Sightings from The Catbird Seat

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August 16, 2006

FBI probes bank over
alleged fraud cover-up

By Rick Daysog, Honolulu Advertiser

The FBI is investigating claims that American Savings Bank officials tried to cover up theft, including one case in which a bank employee allegedly took several hundred thousand dollars from a 91-year-old customer.

FBI agents interviewed the bank’s former security director Bert Corniel yesterday after he charged in a lawsuit that the bank asked him to stop reporting fraud cases to federal and state officials, said John Perkin, Corniel’s attorney.

Assistant U.S. Attorney Ron Johnson, who prosecutes federal crimes in Hawai’i, said yesterday he could not confirm or deny that an investigation is under way. A person at the Honolulu FBI office said late yesterday the bureau had no immediate comment.

The bank said the charges are false and it is cooperating with the FBI investigation.

“Although we cannot comment on the investigation, we can say that we have and will continue to cooperate and provide investigators with all the relevant information as it is requested,” said American Savings Bank in a written statement. “Mr. Corniel’s concerns … were thoroughly investigated and found to be without merit.”

Corniel and bank customer Ada Lim, 91, alleged in separate lawsuits filed on Aug. 2 that a manager at a bank branch took hundreds of thousands of dollars from Lim.

Lim deposited more than $600,000 into her American Savings account in 2004, only to have most of the money siphoned out of her account by the bank employee, who was helping to manage Lim’s finances, the lawsuits allege. The bank employee opened an account with Bank of Hawaii and deposited various sums from Lim totalling $304,000, according to Lim’s lawsuit. The bank employee bought a condominium using $110,000 of Lim’s money, the suit claims.

Corniel said in January 2005, when he was investigating the Lim case, the bank employee confessed to him that she took the money. American Savings officials said the transfer was a loan from Lim to the employee, Corniel said.

Corniel said American Savings officials told him not to report the fraud as required by law to federal regulators and law enforcement agencies such as the FBI, Office of Thrift Supervision and the Federal Deposit Insurance Corp.

Several American Savings employees went to Lim’s house in February 2005 with gifts and to get her to sign a document exonerating the bank, according to the lawsuits.

$200,000 SHORT

Lyle Hosoda, Lim’s attorney, said the bank returned most of Lim’s money but still owes her about $200,000. No criminal charges have been filed against the bank employee, but Hosoda said an Internal Revenue Service investigation of the employee is under way.

Craig Togami, American Savings marketing and communications director, said yesterday the bank would not respond to specific allegations in the two lawsuits. Togami said he could not comment beyond what it said in the written statement.

“American Savings Bank believes that this entire lawsuit is without merit,” the statement said. “There are many factual errors in the complaint. … We look forward to telling our side of the story more fully at the appropriate time.”

The bank’s statement also cast doubt on the motivation of Corniel. In June, Corniel resigned from the bank, saying he was pushed out.

“To understand what truly happened, there are some facts to keep in mind: Security today goes well beyond physical security, and so the bank decided to emphasize protection of security of information systems and computers; Mr. Corniel, whose background is in physical security, was not selected for the newly created position of VP Security; Mr. Corniel voluntarily resigned after repeated efforts by the Bank to have him stay,” the statement said.


Corniel’s lawsuit also charges that Constance Lau, the president of the bank, asked him to “recharacterize” the bank’s fraud losses as “potential losses” in his reports to federal regulators.

Lau became chief executive of American Savings’ parent company, Hawaiian Electric Industries Inc., in May. Togami said Lau was traveling and could not be reached for comment….

FBI agents seized Corniel’s computer at American Savings’ downtown headquarters on Friday in search of e-mails and other electronic records, which could demonstrate Corniel’s allegations, according to Perkin, Corniel’s attorney.

Corniel is a retired Honolulu police officer and a former investigator with the city prosecutor’s office who was hired as American Savings’ security director in 2000.

In his lawsuit, Corniel mentions a second incident, involving two bank tellers and a customer who allegedly defrauded the bank of $256,000 in April and May 2005. Corniel said he filed reports with federal regulators and law enforcement officials, including the FBI, the Office of Thrift Supervision and the Federal Deposit Insurance Corp.

But bank officials recharacterized the losses as expenses or charge-offs and his immediate supervisor told Corniel that his filings with federal authorities could cost him his job, the lawsuit claimed.

For more, GO TO > > > Behind the Blinds at American Savings


June 26, 2006

Just say ‘no’ to HECO’s addiction to oil

Commentary by Cynthia Thielen, The Honolulu Advertiser

Hawaiian Electric Co. is asking the Public Utilities Commission for authority to build another fossil fuel-fired plant (Honolulu Advertiser, June 19). And a June 21 editorial says this should be the last one.

Hawai’i’s consumers lose if HECO is allowed to build this oil-driven power station. Because HECO has dragged its heels on moving to renewable sources of energy, it now cries “wolf” and claims it needs this new fossil fuel plant to provide power to O’ahu residents and businesses.

Wait a minute! What about the vast amount of renewable energy we have in Hawai’i? Wave, wind, solar, and the list goes on.

Do we “reward” HECO for not aggressively pursuing those non-polluting energy technologies by allowing it to stay mired in fossil fuel? Or do we say it is past time for it to stop its oil addiction?

We know the stakes are high. Time magazine’s April 3 cover on global warming headlined to readers: “Be Worried. Be Very Worried.” Fossil fuel power stations burning oil emit large quantities of greenhouse gases that contribute greatly to global warming. It is irresponsible and, yes, even criminal to let HECO continue to add to this world crisis.

Let’s talk about renewable options: The most powerful and commercially available systems use the movements of the ocean to generate power. Called wave energy, this technology is vastly more powerful than wind and solar (but both of the latter still must belong in HECO’s renewable portfolio).

Companies from all over the world are looking into this technology and have found that wave energy is the future.

A Portuguese consortium (including a utility company), led by the renewable-energy company Enersis, has contracted with the Scotland-based Ocean Power Delivery for its “Pelamis” wave-energy converters to build the initial phase of the world’s first commercial wave farm to generate renewable electricity from ocean forces. Once completed, these wave-energy converters are expected to meet the demands of more than 15,000 Portuguese households, which will lead to the displacing of more than 60,000 tons per year of global warming-producing carbon dioxide emissions from conventional generating plants.

In Denmark, they are working on the Wave Dragon, a slack-moored wave-energy converter that can be deployed in 25-yard water depth. With 15,600 hours of experience, it soon will provide electricity for 40,000 to 60,000 homes, using only seven units.

HECO should now partner with these companies to bring this technology to Hawaiian waters. The economics could work for the companies, as state tax credits exist for investment in non-fossil fuel energy, which is a qualified high-tech business.

The potential for this technology in Hawai’i is enormous. The Electric Power Research Institute in Palo Alto, Calif., has identified Hawai’i as a leading site for wave-energy development and says that coastal wave energy has nine to 10 times the energy provided by U.S. hydroelectric dams. Furthermore, studies have found that wave energy could provide 80 percent of the power on O’ahu and all the needed power on the Neighbor Islands at a cheaper price.

Wave energy can help solve the problem of high energy costs. Once a wave project is developed and in place, it can provide power at under 10 cents per kw hour. HECO’s cost to consumers on O’ahu is 20.5 cents per kw hour, and on Moloka’i, the cost is 28.8 cents. The low costs associated with the price of wave energy would be a welcome relief to consumers struggling to pay their bills.

Unfortunately, HECO refuses to move forward in developing wave technology because using oil is easier.

We have already seen some success in developing this technology in Hawai’i. A power-generating buoy anchored near Kane’ohe was able to produce electricity despite relatively calm waters during testing in September 2005 before it was brought ashore for upgrades.

Now is not the time to invest in another costly oil-driven power plant that will only make us even more dependent on fossil fuels. As each day goes by, our further dependence on fossil fuels places our livelihood, our economy and our environment in further danger.

The PUC should say “no” to HECO’s request to build yet another fossil fuel-fired plant. There are better ways to solve this problem. The seas that surround us can provide a clean, plentiful, reliable and cheap source of energy that can serve as a solution to our energy problem without adding to the global warming crisis.

Let’s ride the tide of ocean energy.

Rep. Cynthia Thielen, R-50th, represents Kailua and Mokapu in the state Legislature. She wrote this commentary for The Advertiser.


February 10, 2006

Clarke stepping down at HEI;
Constance Lau gets 2 top jobs

David Segal, Honolulu Star-Bulletin

Hawaiian Electric Industries Inc. announced today that Robert Clarke, its longtime chairman, president and chief executive, will retire at the companys annual shareholders meeting on May 2.

He will be replaced as president and CEO by Constance Lau, 53, who will retain her position as president and CEO of HEI subsidiary American Savings Bank. Lau also will become chairman of subsidiary Hawaiian Electric Co. and will add the title of chairman of the bank’s board. She also will be nominated to be elected a director of HEI.

Jeffrey Watanabe, 63, a senior partner of his law firm, Watanabe Ing & Komeiji, was named nonexecutive chairman of HEI. Watanabe has been a director with the holding company since 1987. Watanabe also is a director of Oahu Publications Inc., publisher of the Honolulu Star-Bulletin and MidWeek.

Clarke, 63, joined HEI in 1987 as vice president-strategic planning and was promoted to group vice president-diversified companies in 1988. He was elevated to president and CEO in 1991, and became chairman in 1998.

For more, GO TO > > > Office of the United States Trustee vs. Harmon: Witness Edwina Clarke


January 13, 2005

HECO under fire at hearing

By Deborah Adamson, Honolulu Advertiser

Residents voiced their concerns to state officials last night about Hawaiian Electric Co.’s proposed 7.3 percent rate increase, bringing up issues ranging from its effect on the elderly and the poor to better scrutiny of how the utility would spend the money.

“Where will the elderly and the poor be able to get the extra 7.3 percent?” said Caron Wilberts of Kaimuki. “It really would hurt the people of Hawai’i 7.3 percent out of the elderly’s Social Security is a great increase.”

About 65 people attended the public hearing before the state Public Utilities Commission at the auditorium of Kaimuki High School. The commission is considering HECO’s proposal to increase rates and will render a final decision within 10 months….

Honolulu users already pay one of the highest electric rates in the country, about 14.4 cents per kilowatt hour. The average rate nationwide is about 8 cents per kilowatt hour, according to the U.S. Department of Energy.

HECO filed for a rate increase in November, the first such request by the company since 1995. The utility said the higher rate, which is expected to bring in $74.2 million in additional revenue, is necessary to meet growing electricity demands across O’ahu as the economy improves….

HECO would formally request a 9.9 percent base rate increase, but that amount includes the transfer of an existing surcharge for conservation programs to the base rate. So the net increase on electric bills would be 7.3 percent.

Kenwynn Goo, a Kailua resident, bristled at the request for the rate increase.

“Why should HECO actually implement a rate increase?” he said at the hearing. “HECO had revenues of $410 million in the third quarter of 2004 and net income was also up by 28 percent to $26.2 million.”

To support his assertion that HECO doesn’t need to raise rates, Goo cited public comments made by Robert Clarke, chief executive of HECO parent Hawaiian Electric Industries, that a robust economy in Hawai’i should increase the utility’s revenues.

“If Hawaiian Electric’s own chief executive is making a statement that he foresees increased revenues collected due to a robust economy … then HECO doesn’t need a rate increase,” Goo said.

“HECO’s absolute power is corrupting absolutely.”…

For more, GO TO > > > The Power Vampires & The Ghost of Ken Lay


March 11, 2004

Trust Plans $9M in HECO Office Repairs

The utility leases the downtown
space from Kamehameha Schools

By Rick Daysog, Honolulu Star-Bulletin

Kamehameha Schools plans to spend $9 million to renovate Hawaiian Electric Co.’s downtown headquarters.

Under the terms of a proposed 20-year lease, Kamehameha Schools will spend $5 million over the next year to upgrade the historic Richards Street building, people familiar with the negotiations said.

The $6 billion charitable trust – which owns the 40,000-square-foot structure and the land beneath it – will add $2 million in tenant improvements in the next several years and another $2 million in the 11th year of the lease.

The deal underscores the interlocking relationships between the two organizations, but Kamehameha Schools officials said that trustees who also hold positions at HECO and its affiliated companies are playing no role in the lease negotiations.

Kamehameha Schools trustee Constance Lau heads HECO’s sister company American Savings Bank, and trustee Diane Plotts is a director of HECO’s parent Hawaiian Electric Industries Inc.

A third Kamehameha Schools trustee, attorney Douglas Ing, is a partner in the Watanabe Ing Kawashima & Komeiji law firm, which represents HECO on regulatory matters.

Kamehameha Schools’ internal policies require board approval on all construction projects valued at $1 million or more. But people familiar with the deal said the HECO lease has not yet gone to Kamehameha Schools’ board for review.

Under the Probate Court-mandated conflict-of-interest policy for the estate, trustees Ing, Lau and Plotts may have to recluse themselves if the lease goes to the board, leaving the five-member board without a quorum, people familiar with the trust said.

The estate’s board will then have to petition the Probate Court for instructions on handling the matter.

HECO, which has occupied the Richards Street offices since 1927, said its current lease will expire in November.

Lynne Unemori, HECO’s director of corporate communications, said HEI’s board played no role in the negotiations. One person familiar with the talks said Lau, Ing and Plotts were not involved in any of HEI’s discussions on the matter….

People familiar with the negotiations said HECO’s rent payments, currently set at $650,000 a year, will increase to $775,000 a year during the first five years of the lease. That annual rent will increase every five years to about $1.3 million during the final five-year period covered by the lease.

During the next 20 years, Kamehameha Schools stands to receive about $18 million in rent payments, or double the amount in planned tenant improvements.

HECO said its building requires significant repairs to its ventilation system and elevators. The building also requires major construction to comply with federal guidelines of the Americans with Disabilities Act, according to one person familiar with the discussions…

Kamehameha Schools’ links to HEI are not limited to the boardroom.

HEI Chief Executive Robert Clarke’s wife, Edwina, is Kamehameha Schools’ treasurer, and HEI Chief Financial Officer Eric Yeaman previously served as Kamehameha Schools’ chief financial officer.

HEI board member Oswald Stender is a former Kamehameha Schools trustee, while Ing’s law partner Jeffrey Watanabe is an HEI director.

Watanabe also is a board member of Oahu Publications Inc., the parent company of the Honolulu Star-Bulletin.



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 International to 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 executive officer.

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 contingent payments.

This is a significant investment for us,” said Edwina Kawamoto, Hawaiian Electric Industries treasurer.

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 Bank subsidiary.

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.


$ $ $

March 14, 2003 < < < (Note the Date!)


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 hundred congressmen.

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 in May 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 claimed.

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 inquiry.

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. and Brightwise 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 “legal problems.”

Brightwise alleges it is owed $490,438. The construction management contract was suspended in June and plaintiffs have received nothing in return, according to the suit.

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 complaint.

John Y. Yamano, plaintiff’s attorney with McCorriston Miho Miller Mukai, declined comment.

For more, GO TO > > > Predators in Paradise






This is only a small branch from…

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Aloha, Harken Energy!

American Savings: Behind the Blinds

Apollo Advisors

The Blackstone Group

Broken Trusts

British Petroleum: Buzzards in the Pipelines

Buzzards in the Bank of Hawaii

The Carlyle Group: Birds that Drink from Cesspools

Claims By Harmon


Part IPart IIPart IIIPart IVPart VPart VI The Hawaiian Insurance Companies

Investigating Investcorp

Investors Equity: Vultures in The Meadows

The Kissinger of Death

Marsh & McLennan: The Marsh Birds

The Myth & The Methane

Of Vampires and Daisies

Paradise Paved

The Power Vampires & The Ghost of Ken Lay

The Secret Lives of Duke and Dusty

The Silence of the Whistleblowers

Sukamto Sia: The Indonesian Connection

Tracking Trex

Vultures up to their beaks in Tesoro Petroleum

William Simon Says

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Last Update August 20, 2006, by The Catbird