The FBI is investigating claims that American Savings Bank officials tried to
cover up theft, including one case in which a bank employee allegedly took several
hundred thousand dollars from a 91-year-old customer.
FBI agents interviewed the bank’s former security director Bert Cornielyesterday after he charged in a lawsuit that the bank asked him to stop
reporting fraud cases to federal and state officials, said John Perkin, Corniel’s
Assistant U.S. Attorney Ron Johnson, who prosecutes federal crimes in Hawai’i,
said yesterday he could not confirm or deny that an investigation is under way. A
person at the Honolulu FBI office said late yesterday the bureau had no immediate
The bank said the charges are false and it is cooperating with the FBI
“Although we cannot comment on the investigation, we can say that we have and will
continue to cooperate and provide investigators with all the relevant information as
it is requested,” said American Savings Bank in a written statement. “Mr. Corniel’s
concerns … were thoroughly investigated and found to be without merit.”
Corniel and bank customer Ada Lim, 91, alleged in separate lawsuits filed on Aug. 2
that a manager at a bank branch took hundreds of thousands of dollars from Lim.
Lim deposited more than $600,000 into her American Savings account in 2004,
only to have most of the money siphoned out of her account by the bank employee,
who was helping to manage Lim’s finances, the lawsuits allege. The bank employee
opened an account with Bank of Hawaii and deposited various sums from Lim
totalling $304,000, according to Lim’s lawsuit. The bank employee bought a
condominium using $110,000 of Lim’s money, the suit claims.
Corniel said in January 2005, when he was investigating the Lim case, the bank
employee confessed to him that she took the money. American Savings officials
said the transfer was a loan from Lim to the employee, Corniel said.
Corniel said American Savings officials told him not to report the fraud as
required by law to federal regulators and law enforcement agencies such as the
FBI, Office of Thrift Supervisionand theFederal Deposit Insurance Corp.
Several American Savings employees went to Lim’s house in February 2005 with
gifts and to get her to sign a document exonerating the bank, according to the
Lyle Hosoda, Lim’s attorney, said the bank returned most of Lim’s money but still
owes her about $200,000. No criminal charges have been filed against the bank
employee, but Hosoda said an Internal Revenue Service investigation of the
employee is under way.
Craig Togami, American Savings marketing and communications director, said
yesterday the bank would not respond to specific allegations in the two lawsuits.
Togami said he could not comment beyond what it said in the written statement.
“American Savings Bank believes that this entire lawsuit is without merit,” the
statement said. “There are many factual errors in the complaint. … We look
forward to telling our side of the story more fully at the appropriate time.”
The bank’s statement also cast doubt on the motivation of Corniel. In June, Corniel
resigned from the bank, saying he was pushed out.
“To understand what truly happened, there are some facts to keep in mind:
Security today goes well beyond physical security, and so the bank decided to
emphasize protection of security of information systems and computers; Mr.
Corniel, whose background is in physical security, was not selected for the newly
created position of VP Security; Mr. Corniel voluntarily resigned after repeated
efforts by the Bank to have him stay,” the statement said.
Corniel’s lawsuit also charges that Constance Lau, the president of the bank, asked
him to “recharacterize” the bank’s fraud losses as “potential losses” in his reports
to federal regulators.
Lau became chief executive of American Savings’ parent company, Hawaiian
Electric Industries Inc., in May. Togami said Lau was traveling and could not be
reached for comment….
FBI agents seized Corniel’s computer at American Savings’ downtown
headquarters on Friday in search of e-mails and other electronic records, which
could demonstrate Corniel’s allegations, according to Perkin, Corniel’s attorney.
Corniel is a retired Honolulu police officer and a former investigator with the city
prosecutor’s office who was hired as American Savings’ security director in 2000.
In his lawsuit, Corniel mentions a second incident, involving two bank tellers and a
customer who allegedly defrauded the bank of $256,000 in April and May 2005.
Corniel said he filed reports with federal regulators and law enforcement officials,
including the FBI, the Office of Thrift Supervision and the Federal Deposit
But bank officials recharacterized the losses as expenses or charge-offs and his
immediate supervisor told Corniel that his filings with federal authorities could
cost him his job, the lawsuit claimed.
Commentary by Cynthia Thielen, The Honolulu Advertiser
Hawaiian Electric Co. is asking the Public Utilities Commission for authority to
build another fossil fuel-fired plant (Honolulu Advertiser, June 19). And a June 21
editorial says this should be the last one.
Hawai’i’s consumers lose if HECO is allowed to build this oil-driven power station.
Because HECO has dragged its heels on moving to renewable sources of energy, it
now cries “wolf” and claims it needs this new fossil fuel plant to provide power to
O’ahu residents and businesses.
Wait a minute! What about the vast amount of renewable energy we have in
Hawai’i? Wave, wind, solar, and the list goes on.
Do we “reward” HECO for not aggressively pursuing those non-polluting energy
technologies by allowing it to stay mired in fossil fuel? Or do we say it is past time
for it to stop its oil addiction?
We know the stakes are high. Time magazine’s April 3 cover on global warming
headlined to readers: “Be Worried. Be Very Worried.” Fossil fuel power stations
burning oil emit large quantities of greenhouse gases that contribute greatly to
global warming. It is irresponsible and, yes, even criminal to let HECO continue to
add to this world crisis.
Let’s talk about renewable options: The most powerful and commercially available
systems use the movements of the ocean to generate power. Called wave energy,
this technology is vastly more powerful than wind and solar (but both of the
latter still must belong in HECO’s renewable portfolio).
Companies from all over the world are looking into this technology and have found
that wave energy is the future.
A Portuguese consortium (including a utility company), led by the renewable-energy
company Enersis, has contracted with the Scotland-based Ocean Power Delivery
for its “Pelamis” wave-energy converters to build the initial phase of the world’s
first commercial wave farm to generate renewable electricity from ocean forces.
Once completed, these wave-energy converters are expected to meet the demands
of more than 15,000 Portuguese households, which will lead to the displacing of
more than 60,000 tons per year of global warming-producing carbon dioxide
emissions from conventional generating plants.
In Denmark, they are working on the Wave Dragon, a slack-moored wave-energy
converter that can be deployed in 25-yard water depth. With 15,600 hours of
experience, it soon will provide electricity for 40,000 to 60,000 homes, using only
HECO should now partner with these companies to bring this technology to
Hawaiian waters. The economics could work for the companies, as state tax credits
exist for investment in non-fossil fuel energy, which is a qualified high-tech
The potential for this technology in Hawai’i is enormous. The Electric Power
Research Institutein Palo Alto, Calif., has identified Hawai’i as a leading site for
wave-energy development and says that coastal wave energy has nine to 10 times
the energy provided by U.S. hydroelectric dams. Furthermore, studies have
found that wave energy could provide 80 percent of the power on O’ahu and all
the needed power on the Neighbor Islands at a cheaper price.
Wave energy can help solve the problem of high energy costs. Once a wave project
is developed and in place, it can provide power at under 10 cents per kw hour.
HECO’s cost to consumers on O’ahu is 20.5 cents per kw hour, and on Moloka’i, the
cost is 28.8 cents. The low costs associated with the price of wave energy would
be a welcome relief to consumers struggling to pay their bills.
Unfortunately, HECO refuses to move forward in developing wave technology
because using oil is easier.
We have already seen some success in developing this technology in Hawai’i. A
power-generating buoy anchored near Kane’ohe was able to produce electricity
despite relatively calm waters during testing in September 2005 before it was
brought ashore for upgrades.
Now is not the time to invest in another costly oil-driven power plant that will only
make us even more dependent on fossil fuels. As each day goes by, our further
dependence on fossil fuels places our livelihood, our economy and our environment
in further danger.
The PUC should say “no” to HECO’s request to build yet another fossil fuel-fired
plant. There are better ways to solve this problem. The seas that surround us can
provide a clean, plentiful, reliable and cheap source of energythat can serve as a
solution to our energy problem without adding to the global warming crisis.
Let’s ride the tide of ocean energy.
Rep. Cynthia Thielen, R-50th, represents Kailua and Mokapu in the state
Legislature. She wrote this commentary for The Advertiser.
February 10, 2006
Clarke stepping down at HEI;
Constance Lau gets 2 top jobs
David Segal, Honolulu Star-Bulletin
Hawaiian Electric Industries Inc. announced today that Robert Clarke, its longtime
chairman, president and chief executive, will retire at the company’s annual
shareholders meeting on May 2.
He will be replaced as president and CEO by Constance Lau, 53, who will retain her
position as president and CEO of HEI subsidiary American Savings Bank. Lau also
will become chairman of subsidiary Hawaiian Electric Co. and will add the title of
chairman of the bank’s board. She also will be nominated to be elected a director
Jeffrey Watanabe, 63, a senior partner of his law firm, Watanabe Ing & Komeiji,
was named nonexecutive chairman of HEI. Watanabe has been a director with the
holding company since 1987. Watanabe also is a director of Oahu Publications Inc.,
publisher of the Honolulu Star-Bulletin and MidWeek.
Clarke, 63, joined HEI in 1987 as vice president-strategic planning and was
promoted to group vice president-diversified companies in 1988. He was elevated
to president and CEO in 1991, and became chairman in 1998.
Residents voiced their concerns to state officials last night about Hawaiian
Electric Co.’s proposed 7.3 percent rate increase, bringing up issues ranging from
its effect on the elderly and the poor to better scrutiny of how the utility would
spend the money.
“Where will the elderly and the poor be able to get the extra 7.3 percent?” said
Caron Wilberts of Kaimuki. “It really would hurt the people of Hawai’i — 7.3
percent out of the elderly’s Social Security is a great increase.”
About 65 people attended the public hearing before the state Public Utilities
Commission at the auditorium of Kaimuki High School. The commission is
considering HECO’s proposal to increase rates and will render a final decision
within 10 months….
Honolulu users already pay one of the highest electric rates in the country, about
14.4 cents per kilowatt hour. The average rate nationwide is about 8 cents per
kilowatt hour, according to the U.S. Department of Energy.
HECO filed for a rate increase in November, the first such request by the
company since 1995. The utility said the higher rate, which is expected to bring in
$74.2 million in additional revenue, is necessary to meet growing electricity
demands across O’ahu as the economy improves….
HECO would formally request a 9.9 percent base rate increase, but that amount
includes the transfer of an existing surcharge for conservation programs to the
base rate. So the net increase on electric bills would be 7.3 percent.
Kenwynn Goo, a Kailua resident, bristled at the request for the rate increase.
“Why should HECO actually implement a rate increase?” he said at the hearing.
“HECO had revenues of $410 million in the third quarter of 2004 and net income
was also up by 28 percent to $26.2 million.”
To support his assertion that HECO doesn’t need to raise rates, Goo cited public
comments made by Robert Clarke, chief executive of HECO parent Hawaiian
Electric Industries, that a robust economy in Hawai’i should increase the utility’s
“If Hawaiian Electric’s own chief executive is making a statement that he foresees
increased revenues collected due to a robust economy … then HECO doesn’t need a
rate increase,” Goo said.
“HECO’s absolute power is corrupting absolutely.”…
The utility leases the downtown
space from Kamehameha Schools
By Rick Daysog, Honolulu Star-Bulletin
Kamehameha Schools plans to spend $9 million to renovate Hawaiian Electric
Co.’s downtown headquarters.
Under the terms of a proposed 20-year lease, Kamehameha Schools will spend $5
million over the next year to upgrade the historic Richards Street building, people
familiar with the negotiations said.
The $6 billion charitable trust – which owns the 40,000-square-foot structure and
the land beneath it – will add $2 million in tenant improvements in the next several
years and another $2 million in the 11th year of the lease.
The deal underscores the interlocking relationships between the two organizations,
but Kamehameha Schools officials said that trustees who also hold positions at
HECO and its affiliated companies are playing no role in the lease negotiations.
Kamehameha Schools trustee Constance Lau heads HECO’s sister company
American Savings Bank, and trustee Diane Plotts is a director of HECO’s parent
Hawaiian Electric Industries Inc.
A third Kamehameha Schools trustee, attorney Douglas Ing, is a partner in the
Watanabe Ing Kawashima & Komeiji law firm, which represents HECO on
Kamehameha Schools’ internal policies require board approval on all construction
projects valued at $1 million or more. But people familiar with the deal said the
HECO lease has not yet gone to Kamehameha Schools’ board for review.
Under the Probate Court-mandated conflict-of-interest policy for the estate,
trustees Ing, Lau and Plotts may have to recluse themselves if the lease goes to
the board, leaving the five-member board without a quorum, people familiar with
the trust said.
The estate’s board will then have to petition the Probate Court for instructions on
handling the matter.
HECO, which has occupied the Richards Street offices since 1927, said its current
lease will expire in November.
Lynne Unemori, HECO’s director of corporate communications, said HEI’s board
played no role in the negotiations. One person familiar with the talks said Lau, Ing
and Plotts were not involved in any of HEI’s discussions on the matter….
People familiar with the negotiations said HECO’s rent payments, currently set at
$650,000 a year, will increase to $775,000 a year during the first five years of
the lease. That annual rent will increase every five years to about $1.3 million
during the final five-year period covered by the lease.
During the next 20 years, Kamehameha Schools stands to receive about $18 million
in rent payments, or double the amount in planned tenant improvements.
HECO said its building requires significant repairs to its ventilation system and
elevators. The building also requires major construction to comply with federal
guidelines of the Americans with Disabilities Act, according to one person familiar
with the discussions…
Kamehameha Schools’ links to HEI are not limited to the boardroom.
HEI Chief Executive Robert Clarke’s wife, Edwina, is Kamehameha Schools’
treasurer, and HEI Chief Financial Officer Eric Yeaman previously served as
Kamehameha Schools’ chief financial officer.
Watanabe also is a board member of Oahu Publications Inc., the parent company of
the Honolulu Star-Bulletin.
February 25, 2000 < < < (Note the Date!)
HEI Power makes Philippine deal
By Frank Cho, Honolulu Advertiser
HEI Power Group, a subsidiary of Hawaiian Electric Industries Inc., yesterday
agreed to pay $87 million for a 46 percent stake in a Philippine power company,
significantly expanding its international holdings.
East Asia Power Resources Corp., a publicly traded company with five power-generating facilities in Manila and Cebu, produces about 390 megawatts of
electricity for the national power company of the Philippines.
The deal was part of a joint venture between HEI and El Paso Energy
Internationalto acquire a controlling interest in the Philippine power company.
Our partnership with El Paso Energy International strengthens our position to
participate in the anticipated privatization of the National Power Corp.,” said
Robert Clarke, Hawaiian Electric Industries chairman, president and chief
The deal is expected to provide HEI Power Group, which already owns minority
stakes in Philippine-based Cagayan Electric Power & Light Co. Inc., immediate
revenues as the plants are already operating. It also calls for up to $6 million in
This is a significant investment for us,” said Edwina Kawamoto, Hawaiian Electric
HEI Power Group has made investments in China and Guam. The company has a 75
percent interest in a joint venture to construct and operate a 200-megawatt coal-fired power plant in Mongolia for $110 million. In Guam, the company is operating a
50-megawatt plant for the Guam Power Authority.
HEI Power Group has invested $49 million and committed another $179 million to
power projects in Asia, the company said. None of the funds will come from
Hawaiian Electric Industries’ other utilities or its American Savings Banksubsidiary.
Kawamoto said the company will finance the investment with short-term debt. Last
year, HEI Power Group reported a loss from continuing operations of $5.1 million.
“We have been focusing on Asia, particularly China and the Philippines for a long
time. This will position us for the anticipated privatization of the National Power
Corp. in the Philippines,” Kawamoto said.
Gov. Ben Cayetano led a delegation of Hawaii business leaders, including HEI Power
Group, to the Philippines several years ago to explore business opportunities.
“I believe there are many opportunities for Hawaii firms to export their services
and expertise to Asia and Pacific Rim countries,” Cayetano said.
EX-NEA CHIEF SAYS GMA ORDERED P470M BRIBES TO CONGRESSMEN
Manila – The former chief of the National Electrification Administration on
Thursday alleged that President Macapagal-Arroyo telephoned him twice two
years ago, to order him to personally distribute 470 million pesos to at least a
Former NEA Administrator Manuel Luis Sanchez said the money, which came from
the National Power Corp., constituted a payola to ensure passage of the
controversial Electric Power Industry Reform Bill.
Sanchez told the Inquirer Thursday that the first call came at around 11 a.m.
during the opening of the special congressional session called inMay 2001.
“She asked me if I already (had) the check from Napocor,” he recalled. “I said,
‘Ma’am, I don’t have it yet but I’m checking it now.'”
He said many members of the House were to receive 2.5 million pesos each.
The following day, Sanchez said he received another call from the President. He
informed her that the checks were ready. “Her specific instruction was for me to
deliver them to Congress.”
He said he subsequently received a list of congressmen who stood to receive the
money. The list included check numbers and the officials’ respective districts, he
Among those who personally received their share, Sanchez alleged, was former
Baguio Rep. Bernardo Vergara, now the city’s mayor.
Sanchez said he would reveal the alleged payola list in a Senate or congressional
Asked whether he was ready to tell everything, Sanchez said: “I am prepared for
that. I have all the names in a list, everything is documented.”…
November 22, 1999
Suit Filed Over HEI China Plant
By Jacob Kamhis, Pacific Business News
Hawaiian Electric Industries Inc. is mired in a lawsuit over a $100 million power
plant in Inner Mongolia, China.
United Power Pacific Co. Ltc., Finrich Ltd. andBrightwise Ltd. have sued HEI
and its subsidiary, HEI Power Corp., according to a 1st Circuit Court complaint.
Allegations include HEI’s unauthorized change in contractor and its breaches of a
shareholders’ agreement that render plaintiffs’ investments worthless.
Hong Kong-based United Power Pacific and Virgin Islands-based affiliates Finrich
and Brightwise seek general, special and punitive damages.
HEI is a Hawaii-based publicly held company in energy and banking. In the last few
years, it has seen little growth in Hawaii’s sluggish business climate and has
invested in the Philippines, Guam and China.
The gas-and-coal-fired electrical power plant in China was to be completed in 2000.
But now it’s less clear when the lights will be switched on.
Prior to 1994, United Power Pacific and state-owned Baotou Iron and Steel Co. Ltd
formed the Baotou Tianjiao Power Co. Ltd, a joint venture 75 percent owned by
United Power Pacific and 25 percent by the steel company.
The venture obtained government permits and negotiated contracts for design,
construction and sale of electrical output.
In April 1998, United Power Pacific contacted HEI about participating. The
condition, however, was for United Power Pacific to manage and control “the
delicate, and at times political, relationships” with contractors, the steel company
and the Chinese government.
A shareholders’ agreement was signed with HEI China a “special purpose” company
HEI set up. The partners formed a venture and based it in Mauritius, an Indian
Ocean island nation east of Madagascar.
By July 1998, Brightwise became construction manager. It was to appoint
contractors, advisers and expedite development. But delays in the project
required an extension of development and HEI and HEI Power began violating the
shareholders’ agreement, according to the suit.
Around late March, HEI China and United Power Pacific began negotiating a
buyout of United Power Pacific’s interest in the venture. But HEI Power and HEI
China eventually informed United Power Pacific it could not close the deal due to
Brightwise alleges it is owed $490,438. The construction management contract
was suspended in June and plaintiffs have received nothing in return, according to
Meanwhile, HEI China has hired another contractor to furnish certain services and
labor for the venture.
Richard McQuain, president and chief executive officer of HEI Power, says the
company does not believe the suit has any merit and it will vigorously counter the
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