year acquired the Investors Equity policies, keeping them alive.

A state insurance fund contributed $10 million to boost the value.…

For more, GO TO > > > Vultures in The Meadows

JMB Realty Corp. – A major US commercial real estate investment firm which owns, develops and manages real estate projects throughout North America, including regional malls, hotels, planned communities, and office complexes.

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Honolulu Star-Bulletin, 6/16/00 – Kamehameha Losses Top $335 Million – Despite unprecedented financial growth, the Kamehameha Schools recorded more than $335 million in losses and writeoffs during the past decade. . . . The troubled investments underscore criticisms that the estate’s embattled former trustees mismanaged assets and took ill-advised bets on speculative ventures. . . .

The estate’s largest write-off was for $50 million. It involved a 1987 investment in Cadillac Fairview Corp, a Toronto-based office and retail property developer.

The estate, following the advice of Chicago-based JMB Realty Corp, joined 38 institutional investors in the $2.6 billion leveraged buyout of Cadillac Fairview, but the investment went south after the mainland recession of the early 1990s forced the developer into bankruptcy protection. . . .

For more, GO TO > > > Predators in Paradise

James Ahloy – President, Ali’i Petroleum; Trustee for Lunalilo Trust; President, Aloha Petroleum (the company in the political spotlight because of its spinoff from Harken Energy Corporation – George W. Bush’s tenacious albatross).

January 9, 1991

Excerpted from a Letter from Bruce N. Huff, Sr. V.P., and CFO, Harken Energy Corp. to Edmund Coulson, Chief Accountant, Securities and Exchange Commission:

. . . June, 1989, the Company decided to sell Aloha (Petroleum) due to the lack of strategic fit and the need to redeploy assets and management effort . . . determined that Intercontinental Mining & Resources, a major shareholder of the company, was the most logical buyer.

. . . At the end of March, 1990, IMP completed the sale of its interest in Aloha to Advance Petroleum Marketing Co.

. . . Advance at this time raised the possibility of a long and costly dispute over environmental liabilities….

. . . Prior to entering into the Letter of Intent dated February 22, 1990 with Advance concerning this sale, IMR through its affiliate Quadrant Management Co. had contacted a number of potential third parties towards locating a prospective purchaser of IMP’s interest in Aloha including potential purchasers in Japan, New York and in Hawaii, after which it determined that Advance constituted the most acceptable purchaser for its interest….

…Concessions:

– Assumed Jimmy Ahloy’s Employment Contract obligation.

* * *

August 9, 1997

BROKEN TRUST

By Samuel King, Msgr. Charles Kekumano,
Walter Heen, Gladys Brandt and Randall Roth

The time has come to say “no more.” The web of relationships between the Judiciary and our beloved Kamehameha Schools/Bishop Estate has pushed two great institutions to an absolute critical point. Immediate action must be taken. To understand the underlying causes, readers must piece together the following stories. Think of them as puzzle parts….

How trustees get selected

In the words of a former Supreme Court justice, here’s how the process worked: “The way we went about picking trustees was different each time. The time we named Chief Justice Richardson, for example, Justice Lum suggested that we select him, and we all agreed. It was just that simple. Another time, we must have gotten over 100 applications. It was pretty informal then too, but we did read through everything. It’s really hard to generalize about how we did things because it just depended on the circumstances.”

In the words of a different former justice, “When Os Stender was picked, we got lucky. Two of the justices wanted Larry Mehau very badly, another two were just as adamant about Anthony Ramos. The fifth justice, who was for Jimmy Ahloy, refused to switch to either of the other two candidates.

Once it became crystal clear that we had a stalemate, someone — and I wish I could remember who — brought up Os’ name. We all knew he was Hawaiian and that he was the CEO at Campbell Estate, and it didn’t take long to agree on him. Chief Justice Lum immediately called and asked him to come over right away. When Os arrived 10 minutes later, we told him he had just been chosen to be a Bishop Estate trustee. He just sat there for a good minute. You know, a minute is a pretty long time to just sit there in a situation like that. Anyway, after that long pause, he just said thank you,’ and that was that. Just about everyone agrees that Os has been a great trustee. Like I said, we got lucky.”

Here’s the same scene as seen through the eyes of Os Stender: “You know, when they picked me, they practically picked my name out of a hat. Can you believe it? There was no process, not even an interview. I was speechless.”

We can’t knock good luck, but would rather rely upon clearly articulated criteria and a coherent selection process. Otherwise, the selectors cannot effectively be held accountable….

* * *

February 2, 1999

Bill would limit amount of money paid
to board members of charitable trusts

By Craig Gima, Star-Bulletin

Trustees of the Bishop Estate and other charitable trusts would be limited to compensation of not more than the salary of the chief justice of the Hawaii Supreme Court under a bill heard today in the Senate Judiciary Committee.

The chief justice makes $94,780 a year. In the last few years, Bishop Estate trustees received more than $800,000 annually in compensation.

Critics of the Bishop Estate told senators that excessive compensation is the genesis of many of the estate’s problems….

In written testimony, Beadie Kanahele Dawson, of Na Pua a Ke Ali’i Pauahi, told the committee, “Eliminate the fat commissions and you eliminate much of the court battles, greed, self-interest, and future politically connected, unqualified trustees.”

Another bill before the committee would impose a five-year renewable term limit on trustees, allow a designated group of beneficiaries to sue trustees and receive attorneys’ fees if they win, and prohibit public officers and employees except probate judges from appointing trustees of a charitable trust.

James Ahloy, a trustee for the Lunalilo Trust, opposed the measure because it would also affect the selection process for the estate that supports the Lunalilo Home.

“The precedent set by changing King Lunalilo’s will may lead to other changes of negative results for Lunalilo Home,” he told the committee….

For more, GO TO > > > Aloha, Harken Energy!

James Riady – From msnbc 1/12/01 (AP): . . .

Billionaire agrees to record
plea bargain for Clinton donations

In a record-setting plea bargain, Indonesian billionaire James Riady agreed to pay an $8.6 million fine and plead guilty to using foreign corporate funds to back Bill Clinton’s 1992 presidential campaign, the Justice Dept announced.

RIADY, A KEY FIGURE in the Democratic campaign finance scandal, is set to plead guilty to a felony charge of conspiring to defraud the United States, prosecutors said….

Riady pledged $1 million in 1992 to support the then-Arkansas governor’s campaign, the Justice Dept said Thursday.

Riady used John Huang, an officer of his Lippo Group, to reimburse foreign contributors to Clinton and other Democrats, according to 70 pages of government documents filed with the plea bargain in U.S. District Court.

Foreign campaign contributions are illegal under U.S. law. The money was funneled through Hong Kong bank accounts and Lippo entities overseas, the government papers said….

For more, GO TO > > > The Indonesian Connection

John Waihee – former Governor of Hawaii and big FOB (Friend of Bill).

From GreaterThings by Greg Wongham: FBI Investigates Hawaii Democratic Party. According to news reports, Nora and Eugene Lum were dispatched by the Hawaii Democratic Party to meet with Bill Clinton. The purpose of the visit was to seek the Presidential candidate’s help in pulling the plug on an FBI investigation of Hawaii’s (D) Governor John Waihee. The Lums admitted to FBI investigators looking into allegations that arose during the “Chinagate” investigation that after Clinton was elected, Webster Hubbell (3^rd man in the Justice Dept during the early days of the Clinton administration) pulled the plug.

* * *

Honolulu Star-Bulletin, 10/28/96, by Ian Y. Lind: Isle Woman Part of Campaign Probe – Former resident Nora Lum figures in congressional investigation into ‘92 finances. Congressional investigators have renewed a probe of former Hawaii resident Nora T. Lum, and a 1992 campaign project which she headed, because of their links to Democratic National Committee fund-raiser John Huang and former DNC official Melinda Yee.

David Bossie, staff investigator for Rep. Dan Burton, said last week that investigators are “extremely interested” in Lum’s association with Huang and Yee in the Asian Pacific Advisory Council (APAC-Vote), a DNC project that operated out of offices in Torrance, Calif, during the fall of 1992.

Bossie said APAC-Vote is drawing new scrutiny because its “cast of characters” included Huang, then an officer of the Indonesian-owned Lippo Bank in Los Angeles; the late Secretary of Commerce, Ron Brown, then chairman of the DNC; and Melinda Yee, an assistant to Brown at the DNC and national director of Asian Pacific American affairs for the 1992 Clinton-Gore campaign.

Following the 1992 elections, Brown was appointed secretary of commerce and named Huang and Yee to key positions in the department….

Huang and Yee have been ordered to testify in a lawsuit by the conservative organization, Judicial Watch, which wants to know whether Commerce Dept trade missions were used to raise funds for the Democratic Party….

APAC-Vote officially opened its office on Sept 9, 1992, the same day then-candidate Bill Clinton announced the formation of the Asian Pacific American Committee for Clinton-Gore, whose roster included Sen. Dan Inouye, Sen. Dan Akaka, Rep. Patsy Mink, and then-Gov. John Waihee….

* * *

The Price of Paradise – Vol II – Randall W. Roth, Editor: Is the State Employees’ Retirement Being Abused?, by Bill Wood: . . . I’ll tell you a few things about the Hawaii State Employees’ Retirement System and let you draw your own conclusions….

The ERS now has total assets of about $5 billion, with two-thirds invested in U.S. Stocks and bonds and the remaining third divided among five other categories, the biggest of which is real estate….

Direct investment in real estate offers the possibility of a comparatively high return, but as a relatively high risk….

The fund had not directly invested in real estate prior to 1989. Governor John Waihee says he suggested the move then as a means of broadening the fund’s investment base. His administration paved the way by convincing the legislature to double the statutory ceiling on real estate investments to 10 percent.

Run by trustees. The ERS is administered by seven unpaid trustees and a paid staff. Three of the trustees are elected by the members of the system, three are appointed by the governor, and one, an ex-officio by voting trustee, is a member of the governor’s cabinet, the director of the state’s Dept of Budget and Finance. So the governor appoints four of the seven trustees.

The trustees have a great deal of discretion in the day-to-day operations … They do, however, get lots of help with their investment decisions. Currently, about 30 investment advisory firms– some local, some not– monitor and make buy-sell recommendations. And there is other help. ERS’s data processing, legal and actuarial work, and financial audits are done by outside firms.

Okamoto, Himeno & Lum. In 1989, when the trustees made their first direct real estate investment, the purchase for $68 million of the newly built City Financial Tower in downtown Honolulu, they decided the legal advice they had been getting in-house– mostly through the state attorney general’s office– was inadequate. The needed specialists. So they hired an outside law firm, known then as Okamoto, Himeno & Lum.

The firm’s partners were Kenneth Okamoto (whose wife, Sandra, was an assistant to then-State Attorney General Warren Price), Sharon Himeno (Sandra’s sister and by November of that year Warren Price’s wife), and Bettina Lum (the law firm’s real estate expert).

Bettina Lum assisted the ERS in its purchase of City Financial Tower. She also helped the trustees evaluate the many mortgage loan applications that were coming in to the ERS as a result of a decision to step up that activity. Much of the $628,000 in fees earned by the law firm from the ERS account between 1989 and 1992 came from evaluating these applications.

Not all the fees came directly from the ERS. Some loan applicants paid Okamoto, Himeno & Lum directly for help in preparing and evaluating their applications. One of these applicants was Waikele Commercial Associates, a partnership seeking a $154 million loan from the ERS to develop a shopping center on land purchased from Amfac/JMB in central O`ahu. Governor Waihee now says he had urged the ERS trustees to increase their loans to Hawai`i businesses such as Amfac/JMB and Waikele Commercial Associates “because it makes good economic sense.”

Political tool.

Some people complain that the governor has openly used the ERS as a political tool and improperly interfered in its decision-making. They contend that this amounts to abuse. . . .

The ERS trustees used more than Lum’s services in buying the City Financial Tower. They also hired the local real estate firm Marcus & Associates. That firm had been recommended by the trustee and budget director, Yukio Takemoto, who was a golfing buddy of its chairman, Marcus Nishikawa. Marcus & Associates was named exclusive leasing agent for the 24-story City Financial Tower and given the contract to review the leasing program for the building.

Marcus & Associates also participated in other real estate purchases. Later in 1989, it was a player in the ERS’s $26 million purchase of the CentrePointe office-warehouse complex in Carson, Calif, and in the 1991 purchase, for $17.5 million, of Huntington Plaza, another commercial center in Southern Calif. In each case, the real estate firm was paid a six-figure commission, not by the ERS, but by the sellers.

A quick $3 million.

The CentrePointe purchase came back to haunt some of its participants. That deal began when Honolulu businessman Stanley Himeno (father of Sharon Himeno) approached the ERS trustees wanting to borrow money to buy the California property. Marcus & Associates got involved and soon it was decided the ERS would itself buy the property. CPA’s Ernst & Young, who had started to work for Himeno, appraised the property for the ERS trustees at $26.2 million, and the ERS then offered Himeno’s company $26 million. The offer was quickly accepted and the sale closed. The trustees later said they had no idea Himeno had bought the property for only $23 million and arranged back-to-back closings, thus making an apparent $3 million gain in a matter of minutes.

Okamoto, Himeno & Lum declined to participate in that particular purchase because of the obvious conflict of interest. Besides the family relations, Sharon Himeno and Sandra Okamoto were officers and directors of the Himeno company that bought and sold the CentrePointe property. Another law firm was hired to help out: Hoe, Yap and Sugimoto, Governor Waihee’s former law firm. . . .

Jurist resigns.

Late in 1991, the trustees voted to pay $31 million for Wood Ranch, a California golf course. That deal had been brought to them by Honolulu developer Rodney Inaba, a friend of ERS trustee Gordon Uyeda. But retired Hawai`i Supreme Court justice Edward Nakamura, who had been appointed an ERS trustee only months before, strenuously opposed the purchase. He also had grown upset over the pending $154 million loan to Waikele Center Associates. Saying he couldn’t stomach such treatment of public funds, the respected jurist resigned his trusteeship when the Wood Ranch acquisition was approved by a majority of the board.

The governor then told “Yuki” Takemoto to kill the deal and the trustees reversed their decision. Another trustee later said Takemoto told the board the governor “didn’t want the hassle.”

By mid-1993 the ERS had made one other real estate investment, a 400-unit apartment complex in Arlington, Virginia, that cost $38 million, and it was considering two others…

But in the summer of 1993 the ERS faced a State Senate special committee probe into its investment decisions and contract practices. Gov. Waihee labeled the investigation “McCarthyism.”

The ERS met the challenge by hiring another consultant: Hill and Knowlton, a high-powered international public relations firm that specializes in crisis management.

The first this the big PR firm did was launch a newsletter for ERS members called “Safe & Sound.” The first issue contained blanket denials of any wrongdoing.

For more, GO TO > > > Predators in Paradise

Johnston Atoll – A U.S. former atomic test site in the Pacific.

October 19, 2002

Liability concerns loom
over Johnston dump

By Diana Leone, Honolulu Star-Bulletin

Some 800 miles southwest of Honolulu on Johnston Island, a contractor hopes to complete a 25-acre landfill of radioactive rubble by next month.

The Defense Threat Reduction Agency, an arm of the U.S. Department of Defense, has pledged that radiation exposure on top of the landfill will meet Environmental Protection Agency standards set for the whole island.

But there’s a hitch. The U.S. Fish and Wildlife Service, which is scheduled to become the sole caretaker of the island after the military leaves in 2004, doesn’t want the liability of the radioactive dump.

The Fish and Wildlife Service maintains that “land-filling of plutonium contaminated material on Johnston Island is not appropriate, and that it should be shipped off-island to a radioactive waste facility,” Regional Director Anne Badgley wrote in a July 25 letter to the Defense Threat Reduction Agency.

Fish and Wildlife officials are still waiting to hear from the defense agency about how to resolve the impasse, said Don Palawski, who oversees Pacific Island refuges, including Johnston, for Fish and Wildlife.

The landfill contains 45,000 cubic meters of radioactive material, the last remnants of fallout from two failed 1962 test explosions of nuclear warheads that contaminated Johnston Atoll National Wildlife Refuge. The material is buried under 2 feet of coral.

Johnston Island is the largest of four islands and the site of military activity that has coexisted with the refuge.

Because nuclear fission never occurred, EPA engineer Ray Saracino likens the plutonium contamination to what people today call a “dirty bomb.”

It will take 24,000 years before half of the plutonium decomposes to a harmless state, he said.

A Maui-based watchdog group, Earth Foundation, has sent out e-mails questioning whether contaminated fish from Johnston could pose a health risk to people in Hawaii.

That possibility is “extremely remote,” for a number of reasons, including the distance and the fact that plutonium isn’t readily absorbed by fish, Saracino said.

However, the EPA is advising the Defense Threat Reduction Agency to do a complete assessment of the effect of radioactive pollution already in the Johnston Atoll environment and to explain how it will handle long-term stewardship of the radioactive landfill.

To address the first EPA concern, Defense Threat Reduction Agency has commissioned an Ecological Risk Assessment Report, which will be completed by June 2003, said spokesman Marcus Wilson.

The material buried in the new landfill accounts for only about 10 percent of the 16 kilograms of plutonium released in 1962, Saracino said.

The rest has been buried deep at sea or is dispersed in the lagoon.

That’s why assessing how wildlife have been doing under those conditions for the last 40 years is key to deciding future safeguards for the area, Saracino said.

An oasis for reef and bird life, Johnston Atoll is home to 32 species of coral, 300 species of fish, the threatened and endangered green sea turtle and Hawaiian monk seal, and 20 species of migratory birds.

As long as the radioactive material stays “buried it’s not a human health issue,” Fish and Wildlife’s Palawski said.

“But there’s a longer-term issue with the possibility of sea wall failure and material being exposed to the surface or released to the marine environment.”

“DTRA will monitor the (landfill) site for construction defects as long as there is commercial air service to Johnston Atoll or for five years, whichever is shorter,” Wilson said.

For more, GO TO > > > The Nuclear Nests

Larry Mehau – Alleged by some, but never proven in court, to be the Godfather of organized crime in Hawaii.

From Land and Power in Hawaii, by George Cooper and Gavan Daws:

. . . Organized Crime, by nature secretive and shrouded in a certain mystique, is difficult to study, in the Islands or anywhere else.

Greatly complicating the effort to assign a proper weight to organized crime in Hawaii have been unproven allegations, whispered for years and then made public from 1977 on, that a close associate of both of Hawaii’s Democratic governors was the leader of organized crime in the Islands.

In the end, the power position to be accorded organized crime in Hawaii … depended heavily on whether that friend of John Burns and George Ariyoshi, Larry E. Mehau, was or was not directing organized crime….

* * *

From EQ2048 – Petition of the Attorney General to Remove Trustees…

STANDARDS APPLICABLE TO TRUSTEES

The Trustees owe the Beneficiaries a duty of faithful adherence to the terms of the Will and the purpose of the Trust.

The Trustees owe a duty to the Beneficiaries to keep and render clear, accurate, and complete accounts with respect to the administration of the Trust.

A Trustee who violates any duty owed to the Beneficiaries is subject at the request of the Beneficiaries to removal, surcharge, and other available remedies.

COUNT 1

THE TRUSTEES HAVE VIOLATED THE DIRECTIVES
OF THE WILL AND THE PURPOSE OF THE TRUST

Introduction….

The Trustees have not provided the Master unlimited access to the Trust’s books and records. Rather, the Trustees have imposed viewing restrictions and copying restrictions on the Master….

The Trustees have closely controlled access to employees with relevant information on Trust operations. The Trustees have created an atmosphere of fear and intimidation among their employees….

COUNT 2

PETERS, WONG, AND LINDSEY HAVE ENRICHED THEMSELVES FROM THE TRUST AT THE EXPENSE OF THE BENEFICIARIES

…Trustees Peters, Wong, and Lindsey have violated their duty of loyalty to the Beneficiaries by using their position as Trustees and by using Trust assets and opportunities to benefit themselves and their relatives and friends….

Larry Mehau, a principal shareholder of Hawaii Protective Association (“HPA”) is a friend of Wong and Lindsey.

In July 1996, the Trustees hired the Hawaii Protective Association (“HPA”) to provide additional security personnel at the Kamehameha Schools. There was no operational necessity to hire any outside security contractor.

It is more expensive for the Trust to use HPA than to use Kamehameha Schools personnel to provide the same security services. It is more expensive for the Trust to use HPA than other outside security services, because HPA charges above market rates.

The Trustees did not solicit competitive bids for HPA’s security services. There is no written contract with HPA….

www.starbulletin.com/98/09/11/news/removal.html

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For more, GO TO > > > Claims By Harmon; The Puna Connection; Predators in Paradise; Who’s Guarding the Henhouse – Part II

Mariana Islands – Sweatshop Watch Press Release, 01/13/99:

15,000 Workers Living in Indentured
Servitude While Producing Goods

“Made in the USA”

In the first-ever attempt to hold U.S. retailers and manufacturers accountable for mistreatment of workers in foreign-owned factories operating on U.S. soil, litigation was filed today in California and Saipan against 18 high-profile U.S. clothing manufacturers and retailers, including The Gap, Tommy Hilfiger, The Limited, J.C. Penney, May Company, Sears and Wal-Mart.

These companies are accused of violating federal law by engaging in a “racketeering conspiracy” using indentured labor — predominantly young women from Asia — to produce clothing on the island of Saipan. (Saipan is part of the Northern Mariana Islands, a U.S. Commonwealth in the South Pacific.)

Their foreign-owned garment contractors in Saipan are also charged with failing to pay overtime and ongoing intolerable work and living conditions. In the last five years, contractors in Saipan have received more than 1,000 citations for violating U.S. Occupational Safety and Health Administration (OSHA) standards, many of which characterized capable of causing death or serious injury.

Two federal class action lawsuits were filed on behalf of more than 50,000 workers from China, the Philippines, Bangladesh and Thailand. The workers were allegedly drawn to Saipan with the promises of high pay and quality work in the United States. Instead, they found themselves working up to 12-hour days, seven days a week, often “off the clock” without receiving any pay or overtime.

A third companion lawsuit was filed in California state court by four labor and human rights groups (Sweatshop Watch, Global Exchange, Asian Law Caucus, and UNITE). The lawsuit accuses the retailers and manufacturers of using misleading advertising and trafficking in “hot goods” manufactured in violation of U.S. labor laws.

Together, the three lawsuits are seeking more than a billion dollars in damages, disgorgement of profits and unpaid wages.

“To allow such squalid conditions to persist on American soil is both patently unlawful and morally reprehensible,” said Al Meyerhoff, one of the lead attorneys. “Saipan is America’s worst sweatshop.”

According to the lawsuits:

* Garments made in Saipan’s sweatshops may carry a “Made in the USA” of “Made in the Northern Marianas, USA” label. American consumers are deceived into believing they have purchased a product made by American workers protected by U.S. labor laws, that guarantee a decent wage and a clean, safe work place.

* Last year alone, the federal government estimated that contractors and U.S. retailers avoided more than $200 million in duties for $1 billion worth of garments shipped from Saipan, that would otherwise have been paid for the same clothing if it were manufactured in China or the Philippines. Some Chinese garment interests have moved their textile operations to Saipan virtually “lock, stock and barrel,” in large part, to avoid U.S. duties and quota restrictions. The federal government estimates that this increase in Chinese apparel production in Saipan has allowed China to exceed its import quota by 250% in 1997 alone.

* Although Saipan’s garment factories are owned predominantly by Chinese and Korean companies, quality-control inspectors from The Gap, The Limited, and other U.S. retailers allegedly oversee the manufacturing process. Still, they have refused to exercise their power to mitigate the intolerable working and living conditions.

* Over 90% of garment industry jobs in the Marianas are held by foreign “guest workers.” These and other foreign workers make up more than half of the estimated total Marianas population of 70,000. This is largely due to the Island’s exemption from U.S. minimum wage and immigration laws instituted to encourage local economic development. Since 1996, over 200,000 apparel industry jobs were lost in the continental United States.

* With promises of a good job and a new life, workers agree to repay recruitment fees from $2,000 to $7,000. They often must sign “shadow contracts” waiving basic human rights, including the freedom to date or marry.

* The crowded, unsanitary factories and shanty-like housing compounds are in flagrant violation of federal law. The heat in some factories is so extreme it can cause workers to faint. Many live in a room with up to seven other people in inward-pointing barbed wire-enclosed barracks. Their movements are strictly supervised by guards, and are subject to lockdowns or curfews. Complaints about the conditions are met with threats of termination, physical harm, and summary deportation.

“Unfortunately, slavery and indentured servitude is alive and well in the many parts of the world, including the United States,” said another lead attorney, William S. Lerach. “Companies like The Gap and Wal-Mart have reaped millions in profits from this scheme — now they will be held accountable.”

Conditions in the Marianas have generated a host of highly critical reports from federal agencies and Congressional oversight. One recent report on the Marianas from the U.S. Department of the Interior sharply criticized “the heavy and unhealthy dependence upon an indentured alien worker program and on trade loopholes to expand its economy.”

Garment production in Saipan continues to increase, already exceeding that of Malaysia and Jamaica. Although the legal limit on foreign garment workers is 11,000 recent estimates exceed 15,000, and more factories are being built.

The plaintiffs are represented by a coalition of law firms, including Milberg Weiss Bershad Hynes & Lerach LLP — class action specialists with principal offices in New York and San Diego. The firm has successfully litigated numerous consumer lawsuits against such companies as R.J. Reynolds (“the Joe Camel” case), Prudential Insurance (for life insurance fraud) and Lincoln Savings (for defrauding depositors).

Most recently, the firm negotiated a $1.2 billion settlement from Swiss banks as reimbursement to surviving families and victims of the Holocaust. They are currently seeking compensation for Holocaust victims forced to work as slave laborers in factories….

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For more information on sweatshop conditions in the Northern Mariana Islands, visit the Sweatshop Watch web site

CorpWatch: http://www.corpwatch.org

Mochtar Riady – A senior executive for the Riady family’s Indonesian enterprise, Lippo Group.

A billionaire, Mochtar Riady was an invited guest at Clinton’s inauguration and his son, James was on the “economic summit” convened after Clinton’s election. Riady has close ties with the military junta that has killed hundreds of thousands in East Timor.

When Clinton visited Indonesia in November 1994, he met with Mochtar Riady and John Huang. A point at issue here is not only the illegal foreign contributions to a presidential election, but also the close economic and social ties to an enterprise vying to market East Timor goods in America by a group that uses genocide and slave labor to compete in the global market.

The Bishop Estate reportedly has connections to the Riadys through the Panin Group, Sino Finance, and Xiamen International Bank.

For more, GO TO > > > The Indonesian Connection

Pacific Forum – Another political “think tank”.

From their website: Based in Honolulu, Hawaii, the Pacific Forum CSIS is a non-profit, private, foreign policy research institute that operates as the Asia Pacific arm of the Center for Strategic and International Studies of Washington, D.C.

Founded in 1975, the thrust of the Forum’s work is to help stimulate cooperative policies in the Asia Pacific region through debate and analyses undertaken with the region’s leaders in the academic, government, and corporate arenas. The Forum’s programs encompass current and emerging political, security, economic/business, and ocean policy issues. It collaborates with a network of more than 30 research institutes around the Pacific Rim, drawing on Asian perspectives and disseminating its projects’ findings and recommendations to opinion leaders, governments, and publics throughout the region.

An international Board of Governors guides the Pacific Forum’s work; it is chaired by Brent Scowcroft, former Assistant to Presidents Bush and Ford for National Security Affairs. The Forum is funded by grants from foundations, corporations, individuals, and governments, the latter providing but a small percentage of the Forum’s $1.2 million annual budget.

The Forum’s studies are objective and nonpartisan and it does not engage in classified or proprietary work.

For more on Brent Scowcroft, GO TO > > > Birds that Drink from Cesspools

Pacific Islands – From Pacific Islands Report, by Pacific Islands Development Program/East-West Center – Center for Pacific Islands Studies/University of Hawai`i at Manoa:

RUSSIAN MAFIA USING PACIFIC
REGION TO LAUNDER MONEY

Paris, France (Feb. 14, 1999 – AFP) — Russian organized crime is increasing using the Pacific region as a base for laundering its ill-gotten gains, the Organization of Economic Cooperation and Development (OECD) Financial Action Task Force (FARF) said last week.

“A heavy concentration of financial activity related to Russian organized crime has been observed, specifically in (Western) Samoa, Nauru, Vanuatu and the Cook Islands,” the FATF said in an annual report on money laundering.

It cited “an increasingly common scheme whereby apparently American middlemen are used to open accounts or charter banks in one of the locations” to hide the Russian origin of the money after local authorities became suspicious at the high level of Russian activity in the region.

The Russian mafia are also looking for “potential alliances” with drug traffickers in Central and South America and the Caribbean…

There is also concern over the rise in internet gambling, which generates nearly $1.5 million dollars a month in the Pacific region and is seen as “another potential vulnerability for money laundering and financial crime.” Such electronic casinos offer clients virtual anonymity, making the source of their cash all the harder to trace.

Elsewhere in the Asia-Pacific region, the report said, the principal sources of criminal funds are human trafficking, drug trafficking, gambling and organized crime.

South Asia is a particular focus for money laundering activities as it is home to several major international banks as well as being a transshipment point for drugs from Afghanistan, Iran, Myanmar, Thailand and Laos.

In South Asia, money laundering through gold transactions is particularly popular, either through a gold dealer who provides gold in exchange for cash and checks received by the presenter, or through a cash transaction in one country which is completed by a gold deposit to the owner in another country.

But as elsewhere in the world, electronic payment transactions are also a cause for concern, along with the increasing use of accountants and lawyers to help set up and manage accounts set up to launder the proceeds of criminal activity….

Peter Savio – Honolulu-based real estate broker, whose firm, Savio Realty, was selected by Kamehameha Schools to handle the estate’s vast residential condominium leasehold-to-fee conversions, worth millions in commissions.

From Washington on $10 Million a Day : . . . Lobbyists and Nuclear Visigoths . . . Big money corporate lobbyists don’t always win their battles, but when they are defeated it’s rarely because Congress or the White House rises to defend the public interest. More likely, the scheme being advanced was so loopy that even official Washington was too embarrassed to take up the cause.

That’s the case with a multi-billion plot put together by a cabal of beltway con men who hoped to dump tons of nuclear waste on a Pacific island.

Despite having been defeated, the would-be scheme is noteworthy in showing that well-connected capital honchos and aggressive lobbying can keep even the nuttiest projects in play. . . . The corporate vehicle for the plan is U.S. Fuel and Security Inc. (USF&S), a Washington-based firm….

USF&S had an easy time lining up money and influence peddlers to back its plan. Finding a dump site proved more difficult. Like a crew of punch drunk sailors lost at sea, Murphy & Co have desperately scouted the horizon for a Pacific Island where they can come aground. (Alex) Copson explained to me that the Pacific was chosen because it lies between Russia and the U.S., and because it is littered with “useless dots of real estate.”

As he sees it, sacrificing a “tiny piece of bullshit in the Pacific” is a small price to pay in order to avoid the doomsday scenario of nuclear annihilation….

USF&S first approached the Marshall Islands … Another possibility explored by USF&S was Midway Island … The next port of call was Palmyra, a tiny atoll about 1,000 miles south of Hawaii which is owned by the Fullard-Leo family of Honolulu but administered by the Dept of the Interior. USF&S drew up plans that showed that all the world’s spent fuel could fit in the atoll’s 5,400-acre lagoon, which would be filled with cement to prevent leakage.

Peter Savio, the Fullard-Leo’s Honolulu-based real estate broker, said a Wall Street firm headed by Kirch, KVR, agreed to pay “in excess of $40 million” for Palmyra. “The buyers claimed they were interested in building a hotel and also mentioned plans for some sort of scientific research,” he said. “They never discussed using the island as a nuclear waste site.”

Once again, strong opposition to the plan arose when word leaked out about Murphy & Co’s true intentions. … Hawaii’s congressional delegation soon entered the fray, with all six members signing a letter to President Clinton in June of 1996 urging him to oppose the project….

The death knell for the Palmyra plan came in August, when the White House sent Senator Akaka a letter promising that the Administration would “strongly oppose” the USF&S proposal. KVR then decided not to buy Palmyra, costing Kirch’s firm what Savio termed a “substantial deposit.”

Copson was as bitter about this setback as he was about the unraveling of the Marshalls plan. During our conversation he called Senator Akaka an “ignorant lightweight.” McGarey, the senator’s aide, would “realize the error of his ways when terrorists set off a bomb in Tel Aviv.”

For an update on Palmyra, GO TO > > > The Nature Conservancy

* * *

Honolulu Star-Bulletin, 12/13/00: Savio to Buy Waikiki Hotel . . . Developer Peter Savio is buying the Diamond Head Beach Hotel in Waikiki and plans to resell its units individually, a deal that could lead to fee-simple conversion of the leasehold property.

Savio signed a contract this weekend to buy the 59-unit condominium building at 2947 Kalakaua Ave for just under the asking price of $5.5 million. The seller, Sports Shinko of Japan, had bought the hotel for $13.5 million in 1990, according to state records….

The Gold Coast beachfront land under the hotel is held by the trust of Jeanne Chan, which does not want to sell the fee interest voluntarily, Savio said…

* * *

From Honolulu Star-Bulletin, Feb 5, 2001: Hawaii developer Savio files for Chapter 11 – He says an eviction notice from Central Pacific Bank to move out of his Realty office prompted the action.

Developer Peter Savio says he blames Central Pacific Bank for causing him to file personal bankruptcy by demanding that Savio Realty Ltd. move out of its Moilili offices by this Friday.

“I’m absolutely shocked that a local lender would act this way,” said Savio, who filed Chapter 11 reorganization bankruptcy on Friday afternoon.

The petition lists 20 unsecured creditors with total claims of $45.6 million, mainly comprising personal guarantees of loans borrowed by Savio Development Co., which also filed Chapter 11 last year. Personal debts were a small factor in the latest petition, which was filed jointly by Savio and spouse Phyllis Savio.

Central Pacific Bank, Hawaii’s fourth largest bank, is one of Savio’s smaller creditors in the personal bankruptcy, with $1.6 million owed. The largest creditor is Dallas-based Beal Bank, which is owed $20 million linked to Savio’s Queen Emma Gardens project on Nuuanu Avenue. Savio said today most of the creditors were close to being paid off and that Savio Development could have emerged from bankruptcy within a month.

Late last week, Central Pacific Bank gave him final notice to move Savio Realty out of its offices in University Plaza out in five days. The bank previously acquired the offices in a loan workout for Savio Development….

Central Pacific Bank declined comment today, citing its practice of keeping client issues confidential….

Savio is also said he is proceeding with his bid to buy 17,780 acres of former sugar land from Kauai landowner Amfac/JMB Hawaii LLC. Amfac listed the acreage for $26 million in September and announced plans to close two sugar mills and lay off 400 employees. Savio said he has three letters of interest from lenders who want to participate in a deal for the property. They are aware of Friday’s bankruptcy filing, he said.

Savio is known for having converted several thousand leasehold apartments to fee-simple condominiums since 1981, many in connection with Kamehameha Schools.

* * *

Honolulu Advertiser, 08/27/01: Developer on a buying spree . . . Savio hoping to rebound after bankruptcy – Hawaii developer Peter Savio is on an invigorated mission to rebuild his development company following bankruptcy, having recently made what he said are offers to buy more than $1 billion of real estate.

“I am on a buying spree, and I am looking for more acquisitions,” the residential developer said late last week.

Savio has made a business out of buying leasehold apartment rental buildings and reselling units as fee-simple condos at below-market prices….

The developer is doing business under Hawaiian Island Development Co. Inc., which he formed in April after initiating bankruptcy liquidation of Savio Development Co.

Savio’s financial troubles stemmed from loans the company made to help buyers purchase units in the early to mid-1990s. About 100 to 150 loans went bad, and defaults by customers led to Savio Development defaulting on loans with its lenders.

To protect other assets from one lender that Savio called unreasonable, he also placed into Chapter 7 liquidation his holding company, Savio Inc., and filed for personal Chapter 11 bankruptcy reorganization….

The developer said the bankruptcies have not hurt his ability to raise money for properties he wants to buy.

The properties Savio has under contract are being purchased with local and Mainland partners and financed by Mainland lenders who Savio has declined to identify….

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(Catbird Musing: Hmmm, I wonder who those local and Mainland partners and lenders might be?)

~ ~ ~

For more, GO TO > > > The Nature Conservancy; The Puna Connection; Woo vs. Harmon

Pihana Pacific – From a Columbia Capital Press Release:

Pihana Pacific Raises US$190 Million in Equity
to Emerge as a Leader in the
Internet Data Center Industry in Asia

Hong Kong (October 31, 2000) – Pihana Pacific has been established as a leader in the Internet data center business with a new model of neutral co-location facilities to be rolled out across major locations throughout Asia/Pacific.

Pihana Pacific today announced it has raised US$190 million in one of the largest private equity financing rounds ever in Asia with Goldman Sachs as the lead investor and other world-class investors consisting of Morgan Stanley Dean Witter Private Equity, LoneTree Capital, Mori Building Co., Ltd., and Hewlett-Packard.

Pihana’s founding investor, Columbia Capital was a major participant in this round of investment and remains the largest shareholder.

‘Asia/Pacific is experiencing tremendous Internet growth, and our latest round of investment will allow us to facilitate this growth at a faster pace and bring to market our enhanced services which are seamlessly compatible with the neutral Internet exchange (IX) and co-location offerings,’ said Richard Kalbrener, chief executive officer and president of Pihana Pacific. ‘The quality of our investors, combined with the size of their investment demonstrates our leadership position in deploying our model throughout Asia /Pacific.’…

‘We are very impressed by the strength of Pihana’s world class management team,’ said X.D. Yang, managing director and co-head of the Principal Investment Area of Goldman Sachs (Asia)….

‘As the founding investor in Pihana, we strongly support the company’s aggressive roll-out of world-class, carrier neutral, Internet exchanges throughout Asia,’ said Harry Hopper, partner at Columbia Capital. ‘The endorsement of the top tier investor group led by Goldman Sachs that has joined us in backing Pihana, is a tribute to the caliber and excellent execution of the Pihana management team.’

Pihana Pacific will use funds to build neutral IX/data centers throughout Asia/Pacific including Japan, South Korea, Hong Kong, Singapore and Australia.

The company currently has a facility in Honolulu and will open a Los Angeles facility later this year. . . .

PricewaterhouseCoopers –SEC News Release 01/06/00: . . . Independent Consultant Finds Widespread Independence Violations at PricewaterhouseCoopers: . . .

The staff of the SEC today made public the report by independent consultant Jess Fardella, who was appointed by the Commission in March 1999 to conduct a review of possible independence rule violations by the public accounting firm PricewaterhouseCoopers arising from ownership of client-issued securities. The report finds significant violations of the firm’s, the professionals, and the SEC’s auditor independence rules….

The independent consultant’s report discloses that a substantial number of PwC professionals, particularly partners, had violations of the independence rules, and that many had multiple violations….

A year ago, the firm agreed in a settlement to conduct the review and create a $2.5 million education fund after the SEC alleged that some of its accountants compromised their independence by owning stock in corporations they audited. As a result of the review, five partners of the firm and a number of other employees had been dismissed.

The independent consultant’s report found that nearly half the firm’s 2,698 partners reported having committed at least one violation of the auditor independence rules, while 153 of them admitted to more than 10 each. Of a total 8,064 violations reported by those involved, 81.3% were by partners and 17.4% by managers.

Almost half the reported violations involved direct investments by the PwC professionals in securities, mutual funds, bank accounts or insurance products related to client companies.

* * *

From the RICO lawsuit: Harmon v. Federal Insurance Company, P&C Insurance Co., Inc., Marsh & McLennan, Inc., Trustees of Kamehameha Schools/Bishop Estate, PricewaterhouseCoopers, et al.:

…Defendant PricewaterhouseCoopers is one of the nation’s largest accounting firms, and conducts business in Hawaii and throughout the United States.

Despite written opinions from Pricewaterhouse that P&C should operate at “arms-length” from KSBE, all or some of the Trustees of KSBE, and all or some of the directors and officers of P&C, conspired to disregard these opinions and to conceal violations of I.R.S. “interim sanctions” regulations.

Plaintiff Harmon personally reported his concerns regarding the apparent “sweetheart deals” with M&M at the direction of Peters, Aipa and Kam, to representatives of Coopers & Lybrand in October, 1996, and followed this up in writing on November 20, 1996. At this meeting and in his letter, Plaintiff explained that he would not sign P&C’s annual financial statements due to the apparent conspiracy between certain trustees, managers, directors and officers at KSBE, P&C and M&M, to defraud KSBE, P&C, and the I.R.S.

Plaintiff also sent a copy of this letter to the Insurance Commissioner, State of Hawaii, along with all enclosures which provided documentary evidence of these wrongful activities. Neither entity responded to this report. Plaintiff later learned that Nathan Aipa had approved P&C’s annual financial statements, and that Coopers & Lybrand had not disclosed in their review the information that M&M was charging excessive fees, and that certain claims were intentionally inadequately reserved.

Plaintiff alleges that Pricewaterhouse had knowledge of these improper activities and financial statements, had a professional duty to report improper and illegal conduct regarding the preparation of these financial statements, and knowingly and wrongfully colluded with some or all of trustees of KSBE, with officers and directors of P&C, in a conspiracy to defraud the beneficiaries of the Estate of Bernice Pauahi Bishop and P&C; racketeering; mail fraud; wire fraud; and violations of the “interim sanctions” regulations of the I.R.S., as detailed in Plaintiff’s complaint…

For More, GO TO > > > What Price Waterhouse; Woo vs. Harmon

Richard Macke – Retired Admiral Richard Macke was the former Commander in Chief, U.S. Pacific Command. He is currently the Senior Vice President of Wheat International.

* * *

Honolulu Star Bulletin, 2/15/01: Retired Admiral Arranged Civilians’ Trip Aboard Sub – The Navy said today that an initial report on the accident in which a nuclear attack submarine rammed a Japanese fishing vessel nearly a week ago could be issued as early as this weekend….

At the Pentagon, Rear Adm. Steve Pietropaoli said that 14 of the 16 civilians that were aboard the USS Greeneville when it collided with the Ehime Maru Friday were supporters of the USS Missouri Association, which is restoring the World War II battleship berthed at Pearl Harbor. The other was a sportswriter and his wife….

Don Hess, the Missouri’s executive officer who also is a retired Navy officer, said, “The association had no involvement in requesting or making arrangements for any civilians to have access to the Greeneville.”

He declined to release the list of his donors without receiving their permission. . . .

Pietropaoli said the purpose of the initial report is to determine what direction the Navy’s investigation will take.

He also discounted reports that the 16 civilians were large contributors to the Republican Party.

“That is not the purpose of our program,” the Navy spokesman said. “No one can arrange visits to our Navy ships except our operational commanders. People refer them. We would be fools not to take those references. We don’t ask questions about political affiliation.”

The Navy also confirmed that retired Adm. Richard Macke, who was forced to resign as Pacific Forces commander in 1995 after a year on the job, was responsible for arranging the one-day orientation trip for the 16 civilians….

For more GO TO > > > The Sinking of the Ehime Maru

Sandwich Isles Communications – An expensive optic cable network being built in the boonies of Hawaii with US taxpayers money, headed by some familiar birds like Robert Kihune, Gil Tam, Al Hee and Joseph Kennedy II.

For more, GO TO > > > Vultures of the Sandwich Isles

Sino Finance Group – Subsidiary of Bishop Estate, with William Simon and others as co-investors. Sino Finance owns nearly 5% of Xiamen International Bank in China.

For more, GO TO > > > Dirty Money, Dirty Politics and Bishop Estate

Sports Shinko, Inc. – This Japan-based real estate development firm invested heavily in Hawaii in the bubbling 1980s (these were big bubbles, not tiny bubbles). The Queen Kapiolani Hotel in Waikiki is one of the better known properties purchased by the company….

* * *

Honolulu Star-Bulletin, 7/6/98, by Rick Daysog: . . . House Speaker Joseph Souki was questioned by the state attorney general’s office over a Maui land deal involving the Bishop Estate that netted him a $132,000 commission….

According to Souki, the state subpoenaed the Bishop Estate for information about its $5.3 million purchase of a 100-acre parcel in Pukalani, Maui, from developer Everett Dowling. Souki had served as a consultant to Dowling…. Bishop Estate plans to build its permanent Maui campus on the site….

Estate critics have cited Souki’s involvement as a conflict of interest, saying he led opposition to a bill to limit the compensation of trustees of the Bishop Estate and other charitable trusts. After it failed on an initial vote, public pressure prompted the House to pass the measure….

Souki has denied any wrongdoing, saying it was a private real estate transaction….

As part of its inquiry into the Maui land deal, the state also has subpoenaed Dowling and state Sen. Joe Tanaka. . . . Tanaka earned $42,000 commission from Dowling last year but said his consulting work did not involve the Bishop Estate.

Tanaka, who has not yet met with state attorneys, said he helped introduce Dowling to Sports Shinko, Inc., which originally owned the Maui property….

State records show that Dowling acquired 273 acres from Sports Shinko in Dec. 1996, before selling 100 acres of it to the estate….

* * *

The Honolulu Advertiser, 5/8/86: Mililani Golf Course sold to Japanese firm . . . Oceanic Properties, Inc. yesterday announced sale of the Mililani Golf Course to a Japanese company …

The new owner, Sports Shinko Co. Ltd, plans “to beautify and improve the course….”

The seller, Oceanic Properties is the real estate subsidiary of Castle & Cooke, Inc….

For more, GO TO > > > Paradise Paved; Yakuza Doodle Dandies

Sukamto Sia – Indonesian multi-millionaire businessman (before declaring bankruptcy). Sia, formerly known as Sukarman Sukamto, also owned a majority share of Bank of Honolulu, The Executive Center building, and the land purchased by the State of Hawaii for Hawaii Convention Center.

Connections: The land under The Executive Center is owned by Bishop Estate. The insurance broker for Sia is Marsh & McLennan. A prime lender on The Executive Centre was Citibank. Sia’s accounting firm is PricewaterhouseCoopers.

* * *

Honolulu Star-Bulletin, 11/10/98: . . . Sia, 39, who formerly went under the name Sukarman Sukamto, last week resigned as board chairman of the Bank of Honolulu following his arrest in Las Vegas last month. He was charged with passing $8 million in insufficient checks to cover gambling debts at two casinos.

Late last week, he filed for bankruptcy protection in Honolulu, listing $161 million in bank loan debts and $27 million in gambling debts.

Sia … listed assets of between $10 million and $50 million in the Chapter 11 filing in U.S. Bankruptcy Court. According to the filing, Sia owes bank loans of $111 million in Singapore, $37 million in Indonesia, $10.5 million in Hong Kong and $3 million in Bangkok….

Sia also owes a total of $18 million to four Las Vegas casinos — The Rio Hotel, Caesars Palace, the Mirage Hotel and the Las Vegas Hilton — as well as $9.6 million to casinos in London, Paris and Melbourne, Australia…

For much more, GO TO > > > The Indonesian Connection

Sumitomo Bank – This Japanese financial giant pumped around $500 million into Goldman Sachs in 1986. After Goldman’s IPO in 1999, Sumitomo held about a 6% interest in Goldman.

In Hawaii, Sumitomo formerly owned the majority interest in Central Pacific Bank.

For more, GO TO > > > Dirty Gold in Goldman Sachs; Predators in Paradise

Sun International Hotels Ltd. – From Honolulu Advertiser, 01/25/01, by Kevin Dayton and Tanya Bricking:

DEVELOPER WANTS APPROVAL TO
BUILD CASINO AT KO `OLINA

When Gov. Ben Cayetano traveled to the Bahamas last year, he met with executives from an international hotel and casino company that is now proposing a new 1,500-room resort at Ko `Olina that would include gambling.

The gambling proposal by Sun International Hotels Ltd. appears to have little hope of approval by the state Legislature this year. Although Cayetano said yesterday he is willing to listen to the plan, he has long opposed casinos in Hawai`i and isn’t promising to support Sun’s proposal.

Cayetano was in the Bahamas Dec 9-13 visiting the Atlantis Resort, a facility owned by Sun International that boasts the largest aquarium in the world. Kim Murakawa, Cayetano’s press secretary, said the governor’s main purpose for the trip was to visit the aquarium, but Cayetano was informed at the time that Sun would propose a development in Hawai’i.

Cayetano was accompanied on the taxpayer-financed trip by his former chief of staff, Charles Toguchi, who is now a lobbyist for Sun, and by public relations executive Jim Boersma, who has represented Sun for about a year.

Boersma said the governor, Toguchi and he had dinner with Sun executives, but that as far as Boersma knows, Cayetano did not discuss gambling with the executives.

Sun is proposing two bills that would allow developers to compete for a license for a single casino in West O’ahu. The operations would be overseen by a gaming commission and pay a wagering tax of 12% to the state.

Under the bills, the state would be guaranteed a minimum take of $32 million to $42 million a year for the first three years, with $30 to $40 million going into a scholarship program for college-bound students who maintain grades of a B-minus or better, Boersma said.

The proposal will be introduced in the Senate by Senate President Robert Bunda, D-22nd (Wahiawa, Waialua, Sunset Beach), and in the House by Rep. Nathan Suzuki, D-31st (Salt Lake, Moanalua).

State lawmakers have rejected one gambling proposal after another in the last decade, most recently killing a measure last February that would have legalized shipboard gambling.

Most lawmakers said they remain opposed to all forms of gambling. . . . Only two of the state’s 76 representatives and senators said they would vote to legalize casino gambling. One is Suzuki, and the other is House Tourism Committee Chairman Jerry Chang, D-2nd (S. Hilo), who has agreed to hold a hearing to consider Suzuki’s bill. . . .

Boersma said a media campaign will kick off with newspaper advertisements at the end of this week to make a case for the gambling proposal.

For more, GO TO > > > The Grand (and dirty) Ko Olina; Predators in Paradise; The Game Birds

Tonga – Another small prey for the giant financial vultures.

January 14, 2003

The ships that died of shame

The Sydney Morning Herald

Pacific islands are bywords for peace and paradise. But Polynesian unworldliness has allowed al-Qaeda to take terrorism into Eden.

Looking around the world for a backwater far from the arenas of terrorist conflict in the Middle East, al-Qaeda found what it needed in the distant South Pacific island state of Tonga.

Although at first glance an unlikely ally for the world’s most feared terrorist group, the one-time island paradise of fewer than 100,000 people boasts the world’s newest flag of convenience and a corrupt royal family – just what Osama bin Laden’s men were looking for.

Among the tens of thousands of foreign-registered ships, who would look askance at the tiny island, ruled for 145 years by the Tupou clan, split by family feuds over the spoils of kingship and often the object of derision among their own people and their Pacific neighbours?

But in the two years since the Tonga red-and-white ensign first flew, three foreign-owned Tonga “ships of shame” have been caught ferrying terrorists, weapons and explosives for al-Qaeda. Two others raised intense suspicions and were searched.

As a result, the US Navy is wary of – and is prepared to stop and search if considered necessary – any of the 62 ships which the CIA has identified flying Tongan flags, including four owned by Australian interests.

Shipping companies use flags of convenience to avoid heavy taxes and stringent inspections which would condemn their vessels to the wrecker yards. While the vessels’ real owners can hide behind a wall of secrecy created by dubious ownership structures, the crews are cheap foreign labour, with no rights. As a result, the ships and the crews are vulnerable, easy targets for clever terrorists.

Tongan-registered ships had been plying the sea without hindrance for a year when they first came under suspicion, causing a new crisis for the royal family, already under attack over allegations that it held $350 million in secret bank accounts.

The Israeli Navy on January 3 last year seized the Tongan-flagged KarineA which was carrying 50 tonnes of weapons and munitions which Israel claimed was destined for the Palestinian Authority in Gaza.

US officials are investigating a shipping company named Nova, incorporated in Delaware in the US and Romania, after two of its Tongan-flagged vessels were used to smuggle suspected al-Qaeda operatives.

Eight Pakistanis, who US officials claimed had been sent by al-Qaeda, jumped ship from the Nova-owned Twillinger when it berthed in Trieste, Italy, last February. They falsely claimed to be crewmen, carried large sums of money and false identification.

In August, the captain of the Nova-owned Sara sent an SOS for help to Italian maritime authorities, claiming the ship’s owners had forced him to take on board in Casablanca, Morocco, 15 Pakistanis, who were menacing his crew with guns. All 15 were charged with conspiracy to engage in terrorist acts after investigators found evidence linking them to al-Qaeda. They confiscated tens of thousands of US dollars, false passports and documents, and maps of Italian cities.

Two months later, another Nova vessel, the Cristi, was boarded in Greek waters and searched, but no incriminating evidence was found.

US warships in the Mediterranean stopped and searched the Tongan-registered Rasha J near Sicily for 17 hours, but allowed it to continue.

Since the capture in November of al-Qaeda’s alleged maritime strategist, Abd al-Rahim al-Nashiri, US intelligence officials say they have identified 15 cargo vessels operated by the terrorists under various flags of convenience. They believe there are more to be identified.

Other North and South Pacific islands have flags of convenience, although there is no evidence that they have also been targeted by al-Qaeda. They are the Marshall Islands, Vanuatu, Tuvalu and Fiji.

But they are minnows compared with the two most notorious registers of “ships of shame” – Panama with 5217 ships and the African nation of Liberia with 1672.

Tonga’s shipping register operates out of the Athens port of Piraeus. The deputy registrar of ships is Pelopidas Papadopoulos, although the nominal registrar is Tonga’s secretary for marine and ports, Tu’itupou Fotu.

After searches of Tongan-flagged vessels last year, the Tongan Government announced in June it would close the register, citing concerns it was tarnishing Tonga’s reputation. The 185 ships then registered were given 12 months’ notice of termination.

Two months after the incident involving the Sara, the Government said any registered vessel found carrying illicit cargo or involved in illicit activities would be immediately de-registered to reflect its commitment to international efforts against terrorism. It has not spoken publicly about the registry since.

The official spokesman last week declined to respond to questions covering the status of the registry and whether moves to close it remained on track, despite initially pledging replies “within the hour”.

Tonga is not the sort of place that readily answers outsiders. In Pacific terms, the archipelago has a unique history. Called The Friendly Islands by James Cook on his second voyage to the Pacific between 1772 and 1775, the name stuck among the European sailors who followed his wake searching for whales and trade. The islands were united into a Polynesian kingdom in 1845 and became a constitutional monarchy in 1875.

In 1900 Tonga became a British protectorate, and it acquired its independence in 1970 and joined the Commonwealth of Nations. It remains the only monarchy in the Pacific.

Followers of Tongan politics would not have been surprised by the monarchy-dominated country’s latest revenue-raising measure. While commoners are poor, the wealthy royal family owns Tonga’s only private power company, its second phone company and its duty-free concession. And it’s not the first time it has exploited its sovereign status to make money.

In the late 1980s the King embarked on a scheme to sell Tongan passports, which eventually disintegrated after few countries recognised the special Tonga protected persons passport. They sold to mainly Hong Kong and Taiwan Chinese for up to $46,000 each, although the disgraced Philippine president Ferdinand Marcos was reputed to be among those who bought one.

Tonga has sold space above the country for satellite use and an American reinsurance scam involving the King’s official court jester lost more than $US26 million ($44.6 million) of government money.

Despite spending several years on a much-publicised weight-loss program aimed at encouraging other overweight Tongans to shed kilos and give up smoking, King Taufa’ahau Tupou IV recently announced a deal to house an American cigarette company factory. But in a post-September 11 world, Tonga, like several Pacific island states knows lax practices – tax havens, shell banks or shipping registers – are under scrutiny as never before.

Next month the Pacific Island Forum secretariat in Fiji will host an expert working group to draft model legislation combating terrorism, money laundering and other transnational organised crime in the region. Australia has put up $150,000 and the United States and New Zealand will also fund the initiative.

The hope is that forum members will adopt the legislation so they can act collectively and implement internationally agreed anti-terrorism measures.

But the challenges are huge. The secretariat law enforcement officer, Shaun Evans, said the ultimate goals of terrorist groups and organised crime syndicates were different, but they often worked hand in hand.

“Organised crime groups use their resources to make money by dealing with terrorists.

“Since September 11 and moves to try to freeze terrorists’ assets, we need to change the way we look at the avenues for terrorism and transnational crime and look far more seriously at the ways in which these groups can be shut down.

“We need to ensure the ways in which they operate can be combated by robust and consistent legislation around the region – be it their finance activities, funnelling money through ‘charities’, people smuggling, whatever – and shipping registers is one of the areas that will be looked at.”

www.smh.com.au/articles/2003/01/13/1041990234408.html

For more on ships and Homeland Security, GO TO > > > The Torch of Eric Shine

* * *

June 15, 2003

Man indicted on charges
of immigrant smuggling

Associated Press

A 24-count superseding federal indictment has been returned against a man accused of smuggling Tongan nationals into Hawaii and forcing them to work at a pig farm in Nanakuli.

Lueleni Fetongi Maka, 50, faces four counts of human trafficking for allegedly recruiting and transporting four Tongans into the United States in 2001 to obtain their labor and services, U.S. Attorney Edward Kubo said.

Maka was also charged Thursday with four counts each of involuntary servitude and forced labor, as well as multiple counts of alien smuggling, harboring aliens and unlawful conduct by confiscating the Tongans’ passports or other immigration documents, Kubo said.

The 24 counts carry a total maximum penalty of 370 years in prison.

Maka was originally indicted in February on a single count of smuggling for the purpose of commercial advantage or private financial gain, Kubo said.

In the original case, Maka was accused of attempting to smuggle a Tongan into Hawaii by having the person pose as a U.S. citizen, he said.

The investigation is being conducted by the Bureau of Immigration and Customs Enforcement.

* * *

June 10, 2001

King’s court jester
scandalises Tonga

By Barbie Dutter in Sydney

THE court jester to the King of Tonga has emerged as the central player in an extraordinary scandal involving millions of dollars, several prominent Asians including at least one former dictator, and the forced resignation of two cabinet ministers.

King Taufa’ahau Tupou IV was so captivated by Jesse Bogdonoff, a Buddhist businessman from North Carolina, that he issued a royal decree proclaiming him court jester three years ago.

He also entrusted into Mr Bogdonoff’s stewardship a fund set up from the proceeds of a lucrative scheme to sell Tongan citizenships and passports to foreigners.

But inquiries have revealed that £13.8 million has disappeared from the Tonga Trust Fund. Mr Bogdonoff’s whereabouts are unknown. The extent of the losses led the legislative assembly to launch impeachment moves against ministers implicated in the scandal.

The episode began in the Eighties when the king approved a scheme by a Hong Kong businessman, George Chen, to sell Tongan passports. Many were purchased for up to £13,800 apiece by Hong Kong Chinese anxious over the colony’s impending handover to China.

Between 1983 and 1991, more than 5,000 passports were sold by the South Pacific kingdom, raising £21.2 million. Those who took up the offer of citizenship included the disgraced former head of the Hong Kong Stock Exchange, Ronald Li Fook-shiu, the Hong Kong textile millionaire, Chen Din-hwa, and the General Motors Company vice-president, Michael Nyland.

Passports were also bought by the exiled Philipppines president, Ferdinand Marcos, his wife Imelda, and their daughters, Aimee and Irene. The king ordered the money to be placed in an account in the San Francisco branch of the Bank of America.

Mr Bogdonoff was working at the bank branch at the time and, according to his own account in a company newsletter, he simply “stumbled on to . . . millions of dollars inexplicably invested in a checking account”.

He successfully sought royal approval to invest the money and claimed that he made the fund grow by an extra £8.3 million. He then left the bank and persuaded the king to allow him to take £13.8 million with him.

Trinity Investment Trust – From: Honolulu Star-Bulletin, 7/31/97: . . . A Chicago-based partnership is buying the 318-room Keauhou Beach Hotel on the Kona Coast…

Trinity Investment Trust LLC, which is also purchasing the mortgage to the Aloha Tower Marketplace, has signed a letter of agreement to acquire the beachfront hotel from Azabu USA.

The hotel, built in 1970, sits on land leased from the Bishop Estate….

Azabu, headed by maverick deal maker Kitaro Watanabe, acquired the Keauhou Beach Hotel in 1987 for $13 million. During the 1980s, Azabu invested about $600 million in Hawaii, acquiring the Hyatt Regency Waikiki, the Ala Moana Hotel, the Maui Marriott and the Kona Lagoon [also on land leased from Bishop Estate].

Since then, Azabu has run into a string of financial difficulties. In 1993, lender Mitsui Trust & Banking filed a foreclosure suit on the 1,200-room Hyatt Regency.

In 1994, Mitsui wrote off $1 billion in bad debts from loans to Azabu.

Last month, Tokyo officials arrested Watanabe and two other Azabu officials alleging that they illegally concealed company assets from creditors. Azabu’s Hawaii subsidiary said then that the arrests had no effect on the company’s local operations.

Trinity, meanwhile, is part of a new wave of American buyers who are purchasing properties from financially troubled Japanese investors….

The company — whose investors include former VMS Realty executives George Ruff, local attorney Jon Miho [of McCorriston Miho Miller & Mukai, defense attorneys for the Bishop Estate trustees] and hotel developer Charles Sweeney — is trying to acquire the $60 million mortgage to the Aloha Tower Marketplace from Mitsui and take over the waterfront complex.

Last year, Trinity and Apollo Advisors L.P. bought the $130 million mortgage to the nearby Harbor Court luxury office and condominium complex for an undisclosed price from Mitsui.

Trinity has also joined up with Apollo, time-share operator Signature Resorts Inc. and Goldman Sachs’ Whitehall Fund [another Bishop Estate investment] to buy the 413-room Embassy Suites Resort on Maui for $78 million….

* * *

[A Catbird Comment: Note that nowhere in this news article is there a tweet about Azabu’s connection with the Yakuza.]

* * *

For more, GO TO > > > Paradise Paved; Yakuza Doodle Dandies

U.S. Fuel and Security Inc. – A nest that you don’t want to find in your backyard.

From Washington on $10 Million a Day: . . . Lobbyists and Nuclear Visigoths. Big money corporate lobbyists don’t always win their battles, but when they are defeated it’s rarely because Congress or the White House rises to defend the public interest. More likely the scheme being advanced was so loopy that even official Washington was too embarrassed to take up the cause.

That’s the case with a multi-billion dollar plot put together by a cabal of beltway con men who hoped to dump tons of nuclear waste on a Pacific Island….

Money and politics make for strange bedfellows but the nuke deal was put together by what must surely rank as one of the most bizarre beltway coalitions of all time: a volatile Englishman who sometimes poses as a rock star, a retired CIA official, a self-described flower-child-turned investment banker, and a well-known friend of Bill.

The corporate vehicle for the plan is U.S. Fuel and Security Inc (USF&S), a Washington-based firm. The company’s CEO is Daniel Murphy, a lobbyist who formerly served as deputy director of the CIA and chief of staff to George Bush when the latter was vice president. Murphy carried out a variety of murky activities while in government, once accompanying the notorious influence peddler Tongsun Park to meet with then President Manuel Noreiga of Panama…

Murphy’s partners at USF&S include Alex Copson, who has pawned himself off to a variety of reporters and government officials as the former bass guitarist (and sometimes drummer) for the 60s rock group Iron Butterfly…. Then there’s a Wall Street investment banker named Thomas Kirch, an aging hippie who, Copson says, “brings the peace, love and flowers” to the project.

The firm has recruited a number of heavy hitters to its cause. USF&S’s counsel is retired Secretary of State James Baker.

Former FBI Director William Webster sits on the advisory board of International Fuel Containers, a corporate subsidiary that plans to build huge steel containers to store the nuclear waste. Mark Grobmyer, a Little Rock lawyer and golfing partner of President Clinton’s, has vigorously lobbied the White House on the company’s behalf.

USF&S has also lined up international support. MinAtom, the Russian nuclear energy ministry, has indicated that it will sign on as a co-sponsor of the deal. The German firm GNB, Europe’s largest producer of fuel storage casks, has given permission for USF&S to mass-produce its patented waste containers under license.

I met with Copson and Kirch in Georgetown, where USF&S rents a suite of offices. They outlined what everyone agrees to be a real problem: Commercial nuclear reactors produce huge amounts of spent fuel which contains plutonium, the material needed to produce nuclear weapons. An estimated 100,000 tons of spent fuel has piled up around the globe and no one has figured out a way to store it.

The U.S. nuclear industry is looking to a site at the Yucca Mountains in Nevada, but Congress has yet to approve that site. Meanwhile, spent fuel is piling up at nuclear plants around the country. Similar problems exist in Russia— exacerbated by the fact that MinAtom is virtually bankrupt— and in all countries that produce nuclear power….

“Some people have billed us as anti-environmental, pro-nuclear, but it’s really just the reverse,” Copson says….

Others take a less sanguine view of the USF&S scheme. “The motivation for this plan is not world peace but dollars,” said Patrick McGarey, an aide to Sen. Daniel Akaka of Hawaii, a leading opponent of USF&S. “If they are successful many people are going to get rich very fast.” McGarey pointed out that USF&S plans to charge $1 million per ton in storage fees, which could generate billions of dollars for the company annually.

Greenpeace opposes cross-border movement of nuclear waste and believe countries that produce it should take responsibility for storing it. “There is still no proven technology that stores radioactive waste without eventually contaminating the environment,” the group says….

Bullshit in the Pacific— and Washington.

USF&S had an easy time lining up money and influence peddlers to back its plan. Finding a dump site proved more difficult. . . . Copson explained to me that the Pacific was chosen because it lies between Russia and the U.S., and because it is littered with “useless dots of real estate.”

As he sees it, sacrificing a “tiny piece of bullshit in the Pacific” is a small price to pay in order to avoid the doomsday scenario of nuclear annihilation….

USF&S first approached the Marshall Islands, a former U.S. protectorate which entered into a “Compact of Free Association” with the U.S. upon becoming independent in 1986. The Defense Dept used the Marshalls to conduct 23 nuclear tests during the early days of the Cold War. The biggest was in 1954, when the U.S. detonated the 15-megaton “Bravo Shot”– 1,000 times more powerful than the bomb dropped on Hiroshima— on the Bikini atoll, a blast that exposed hundreds of Marshallese to radioactive fallout.

The feasibility study states that the Marshalls would make an “appropriate storage and disposal site” since some of the islands have already been rendered uninhabitable due to “varying levels of residual radioactivity”… Another likely attraction (though one not mentioned in the study) was that Murphy’s son, Tom, is deputy chief of mission at the U.S. embassy in the Marshalls capital of Majuro.

A feudal system prevails in the Marshalls, which is ruled by King Amata Kabua. On 10/14/94, the king received a fax from Murphy that laid out a preliminary proposal for a “global nuclear non-proliferation initiative.” In exchange for “exclusive use of one suitable atoll” for nuclear storage, the plotters pledged to provide the king with $10 million up front and $50 million annually for three years as the project was implemented. After operations began, the Marshalls would receive further millions through a profit sharing arrangement.

Annual revenues for the King Kabua’s government total about $70 million, and the large sums of money offered up by USF&S appear to have whetted the monarch’s interest. However, fierce local resistance arose when word of the plan leaked to the public and the king decided to turn the deal down.

Copson took the rejection badly. “They’re all scam artists, banging the tin cup in front of the white man,” he later said of the Marshallese to a reporter from Outside magazine.

“They’d open a whorehouse and sell their daughters and grandmothers for a dollar. They’ve never lived so good since that bomb, the fat lazy fu*ks.”

Another possibility explored by USF&S was Midway Island, located 1,100 miles from Honolulu and site of a U.S. Navy base that the Pentagon had targeted for closing. Murphy wrote a letter to Navy Secretary John Dalton asking for a long-term lease on the island. He promised that his company’s plans to store vast quantities of nuclear waste there “would not disturb wildlife in the Midway habitat.” To the dismay of USF&S, the Navy selected a competing bid from the U.S. Fish and Wildlife Service, which will run Midway as a nature preserve.

The next port of call was Palmyra, a tiny atoll about 1,000 miles south of Hawaii which is owned by the Fullard-Leo family of Honolulu but administered by the Dept of the Interior. USF&S drew up plans that showed that all the world’s spent fuel could fit in the atoll’s 5,400-acre lagoon which would be filled with cement to prevent leakage….

Once again, strong opposition to the plan arose when word leaked out about Murphy & Co’s true intentions. The South Pacific Forum, an association of Pacific island governments that includes Australia and New Zealand, issued a statement that condemned the planned use of Palmyra as a “dumping ground for nuclear waste.”

Hawaii’s congressional delegation soon entered the fray, with all six members signing a letter to President Clinton in June of 1996 urging him to oppose the project. “We question the wisdom of sitting such a facility on an isolated atoll that is prone to erosion and extreme weather conditions,” reads the letter. “Shipments of spent fuel and reprocessed nuclear materials by sea require extraordinary security measures. Even if careful precautions were observed, the safety of such cargo could not be guaranteed.”

The death knell for the Palmyra plan came in August, when the White House sent Senator Akaka a letter promising that the Administration would “strongly oppose” the USF&S proposal….

Copson was as bitter about this setback as he was about the unraveling of the Marshalls plan.

During our conversation he called Senator Akaka an “ignorant lightweight.” McGarey, the senator’s aide, would “realize the error of his ways when terrorists set off a bomb in Tel Aviv.”

Undeterred by this latest setback, USF&S is focusing its efforts on obtaining the use of Wake Island, site of a bloody World War II battle and now largely uninhabited. Wake is a major stopover for migratory birds and, like Midway, a wildlife refuge….

For more, GO TO > > > The Nuclear Nests

Yakuza – From tripod.com: Yakuza Stretch Tentacles Overseas . . . Like most growth-oriented enterprises, the yakuza have not confined their illegal — and legal — business activities to Japan. In the late 1960’s the Japanese mob took advantage of the sharp rise in Japanese tourism and began organizing “sex tours” to various countries in Southeast Asia.

The yakuza also began to recruit — or, more probably, to coerce — women from the Philippines, Taiwan, South Korea and other Southeast Asia countries to work as “hostesses” in mob-controlled brothels in Japan. The overseas push proved similarly lucrative for drug trading — primarily of Korean, Taiwanese and other sources of methamphetamine (known as “speed” on U.S. streets).

Gunrunning also evolved into a profitable activity since the sale of guns is controlled so strictly in Japan that the black market price for handguns can be as much as $5,000 to $7,000.

Gangsters typically have bought the guns abroad, mostly from criminal elements in China, Taiwan, Hong Kong, the Philippines and the United States, and sold for exorbitant prices on the black market back home….

American law enforcement officials maintain that until 1974 yakuza activities in the U.S. were relatively limited, both in nature and scope. Not surprisingly, given its geographic proximity and brisk tourist trade, Hawaii initially attracted Japanese gangsters. Their focus there was on fleecing their own countrymen on yakuza-organized tours that included patronizing yakuza-run bars, restaurants, brothels and other entertainment.

As the yakuza’s economic power has grown, however, they have focused greater attention on picking other fruits from the U.S. market. In this regard, mobsters found that, partly due to its heavy tourist traffic, the fiftieth state was a prime market for selling Asian-made methamphetamine (usually at a cut-rate price compared to U.S.-made speed) and/or trading these drugs for handguns….

From its Hawaiian beachhead the Japanese mob has moved on to the mainland, stopping first in southern California but continuing its reach up the coast to such cities as San Francisco, Portland, and Seattle. As the yakuza have cultivated ties with other organized crime groups operating in the United States, American law enforcement officials have observed the Japanese mob in gambling centers, such as Las Vegas and Atlantic City, as well as in Newark, New Jersey, New York City and Boston….

While the primary focus of the yakuza’s dealings with other organized crime groups still appears to be the trafficking in drugs and handguns, U.S. officials, aware of the Japanese mob’s expanded activity in the “above-ground” business world in Japan, have become increasingly worried about the extent to which the yakuza have been able to commingle their illicit profits with legitimate Japanese investment in the United States….

For much more, GO TO > > > The Puna Connection; Yakuza Doodle Dandies

# # #

For more Broken Trusts
GO TO

A Connecticut Yankee in King Kamehameha’s Court

Aloha, Harken Energy!

American Savings Bank: Behind the Blinds

Apollo Advisors

Buzzards in the Bank of Hawaii

Buzzards of Paradise

Dirty Money, Dirty Politics & Bishop Estate

Flying High in Hawaii

Gensiro Kawamoto: How to Pluck a Billionaire