Blood, Bribes & Brutality
Sightings from The Catbird Seat
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February 12, 1996
Kajima’s Throne of Blood
By Mike Davis, The Nation
Ana Alvarado is a Salvadoran immigrant to Los Angeles. For fifteen years she made beds and scrubbed toilets in Little Tokyo’s swank New Otani Hotel. Last year she was fired for supporting a union organizing drive.
Eighty-year-old Geng Zheng is a survivor of a World War 11 Japanese slave-labor camp in northeast Honshu. After an abortive uprising in 1945, 113 of his Chinese compatriots were tortured to death. Now living in China, he has spent a half-century fighting to keep their memory alive.
Although Ana and Geng have never met, they know each other’s stories, and, as Ana puts it, “are learning to speak with one voice against injustice.” Just before Christmas, she helped organize a local rally in support of Geng’s landmark lawsuit for reparations in Tokyo. Geng and other massacre survivors, meanwhile, weighed possible actions against the New Otani Hotel in Beijing.
These are some of the fruits of a remarkable solidarity that links Asian-American community activists, Latino hotel workers, former Chinese slave laborers and Japanese leftists in a common struggle against an arrogant empire with a dark history, known as Kajima.
The Ghosts of Hanaoka
Kajima, the world’s second-largest construction firm (and developer of the New Otani Hotel in Los Angeles) is headquartered behind formidable iron gates in Tokyo’s once-bawdy Akasaka district. The chaste whiteness of the Kajima skyscraper belies a reputation for bribery and bid-rigging that has kept the corporation under repeated criminal indictment since the late 1980s. (An indiscreet 1994 poll of Kajima’s own employees found that 88 percent agreed with the proposition that the company was “prone to corruption.”)
Fifty years ago, however, Kajima was not just passing fat envelopes of 5,000-yen notes to corrupt Diet members and former government ministers of construction. It was running a full-fledged slave-labor camp at the Hanaoka copper mine in Akita Prefecture.
In 1944 the Japanese empire had sent there 1,000 Chinese peasants and P.O.W.s (including captured Communist guerrillas) to undertake the dangerous work of diverting a river next to the mine. It gave Kajima carte blanche to “squeeze them like a damp towel until not one drop remains.”
By March of 1945 the emaciated and exhausted Chinese were dying at the rate of thirty per week.
“One day,” according to Geng’s published memoir, “one of our comrades, to stave off his hunger, picked up an apple core discarded on the side of the road. A Kajima supervisor saw this and beat him to death on the spot.”
The enraged laborers decided to gamble everything on a desperate uprising against Kajima. They hoped to reach the coast, liberate a nearby camp of American P.O.W.s and steal a fishing boat to freedom. On the evening of June 30, 1945, they attacked their guards with stones and bare fists, killing three Kajima employees and a Chinese informer.
They never made it to the American camp or to the coast, though. Hunted down like rabbits by police and local militia, they were returned to Hanaoka where, for three days and nights, they were the object of sadistic sport. Some had water forced down their throats while police and Kajima goons jumped up and down on their swollen stomachs. Others were hung by their thumbs and beaten until their faces were unrecognizable. A few were simply dispatched with sledge-hammers and shovels.
In a surreal postscript, Geng and a dozen other survivors were put on trial after the surrender of Japan and sentenced to life imprisonment for leading the revolt. The rest of the starving camp was kept at slave labor until finally being liberated by U.S. occupation forces.
Although three Kajima supervisors were sentenced to death by the Yokohama War Crimes Tribunal for their role in the massacre, the executions were never carried out, and by 1956 all had been released from prison. Kajima was even compensated by the Japanese government for the repatriation of its former slaves.
Today, the “Hanaoka incident” might have been lost entirely in the moral amnesia of the cold war had it not been for the persistence of Geng and the lonely vigils of two Japanese chroniclers of the slaughter, Nozue Kenji and Yachita Tsuneo, whose courageous stories are told in Ian Buruma’s The Wages of Guilt.
Unlike Germany, Japan was not obligated by the Allies to make reparations to the millions of victims of its “Greater Far East Co-Prosperity Sphere.” More hungry for yen than for justice, one Asian country after another – including China in 1972 – renounced official war claims against Tookyo.
The legal standing of individual victims, however, has remained largely untested in Japanese courts. Beginning in 1990, Geng and his lawyers entered into negotiations with Kajima executives, who stubbornly refused to acknowledge any institutional responsibility for the massacre. Last June, on the fiftieth anniversary of the Hanaoka uprising, Geng and ten other survivors filed suit in a Tokyo court. Their demands include a formal corporate apology, $ 50,000 compensation for each survivor and the construction of memorials in China and Japan.
This is the first attempt by individuals to establish the liability of private Japanese capital for wartime atrocities. If successful, the Hanaoka suit would open the door for thousands of other aging victims of what some call the Pacific Holocaust – including Koreans, Filipinos, Burmesee, Malays, Micronesians and the “comfort women” – to claim some measure of financial and moral vindication. . . .
A Small Earthquake
December 18: Ice rattles in the martini glasses and some nervous guests wonder, “Earthquake?”
But it is only the Taiko drummers bouncing their martial percussions off the walls of the New Otani. Three hundred demonstrators – workers and their families, students, community leaders – rally beneath huge black-and-white signs proclaiming “Union Jobs Better L.A.” and “Tourism Workers Union Now.”
As smirking security guards kibitz from the hotel’s portecochere, speakers from a half-dozen Asian nationalities, as well as U.C.L.A.’s African Student Union, denounce the latest round of firings and suspensions of union sympathizers.
This action was a militant preface to the January 24 kickoff of a full-scale boycott of the New Otani. Heavily dependent on package tours and business travelers from Japan, the hotel is also a popular watering hole for bureaucrats from nearby state and city office buildings, including the Los Angeles Police Department’s headquarters at the Parker Center. And if L.A.’s huge hotel and tourism industry, capitalized as it is on minimum wage immigrant labor, is closely watching the current test of strength between the New Otani and Local 11, so too are the many public agencies that have become part of Kajima’s spider web of high-profile construction deals.
Despite its anti-union behavior, Kajima recently has captured such prize contracts as the Tampa and Long Beach aquariums; subway construction in Hollywood; light-rail in Portland, Oregon; an underground pipeline in Toledo, Ohio; courthouses in Miami and Los Angeles; and, fittingly for a company whose executives have been charged with felonies, an expansion of the notorious Soledad Prison in Central California.
Over the past five years, Kajima’s subsidiaries have reaped close to $500 million in prime public-works contracts in Southern California alone.
Kajima’s secret is its ability to finance its own projects. Because of its size, as well as its intimate relationship with Sumitomo Bank, it is able to run circles around competitors when it comes to providing up-front development and construction loans.
Last fall, for example, a Kajima-led team won exclusive rights to negotiate the lucrative contract for a new high school and residential complex near Downtown L.A. by offering to bankroll more than $ 100 million in construction costs. This was obviously a strong persuader in a state where voters routinely reject school-bond ballot measures.
When the National Coalition and Local 11, supported by several school-board members, confronted district officials with Kajima’s record – from Hanaoka to the recent bribery scandals – the response was dismissive. “Every major firm has some problems,” the school district’s top development officer told the Los Angeles Times….
– Mike Davis is the author of City of Quartz: Excavating the Future of Los Angeles (London: Routledge, Chapman & Hill, 1990).
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November 17, 2005
Venture to develop
Kakaako bio center
Kamehameha Schools selects a partnership
of two prominent firms
By Stewart Yerton, Honolulu Star-Bulletin
MARKING AN incremental step in Kakaako’s rebirth as a biomedical district, Kamehameha Schools announced yesterday it has selected a joint venture of two prominent firms to develop a $200 million Life Sciences Research Complex on the ocean side of Ala Moana between Cooke and Coral streets.
KUD International LLC, a Santa Monica, Calif., unit of Tokyo-based Kajima Corp., and Phase 3 Properties Inc. of San Diego are in exclusive talks to develop the 400,000-square-foot complex for Kamehameha Schools, which has been leading a push to transform Kakaako from a neighborhood of car lots and run-down industrial buildings into a revitalized high-tech hub. The project is expected to take 18 to 20 months to complete once construction begins, possibly in late 2006, said Kekoa Paulsen, a Kamehameha Schools spokesman.
“This is a tremendous day for Kamehameha Schools, as this project continues to develop under our concept of understanding and commitment to the community, stewardship of the land and creating an urban village,” said Kirk Belsby, Kamehameha Schools’ vice president for endowment.
THE ANNOUNCEMENT comes as Alexander & Baldwin Inc. and the state’s Hawaii Community Development Authority are gathering public input on a proposal to develop a $650 million, mixed-use community on taxpayer-owned land near Kamehameha Schools’ proposed biomedical center. The A&B project would consist of park land, an amphitheater, retail space and 950 residential condominiums on land surrounding the Kewalo Basin boat harbor, stretching from the waterfront toward Ala Moana.
Although some biotechnology boosters have questioned A&B and the state authority for failing to include a bio-medical component in their planned development, Belsby said the projects would complement each other, as well as the University of Hawaii’s new John A. Burns School of Medicine building in Kakaako.
“This project is a perfect complement to Hawaii Community Development Authority and the University of Hawaii’s vision of a ‘live, work, learn and play’ community,” Belsby said.
Ted Liu, director of the Hawaii Department of Business, Economic Development and Tourism, called Kamehameha Schools’ announcement “great news for Hawaii’s economy and for the economic diversification that we are seeking.”
KAMEHAMEHA SCHOOLS’ project harnesses the expertise of two companies with distinct specialties.
Phase 3 Properties specializes in the development, leasing and management of biotech laboratory facilities. Projects include the San Diego Science Center in California, Patriot Science Center in North Carolina and Nexus Canyon Science Park in Seattle.
KUD and its affiliate companies have been involved in a number of world-class developments in Hawaii and elsewhere, including the John A. Burns School of Medicine building, the Hualalai resort on the Big island, Pacific Bell Stadium in San Francisco and Silvertown Quays in London, a major redevelopment project.
“We believe that KUD’s tremendous experience in development, construction and financing and the tremendous strength of Phase 3 in marketing and leasing life science facilities and property management creates a world-class team to develop this ambitious project,” said Susan Todani, director of Kamehameha Schools’ planning and development division.
Daniel Dinell, executive director of the Hawaii Community Development Authority, said Kakaako is gathering the elements it needs to attract top scientists, including spaces for work and research, housing and recreation….
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For more, GO TO > > > Dirty Money, Dirty Politics & Bishop Estate
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April 16, 1999
Financial Report Unmasks Bribery Case
TOKYO – Disclosure of the Japanese bribery case involving a number of Indonesian officials, was not meant to belittle or to put the blame on the respective parties. The disclosure followed after Japanese tax officials discovered manipulations in the tax reports of several contractor companies. And the companies happen to operate in Indonesia, according to t report of Kompas correspondent, Yusron Izha, in Tokyo, Thursday (15/4).
The report said that in the Toyo case, the company described a disbursement of 200 million yen as necessary expenditures in connection with its project in the country….
After Japanese tax authorities looked closer into the matter however, the description in the report took on a whole different meaning.
It covered bribes to Indonesian officials.
The bribery issue surfaced because Japanese officials unraveled a similar operation at Tokai Kogyo, Kajima, Taisei, Obayashi and Toyo. Billions of rupiah were released by these companies for the same purpose and entered in their books as deductible incomes before taxes.
Japanese tax authorities divulged that Kajima Corp and Tekken Corp. Have made payments to former President Soeharto, a number of ministers and Indonesian tax officials, according to Yomiuri Shimbun which AFP quoted of Thursday (15/4).
Even so, the same daily quoted Kajima’s spokesman who said that the payments were made in the framework of tax settlements. Kajima was accused of paying a bribe of 80 million yen (US$660,000) to Indonesian officials.
“It is indeed true that we gave the Indonesian authorities money to complete tax negotiations, but I can’t confirm the amount,” said the spokesman of Kajima who did not mention his name.
Tekken Corp was accused of paying up to at least 40 [m]illion yen (US $340,000) to Soeharto cronies and a number of ministers connected with development contracting of the railway network in Jakarta.
For more, GO TO > > > Sukamto Sia: The Indonesian Connection
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CORRUPTION THROUGH POLITICAL CONTRIBUTIONS IN JAPAN
by Verena Blechinger
Submitted for a TI workshop on corruption and political party funding in La Pietra, Italy.
October 1997: Scandal involving former Construction Minister Nakajima Kishiro, who was sentenced to 1 1/2 years in prison and fined 10 million yen for accepting a 10 million yen bribe from general contractor Kajima Corp. in exchange for obstructing a criminal complaint about bid-rigging practices in relation to public construction contracts.
Both the former Vice President of Kajima Corp. Kiyoyama and Nakamura argued that the money was a “political donation for the reconstruction of the building industry” (Daily Yomiuri 2 October 1997).
During the trial, it became clear that Kiyoyama had approached Nakamura in January 1992 with the request to influence the Chairman of the Japanese Fair Trade Commission not to file a criminal complaint against Kajima Corp. At the time the request was made, Nakamura received 10 million yen in cash.
Following this meeting, Nakamura approached the FTC Chairman and tried to persuade him to drop the investigation against Kajima. A clear quid pro quo thus could be established.
This was the first case in 14 years in which an incumbent Diet member was sentenced to prison on a bribery conviction.
Nakamura appealed the sentence claiming that the money was not a bribe, but a legal political donation (Daily Yomiuri, 8 June 1999).
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May 10, 2002
Hawaiian Dredging finds buyer
A U.S. subsidiary of a Japan company has agreed to purchase
the construction company
By Russ Lynch, Honolulu Star-Bulletin
Hawaiian Dredging Construction Co., the historic business that started in 1902 and gave rise to Dillingham Corp., has found a buyer and says it will stay in the islands with no loss of jobs and under its old name.
The intended buyer is Kajima U.S.A. Inc., the American subsidiary of a Japan-headquartered worldwide construction giant that had more than $16 billion in revenues last year.
A letter of intent has been signed but the price has not yet been disclosed, the companies said.
Hawaiian Dredging has had close contact with Kajima for more than 20 years, William Wilson, president and CEO, said yesterday.
They first worked together when Central Pacific Bank hired Hawaiian Dredging as the contractor for its new headquarters building in downtown Honolulu, Wilson said. The bank had strong connections in Japan with part-owner Sumitomo Bank and through that with Kajima,
“(Kajima) had some people involved and they reviewed the construction,” Wilson said. That collaboration led to others.
“We were the general contractor for the Four Seasons at Hualalai, where they are the owner and developer,” he said.
Wilson said the 500-plus employees at Hawaiian Dredging will remain — the number varies according to the jobs in hand — and “we expect to continue to use the name Hawaiian Dredging.”
Hawaiian Dredging was founded in Honolulu to build harbors serving the railway line built by Benjamin F. Dillingham. With the approval of King David Kalakaua, Dillingham completed the railway linking Honolulu to West Oahu in 1889.
In 1961, the companies he founded, Oahu Railway & Land Co. and Hawaiian Dredging, merged with other Dillingham businesses, such as Hawaiian Bitumuls, to form Dillingham Corp.
Dillingham Construction was its main subsidiary.
Dillingham moved its head office to Pleasanton, Calif., in the 1980s, but Hawaiian Dredging remained behind as Hawaii’s biggest construction firm, building hotels, shopping centers (including Ala Moana Center), residential developments and other projects in the islands.
Last year, Dillingham sold 67-year-old Hawaiian Bitumuls to Grace Pacific Corp., making Hawaiian Dredging its only remaining isle business.
Wilson said the fact that Dillingham Construction moved to the mainland does not lessen its presence in Hawaii. As long as Hawaiian Dredging is alive and well, the Dillingham legacy remains strong in Hawaii, Wilson said.
For Kajima, the purchase will give it direct ownership of a company it is working with on a number of jobs. A recently formed partnership of Hawaiian Dredging and a Kajima subsidiary, Kajima Construction Services, is the contractor for the new University of Hawaii medical school in Kakaako.
Other Hawaiian Dredging-Kajima joint projects include a Kamehameha Schools campus at Keaau on the Big Island and Westin Kaanapali Ocean Resort Villas on Maui….
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February 10, 2003
Dillingham Falls to Mounting Debt
Katherine Conrad, East Bay Business Times
In a move that bodes ill for the construction industry, Pleasanton’s Dillingham Construction Co. has filed for Chapter 11 bankruptcy, citing debts of $130 million.
“We’ve been fighting very hard for three years now. Life should be a little better than that,” said Dillingham President and CEO Don Sundgren.
The company has sold its assets in Hawaii and San Diego and will shut down its Pleasanton headquarters by June. Its Hawaiian Dredging Construction Co. of Honolulu was sold last fall to Kajima Corp. And Nielsen Dillingham builders Inc. was sold a few weeks ago to Roel Construction Co. of San Diego.
Dillingham, which filed for bankruptcy last week, is reorganizing around Watkins Engineers and Constructors Inc., a company in Tallahassee, Fla., that Dillingham acquired in 1983.
Layoffs at Dillingham’s Hacienda Business Park headquarters have whittled the work force from a high of 200, including construction workers, in 2000, down to 20 or 30. The head count in Florida where Sundgren, currently a Danville resident, will go is 350 salaried workers and 3,000 in the field.
Dillingham will slowly ease out of the Bay Area, where it has done business for decades. Its projects have included laying decking on the Golden Gate Bridge, constructing portions of the Cypress Structure in Oakland, expanding San Francisco International Airport and working on refineries in Richmond, the BART extension to Colma and water treatment facilities in Martinez.
“Most of the work is bonded, so our bonding company has a responsibility to finish the work. Our employees will be let go,” he said. “We gave them as much notice as we could.”…
Dillingham does not plan to reinvent itself, according to Sundgren. It intends mere to return to its core business in a place where it has been successful.
The 100-year-old company started in Hawaii. It moved to the West Coast in the 1960s and took part in renovating the Qualcomm stadium in San Diego.
“Our problems began in the mid-‘90s with some significant projects on the West Coast and overseas. Our debt began to accumulate and then it finally got to the point where we could no longer manage it,” Sundgren said.
“We have problem projects that required us to go into debt to finance the projects. Then there were disputes to collect the money and we had to borrow money to do it. Our debt load is too large for us right now.”
He said many of the problems occurred on projects in the Bay Area, including work at the San Francisco airport.
Like any construction outfit, Dillingham suffered its share of lawsuits. But its lawyer, Michael Ahrens, said the lawsuits could not be blamed for bankrupting the company.
He said the bankruptcy can be blamed on the marketplace….
For more on Dillingham Corporation, GO TO >>> The Indonesian Connection
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October 25, 2002
Dignitaries break ground for new medical school
By Helen Altonn, Honolulu Star-Bulletin
The occasion was described as historic by dignitaries and would have greatly pleased his dad, said James Burns, chief judge of the Intermediate Court of Appeals.
He said John Burns, his father, envisioned the kind of prestigious University of Hawaii Medical School that the state broke ground for yesterday in Kakaako.
Gov. Ben Cayetano said the late governor, an “Irish cop” without a college education, provided the “great vision” that the school bearing his name will build on at its new waterfront site.
U. S. Sen. Daniel Akaka and U.S. Rep. Neil Abercrombie were among about 500 community, government and university officials who attended the ceremony.
UH President Evan Dobelle also surprised Cayetano with the first “President’s Medal” in recognition of his support for the new school.
Dr. Edwin Cadman, dean of the John A. Burns Medical School, said he anticipates the school ultimately will bring $80 million to $100 million into the state in annual revenues and create 1,000 new jobs.
House Speaker Calvin Say said the project was part of a post-Sept. 11, 2000, state effort to bolster the economy with state-funded construction projects. He said UH delivered on a promise to fast-track the medical school in 18 months.
The first buildings on the nearly 10-acre site are expected to be ready for occupancy in the fall of 2005. They include a 216,000-square-foot research building and a 138,000-square-foot education and administration building.
The Legislature provided $150,000 million from tobacco settlement funds for revenue bonds to finance the first phase. The second phase, including another research building, depends on UH finding another $150 million from private sources.
Senate President Robert Bunda called the groundbreaking a “giant step closer to realizing plans for a vibrant urban center and thriving waterfront community.”…
Manoa Chancellor Peter Englert said the medical school at Kakaako will be “a home away from home” and “a very visible symbol that the UH is a vital part of our city and state.”
Pointing our that the UH strategic plan makes a strong commitment for research and education at Manoa, Englert said the medical school holds promise for a significant increase in funding and worldwide attention “to the excellent caliber of our scientists.”
Dr. Hamilton McCubbin, chief executive officer of Kamehameha Schools, a partner in the Kakaako biomedical development, said it reflects Bernice Pauahi Bishop’s vision for the Hawaiian people.
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March 4, 2003
Medical school audit details management problems
By Beverly Creamer, Honolulu Advertiser
Internal management “deficiencies” within the John A. Burns School of Medicine at the University of Hawaii have meant contracts were signed after work had begun, bills were sent out late, and faculty failed to file outside employment disclosure forms on tame or at all, according to State Auditor Marion Higa.
In a new audit of the medical school, Higa pointed to several problems in internal management practices that led to potential conflict-of-interest issues for faculty with outside employment; lost interest payments in two instances; and slow billing procedures, all resulting in a negative cash flow situation twice last year.
“The University agrees with our recommendations,” Higa said in the official audit statement, “and responded that it has already taken steps to implement some of our recommendations.”
Medical School Dean Edwin Cadman said that he had identified measures to increase efficiency within the school and was in the process of implementing them. And chief financial officer Robert Nobriga said that staff within the medical school had helped pinpoint some of the issues for auditors.
“After reading a lengthy 1998 audit report on the school by a private CPA firm I realized significant improvement was needed in the area of financial management,” Cadman said.
In illuminating the problem areas, Higa pointed out that all of the contracts between the school and Hawai`I healthcare organizations – primarily hospitals – were signed and executed after faculty had begun providing services. Medical school contracts with Hawai`i hospitals bring in about $6.7 million a year out of a total budget of $57.9 million, Nobriga said.
“School faculty provided services for at least four months, and approximately $2.3 million in expenses were incurred, before the healthcare organizations could be billed,” Higa said. “As a result, the school’s cash flow was negatively impacted and interest that could have been earned on the amounts outstanding was lost.”
Higa told The Advertiser that this is not uncommon in state departments, but it put both sides at risk.
The University advanced the money to pay salaries until the contracts were signed, Nobriga said….
“It’s a cumbersome process to put together the agreements and to get the department chairs as well as the hospitals on board to agree to what has been laid out,” he said….
The auditor also said the medical school does not comply with UH policies and procedures to avoid conflict-of-interest situations involving school faculty by letting faculty miss deadlines to file outside employment forms.
Nobriga said that many of the faculty are paid just $4,000 to $5,000 a year to teach at the medical school, and that their primary jobs are in private practice, or serving in positions at local hospitals.
The office of James “Wick” Sloane, chief financial officer for the university, promised Higa’s office that medical school administrators would be held responsible for filing future disclosure forms on time.
As part of the audit, the certified public accounting firm Deloitte & Touche LLP gave the medical school an “unqualified” financial audit which Higa called “a clean opinion” of their financial statements. “It’s what any organization would want,” she said.
Cadman called it an “A-plus.”
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April 22, 2003
Japanese Bid for Iloilo Airport Rejected
by Sol Jose Vanzi, Philippine Headline News Online
Manila – The Department of Transportation and Communications (DOTC) had reaffirmed its policy of transparency and accountability in the implementation of its infrastructure projects.
The declaration comes on the heels of the decision by the pre-qualification, bids and awards committee (PBAC) to disqualify a Japanese consortium from participating in the bidding for the rehabilitation of the Iloilo City airport.
The bid of the Taisei-Kajima-Shimizu Construction for the P6.2-billion Iloilo Airport Development Project was rejected by the PBAC headed by Assistant Secretary Art Maglangue because one of its partners was involved and convicted recently in a bribery-scandal in Japan.
The Japanese Ministry of Information and Land Transportation, after the conviction of the Kajima group, suspended the construction firm from participating in any government and private construction projects from March 25 to April 3 this year.
Maglangue said the PBAC rejected the Japanese firm’s bid despite the reported pressures from local political and foreign funding agency supporter of the Kajima group.
Kajima has reportedly boasted of the influential backing it enjoys from a ranking senator and the Japan Bank for International Cooperation (JBIC)….
He also admitted that pressures were exerted on the PBAC by the consortium’s backers to exempt the group from scrutiny, but he said, he had courteously turned down these suggestions.
The Taisei consortium walked out of DOTC conference room when the rejection was announced and trooped to the JBIC-Manila office to air their complaints.
“I am not backing out our decision. I don’t care what their nationality is American, Japanese or Iraqi but if their reputation is questionable, we will not include them in any bidding” Maglanque said.
The DOTC had earlier tightened the screws on all bidding processes at the department, ensuring their transparency and fairness to all bidders.
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July 20, 2003
Medical school deals secret
By Johnny Brannon, Honolulu Advertiser
Work is well under way on the University of Hawai`i’s ambitious new medical school complex at Kaka`ako, but many details about how the institution is spending public money are being kept secret.
Ground was broken for the John A. Burns School of Medicine last October and the university has spent more than $10 million so far. But officials have refused to disclose the value of eight construction and consultant contracts, most of which were signed more than a year ago.
The high-profile project is expected to cost at least $163 million and is linked to the planned construction of a cancer research center and other work that is to cost $300 million in total.
State and university officials say the project will boost UH’s academic credentials, provide important educational opportunities and invigorate the waterfront area.
The university has chosen the main contractor, a joint venture between Hawaiian Dredging and Kajima Corp., but has yet to nail down a final cost and contract.
University chief of staff Sam Callejo said releasing information about completed contracts with those firms and others could undermine the school’s bargaining position for further work.
“We have a target price in mind, but we are not there yet,” Callejo said in a letter responding to an Advertiser request that completed contracts be made public.
“…We believe premature disclosures of the remaining contracts and their pricing would frustrate our ability to negotiate the best possible terms with HD/K.”
State Office of Information Practices attorney Carlotta Dias said that, in general, state contracts can’t be kept secret.
“We say usually that once a contract is signed, it should be public,” she said.
But RCUH director flatly refused last month to allow access to any public records related to the contracts, despite a formal request invoking the state’s public records law.
He said that no documents would be released until the final contract is signed and that negotiations are expected to conclude by September.
University officials later overruled that decision and released five contracts for legal and other advisory work related to the project.
UH release eight additional construction and consultant contracts Thursday, but deleted all cost figures from the documents.
The Office of Information Practices is reviewing UH’s response but has not validated or advised against it, Dias said.
The university also deleted amounts from four change orders to an “interim agreement” with Hawaiian Dredging/Kajima. Those amendments cover the work the company has done so far.
Documents released by RCUH earlier show that three of the change orders total $10.3 million.
Some companies involved in the project have faced intense scrutiny for making illegal campaign contributions.
One firm, Geolabs, last year paid a $64,000 fine for such activities, the largest the state Campaign Spending Commission has ever issued.
Investigators found that the company funneled a total of more than $124,000 to several politicians, with most of the money going to Mayor Jeremy Harris, who was a gubernatorial candidate, former Gov. Ben Cayetano; and former Lt. Gov. Mazie Hirono, who ran for governor last year. Several others received smaller illegal amounts, the commission found.
Geolabs is performing geotechnical engineering work for the medical center project, records show, and was awarded the contract seven months after the fine. University officials would not say how much the firm is being paid, and deleted that information from a contract signed last August.
Geolabs is also a defendant in a major lawsuit against the city and another consultant, filed by a contractor who charged that planning work for a city sewage treatment plant expansion project on Sand Island was badly bungled. The city and Geolabs say in court papers that the suit is baseless.
The medical school project includes numerous subcontractors, who have agreements with other companies rather than directly with the university.
One subcontractor is SSFM International Inc., whose president recently pleaded no contest to a felony money laundering charge and a misdemeanor campaign finance violation for illegally funneling $140,000 to Harris’ re-election campaign.
State Campaign Spending Commission director Robert Watada said the company appears to have funneled illegal contributions to Cayetano and several others, and that he will seek a hefty fine.
SSFM is the project’s structural engineer and was hired by Architects Hawaii Ltd., which has a contract with RCUH. The university deleted all cost information from the documents it released, including a change order that detailed payments to subcontractors.
Callejo, who formerly served as Cayetano’s chief of staff, said those amounts must be kept secret “to avoid the frustration of a legitimate government function,” and that they would not be released when the project is finished.
RCUH director of physical facilities Allan Ah San initially refused to release even the names of the subcontractors, even though many are listed on a sign posted at the project site and on company vehicles parked there.
No one has publicly alleged that any of the medical schools contracts or subcontracts were awarded improperly or were linked to campaign contributions.
The Kaka`ako project and related work are being financed with a mix of public money and private contributions that UH President Evan Dobelle has promised to raise. The state has committed $150 million in revenue bonds and $13 million in general obligation bonds.
Dobelle said the nonprofit University of Hawaii Foundation will raise an additional $150 million, and that the project will be completed “on time and on budget.”
The medical school is to be completed by September 2005.
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January 15, 2004
UH Foundation fund raising outpaces 2002
By Craig Gima, Honolulu Star-Bulletin
The University of Hawaii Foundation raised $13.4 million in the first six months of the fiscal year through December, foundation officials said….
Bill King, the foundation’s chief financial officer, said the foundation is “right on target” to reach a goal of at least $30 million by June 30….
Donations from private foundations are at $4.8 million, which is above what was raised in the past fiscal year.
One of the biggest donations is from the Freeman Foundation, which has given more than $2 million to support exchange activities throughout Asia….
The university’s endowment fund has increased to $111.1 million, mostly because of an increase in the value of its investments, King said….
Catbird: And just who is the Freeman Foundation???
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March 17, 1997
THE BARBADOS CONNECTION: CORAL REINSURANCE
The Washington Weekly
After Reps. Spencer Bachus (R-Ala) and Henry Bonilla (R-Texas) voted to extend MOST-FAVORED-NATION TRADE STATUS FOR CHINA last year, they received an invitation from the China Government to tour major cities in Red China.
And who paid for their trip?
Not only the Chinese Government, but also American International Group, with money laundered through the National Committee on United States-China Relations and the Freeman Foundation, reported the newspaper Roll Call last week….
American International Group is headquartered in Barbados and operates Coral Reinsurance.
Where have we heard that name before? Oh yes! In Arkansas.
In 1986 the notorious Arkansas Development Finance Authority borrowed $5,000,000 from a Japanese bank’s [Sanwa Bank] Chicago branch as part of a $60,000,000 deal to purchase stock in Coral Reinsurance.
The deal was brokered by Goldman Sachs, whose head Robert Rubin is now Treasury Secretary.
On the board of directors of AIG is one Lloyd Bentson, former Treasury Secretary….
For more on Sanwa Bank, GO TO > > > Yakuza Doodle Dandies
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January 22, 2002
UH wins $1.2 million grant
Pacific Business News
The University of Hawaii has won a $1.2 million grant to improve Asian Studies, and can use the money to bring more visiting professors to Hawaii or to send its own professors to study abroad.
The Asian Studies division of the School of Hawaiian, Asian and Pacific Studies was awarded the grant by the Freeman Foundation, created by the same Bud Freeman who founded American International Group.
AIG developed from a business the Freeman family founded in China, where Bud Freeman was born. AIG would become number 15 on the Fortune 500, and has significant operations in Hawaii.
The Freeman Foundation awards almost $30 million a year, mostly in smaller grants to organizations that promote American appreciation and understanding of Asian lands.
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February 19, 2001
Portman seeks fees from partners in Shanghai project
By Matt Gove, Atlanta Business Chronicle
Portman Holdings L.P., is battling with itself. Well, sort of.
The Atlanta developer is suing Shanghai, China-based Seacliff Ltd. for failure to pay asset management fees and wrongful termination of an asset management agreement….
The project in question is Shanghai Centre, a $200 million, 2 million-square-foot mixed-use development in Shanghai that is owned by Seacliff. It was developed in the late 1980s/early 1990s.
This is where the story gets more interesting.
Seacliff Ltd. is a joint venture of insurance giant American International Group Inc. (NYSE: AIG), Japanese construction firm Kajima Corp., hotelier Shangri-La Asia Ltd. and Portman Holdings – the same Portman Holdings that filed the lawsuit against Seacliff in the U.S. District Court for Georgia’s Northern District….
One explanation as to why Portman would have to sue its own partnership for the lost fees is the size of its stake in Seacliff.
Its stake may be too small to influence the partnership to pay the asset management fees, said Bob Moot, a managing director firm Julien J. Studley Inc….
“Usually, decision-making power is in accordance with equity,” Moot said….
Shanghai Centre is the first mixed-use project in Shanghai with 200,000 square feet of office space, 472 luxury apartments, a 605-room Ritz-Carlton hotel, a tri-level retail plaza, exhibition space and a theater.
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May 1, 2001
$4.5 Million Freeman Foundation Grant to Support New East-West Center Student Program
East-West Center News Release
The East-West Center has been awarded a $4.5 million grant over four years from the Freeman Foundation to establish an innovative program to meet new educational needs of the Asia Pacific region.
The grant is the largest-ever single foundation grant to the East-West Center….
Dr. Morrison said he hopes the Freeman Foundation’s leadership will help the East-West Center leverage other resources need for the new program. He said that the Foundation, based in Stowe, Vermont, has emerged as the most significant force in the field of educational exchange between Asia and the United States and also the largest foundation supporter of the East-West Center….
For more, GO TO > > > AIG: The Un-American Insurance Group
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August 17, 2003
Kakaako contracts disclosed
By Johnny Brannon, The Honolulu Advertiser
The University of Hawaii has spent nearly $40 million on a major medical-school complex under construction at Kakaako but has yet to nail down a master contract for completing the project.
UH released public records detailing the expenditures only after the state Office of Information Practices determined there was no legal basis for denying The Advertiser’s request that documents be disclosed.
The university had argued that it could be harder to negotiate the main construction contract with Hawaiian Dredging Construction Co. and Kajima Construction Service if it became clear how much had been spent.
The records show that UH’s contracting arm, the Research Corporation of the University of Hawaii, has agreed to pay more than $21.8 million to the Hawaiian Dredging/Kajima joint venture through other contracts and change orders.
Additional large contracts include a $10.6 million deal with Architects Hawaii, Ltd. For design and engineering work, and a contract and change orders worth $3.6 million for insurance coverage and evaluations by the Atlas Insurance Agency Inc. (a subsidiary of Island Insurance)
Several smaller contracts with other firms bring the total to $37,394,481. Legal representation, auditing and other ancillary services add another $2,196,876, bringing the total to $39,591,357.
UH says the John A. Burns School of Medicine and linked projects comprising a Health and Wellness Center will cost about $300 million altogether. But some lawmakers have expressed concern that fund-raising for the project will fall short.
The first phase of the work includes an education and administration building and a research building, together providing 345,000 square feet of facilities. It is scheduled to be completed by fall of 2005.
UH hopes to finish cost negotiations and sign the main contract with Hawaiian Dredging/Kajima by the end of September, said Carolyn Tanaka, UH associate vice president for external affairs.
The change orders approved do not reflect cost overruns, and the negotiations are proceeding on schedule, she said.
The main construction contract was split into segments so work could begin while costs for the rest of the project are decided, and the change orders cover the first segments, she said.
“One of the priorities of the project was to get construction moving and get people working as one of the post-9-11 remedies of the expected drop in the economy,” Tanaka said. “We could get moving quicker and they could start getting things done.”
The state has committed up to $150 million for the medical school, backed by $163 million in bonds. UH hopes to raise another $150 million in private donations, including $90 million for a cancer research center in Kakaako and $60 million to renovate the university’s Manoa campus medical school.
The nonprofit University of Hawaii Foundation has so far raised $709,000 for the cancer center and $4.2 million for the renovation.
A group of Japanese pharmaceutical companies is also considering a plan for a $100 million disease research complex in Kakaako in conjunction with the cancer center.
Rep. K. Mark Takai, chairman of the House Higher Education Committee, said UH should not expect a state bailout if private donations are lacking.
“That will not happen,” said Takai, D-34th (Pearl City, Newtown, Royal Summit).
“The commitment by the university to the Legislature was that if we gave them $150 million, they would come up with the other $150 million. That was the deal.”
But information about how public money is being spent on the Health and Wellness Center has trickled out slowly.
Research Corporation of the University of Hawaii director Harold Matsumoto refused in June to release any documents related to the medical-school construction contracts, despite a request under the state’s public records law, the Uniform Information Practices Act.
UH officials later overruled that decision and released consultant and construction contracts to The Advertiser but deleted cost figures from many of the documents.
“It’s mind-boggling that on one hand the UH administration says transparency is important, and there are these problems obtaining public information,” Takai said.
“What the university says and what they’re doing doesn’t add up.”
The university had invoked an exemption in the law that allows government agencies to withhold public records if their release would “frustrate a legitimate government function,” in this case the final contract negotiations with Hawaiian Dredging/Kajima.
But the Office of Information Practices found that when creating the law, the Legislature had specifically intended that certain records be public as a matter of policy, and not subject to the broad exemption.
“We are simply unable to interpret the statute as permitting any exception to disclosure of the contracts,” OIP director Leslie Kondo wrote in a July 30 letter to UH lawyers that called for the release of uncensored contracts.
The university had also argued that since all the contracts related to one project, they should be considered as one and the details not be disclosed until the final deal with Hawaiian Dredging/Kajima is signed.
But the OIP found “nothing in either the statute or the legislative history to support UH’s argument. We also cannot conclude that such an interpretation would be consistent with the statute’s stated policy of ensuring that government is conducted as openly as possible.
• • •
Major contracts for medical-school project
Major contracts related to the University of Hawai’i John A. Burns School of Medicine project at Kaka’ako:
• Hawaiian Dredging Construction Co./Kajima Construction Service, October 2002
Construction contract outline, no price
Change Order 1, October 2002, added $3,374,877
Change Order 2, January 2003, added $3,715,676
Change Order 3, May 2003, added $3,272,497
Change Order 4, June 2003, added $10,338,749
• Hawaiian Dredging/Kajima, September 2002
$785,000 interim agreement for demolition and other work
• Hawaiian Dredging/Kajima, June 2002
$315,450 for pre-construction services
Change Order 1, June 2003, added $100,000
• Architects Hawaii, February 2002
$10,608,980 for architectural design, structural engineering, mechanical engineering, civil engineering, landscape design, cost estimating, laboratory planning, environmental assessment
• Atlas Insurance Agency Inc., July 2002
$250,000 for insurance coverage and evaluations, etc.
Change Order 1, October 2002, added $2,739,032
Change Order 2, March 2003, added $637,016
Change Order 3, June 2003, added $48,286
• Southland Industries, January 2003
$465,000 to serve as commissioning agent
• Thompson Matheny Corp., December 2001
$400,000 for project management
• Geolabs Inc., August 2002
$154,446 for geotechnical engineering and testing
Change Order 1, October 2002, added $28,145
• Kimura International Inc., August 2002
$140,364 for environmental services
• Hawaii Insurance Consultants Inc., May 2002
$12,760 for reviewing Request for Proposals
Change Order 1, July 2002, added $8,203
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October 20, 2003
Corruption probe on stadium firm
By Chris Brown, Daily Post (UK)
A COMPANY which wants to build a joint stadium for Liverpool and Everton football clubs is under investigation for corruption in Japan.
Kajima, the world’s third largest construction firm, last month put forward a plan for the two teams to share a ground on a site between Stanley and Waterloo docks where landowner, the Mersey Docks and Harbour Board (MDHC), wants to redevelop 90 acres of derelict space.
A matter of days after the announcement, on September 30, Kajima was raided by officials from Japan’s Fair Trade Commission probing bid rigging in the northern city of Niigata.
The FTC raided about 40 firms and Niigata city hall because it suspects the firms colluded to rig the outcome of civil engineering tenders.
Kajima said it was prepared to help finance a new shared stadium for Everton and Liverpool football clubs. But it now appears unlikely to happen due to the advanced nature of Liverpool’s plan for their own ground at Stanley Park.
The move on Kajima in Japan follows a similar FTC investigation in Miyagi Prefecture, when Kajima was accused of secretly rigging tenders for civil engineering contracts last year.
Although in June the FTC reprimanded 29 firms including Kajima, it did not have enough evidence to take the matter further….
Kajima has already courted controversy in Britain when it won five privately-funded school deals in the last 18 months despite a “Stop Kajima” campaign highlighting its presence in Burma.
No-one from Kajima UK was available for comment last night while a spokesman for the Mersey Docks an Harbour Company said he was unable to comment on anything regarding Kajima.
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November 26, 2003
Accountant charged with
federal tax violations
By Rick Daysog, Honolulu Star-Bulletin
An accountant for a company under investigation for alleged illegal political donations to Honolulu Mayor Jeremy Harris’ campaign has been charged with violating federal tax laws.
In a criminal complaint filed in U.S. District Court Monday, federal prosecutors alleged that Yiu Wing Wong helped prepare false tax returns for his employer, C.W. Associates Inc., and its affiliated company, Geolabs Inc.
Wong, who serves as a secretary and director at Geolabs and C.W. Associates, is in charge of preparing the Kalihi-based companies’ tax forms.
On Aug. 4, 1998, Wong helped arrange C.W. Associates’ 1997 corporate tax returns, which under-reported its tax liabilities by $4,000, federal prosecutors said.
Wong could not be reached for comment. Assistant U.S. Attorney Michael Seabright declined to discuss the case.
According to the state Campaign Spending Commission, Wong played a significant role in Geolabs’ political fund-raising efforts.
Commission records show that Wong and his family contributed $22,500 to the campaigns of Harris, former Gov. Ben Cayetano and ex-Maui Mayor James “Kimo” Apana.
The donations included a December 1999 contribution to Harris for $2,000 from Wong’s daughter, who was a high school student at Maryknoll School at the time.
Wong later told a commission investigator that his daughter was not aware that a contribution was made in her name until it was reported in a Star-Bulletin article.
The Wong’s contributions were among a maze of Geolabs-linked contributions totaling more than $124,000 to Harris, Cayetano, Apana, former Lt. Gov. Mazie Hirono and ex-Big Island mayoral candidate Fred Holschuh.
In January 2002, the state Campaign Spending Commission fined Geolabs a then-record $64,000 and referred its investigation into Geolabs and the Harris campaign to the city Prosecutor Peter Carlisle for criminal prosecution.
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Last update November 18, 2005, by The Catbird Seat