of the


Sightings from The Catbird Seat

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Posted 2006-08-01 11:39:07 by Karl

FCC Cronyism Nets Big Hawaii USF Payoff

$500 million to wire just 5,400 affluent homes

Telecom pundit Gordon Cook points to yet another example of waste in the USF system you pay into via your broadband, landline, and wireless phone bills. The idea is to help fill in the nation’s rural telecom black holes, but instead the fund, as this Hawaii Free Press article explores, is sometimes used for political cronyism.

One of the last acts of former FCC chief Mike Powell was to approve a waiver that gave Sandwich Isles Communications in Hawaii $500 million to wire just 5,400 homes. The IP Inferno blog points out that the properties, which already have landlines, could get DSL for $600 or so; instead of the $93,000 per home this project will cost.

The rub: Michael Powell was a Naval Academy classmate of Al Hee, president of the company receiving the $500 million. Another reason critics like Cook argue that FCC statistics aim to show a rosy picture of American broadband, and why the USF system – long rife with fraud – has yet to be either scrapped or reformed by the FCC.


June 4, 2005

Sandwich Isles Communications:
Political Connections Pay Off

By Andrew Walden, Hawaii Reporter

Special from Hawaii Free Press

In a little-noticed May 16 ruling, the Federal Communications Commission (FCC) has granted a waiver necessary to allow Sandwich Isles Communications to complete construction of its $500 million project to link 69 Hawaiian Homelands properties with a fiber optic communications network.

Sandwich Isles, had completed about $160 million worth of construction bringing its network to all the islands except the Big Island, when in October, 2004 the FCC suddenly acted on a 6-year-old complaint from telecom rival Verizon. As a result of the October ruling, Sandwich Isles was forced to reapply for its FCC waiver which allowed SIC to receive $400 million in federal funds taken from the “Universal Service Fund” (USF) tax on consumers’ phone bills.

The Universal Service Fund tax is intended to subsidize telecommunications service to unserved rural areas. Verizon Hawaii, now re-named Hawaii Telecom after being purchased by the Carlyle Group, had argued the DHHL lots Sandwich Isles proposed to serve were not unserved because they were within Verizon territory. With the waiver granted, federal funds can once again flow into Sandwich Isles Communication’s coffers and construction can be completed on the Big Island.

Gilbert Tam, Sandwich Isles Communications Vice President for government and community relations, says the company “is pleased with the FCC order” which “allows SIC to fulfill its commitment and efforts to provide modern and affordable telecommunications services to residents of Hawaiian Home lands.”

At an estimated of $500 million, if Sandwich Isles Communications were to serve all 20,000 DHHL lots, the cost would be $25,000 per lot. But DHHL has only about 5,400 lots occupied by leaseholders.

At current build-out rates it would be about 40 years until all 20,000 lots are filled. $500 million to wire 5,400 lots averages out to about $93,000 per lot – the construction cost of a house – just for high speed internet and phone service.

 Further, there is no reason to believe that all 5,400 DHHL leaseholders would want to pay Sandwich Isles Communication’s monthly fees for high speed internet service.

Many DHHL homesteaders already have land lines from Verizon. In the United States, about 33 percent of households have high speed internet connections.

If DHHL leaseholders have the same level of interest in high speed internet connections, Sandwich Isles Communications would serve about 1,800 lots at an average cost to the taxpayers of about $278,000 per lot.

Currently, Sandwich Isles Communications is reported to serve about 1,300 customers.

These figures compare unfavorably to the $600 or less setup cost of many commercially available high-speed satellite internet connections.

Internet satellite providers’ monthly charges are competitive with those of Sandwich Isles Communications. With inexpensive, commercially available “VOIP” technology, high quality internet based telephone service can be included.

Satellite technology requires no digging to lay cables, thus minimizing environmental damage and disruption of Hawaiian sites.

Unsurprisingly, Sandwich Isles is led by many politically connected directors and corporate officers.

Robert Kihune, retired vice admiral and Vice-Chair of the Kamehameha Schools Board of Trustees, is Sandwich Isles Communications Chief Executive Officer. Kihune, who is also Chairman of the USS Missouri Memorial Association, was keynote speaker at the Hawaii County Council inauguration in December.

Al Hee, brother of former Office of Hawaiian Affairs Chairman (and current Democrat State Senator) Clayton Hee, is Sandwich Isles Communications President.

Sandwich Isles Vice president, Gilbert Tam is a former Director of P&C Insurance Company, Inc. and the former Administrative Group Director for Kamehameha Schools/Bishop Estate (KSBE). Tam was formerly an officer with Bank of Hawaii, which has substantial financial connections with KSBE.

As a Dec. 31, 2001, article in The Honolulu Advertiser explained:

Part of the reason Sandwich Isles Communications has attracted interest in Hawaii political circles is that the company has ties to a variety of politicians and current or former executives involved with Kamehameha Schools, another politically influential local institution.

Al Hee says his brother Clayton, then chairman of the board of trustees of the Office of Hawaiian Affairs, is not involved in the project. Sandwich Isles did hire Clayton Hee’s wife, Lynne Waters, to produce videos for presentations to business leaders, homesteaders and others on the company’s operations.

Among (Sandwich Isles’)… 22 employees are former Democratic House Majority Leader Tom Okamura and former Rep. Devon Nekoba, who both carry the title of agency coordination officer. (Al) Hee says the two advise company executives on government policy matters.

Ties to Kamehameha Schools, formerly known as the Bishop Estate, include Gil Tam, the company’s vice president of government and community relations, formerly director of administration and interim chief executive officer for Bishop Estate, and Robert Kihune, chief executive officer, now a Kamehameha Schools trustee.

The Hawaiian Homes Commission chairwoman in 1994, when the commission approved Hee’s license (to provide communications services), was Hoaliku Drake, the mother of former Bishop Estate trustee Henry Peters.

Clayton Hee is a friend of Peters and was hired as a cultural affairs researcher for the Royal Hawaiian Shopping Center, a subsidiary of the former Bishop Estate/Kamehameha Schools (KSBE).

(See article and related materials posted at

Henry Peters was one of the Bishop Estates Trustees named in the infamous “Broken Trust” case. Gilbert Tam was also a co-investor in KSBE’s McKenzie Methane deal at the time he was a KSBE manager.

(Articles reprinted at:

In Harmon vs. Federal, et al, a lawsuit stemming from the Broken Trust expose, plaintiff Bobby Harmon, former P&C President, alleged “Tam’s actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of the trustees of KSBE, with other managers and employees of KSBE, with other officers and directors of P&C, and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations….”

(See Harmon vs. Federal reprinted at

In addition to “Broken Trust” connections, Sandwich Isles also benefits from a connection with former FCC Chairman Michael Powell, son of former Secretary of State Colin Powell, and a mid-1970s Annapolis Naval Academy classmate of SIC President Al Hee. The FCC’s sudden decision to rule on Verizon’s complaint corresponds in time closely to Michael Powell’s resignation as FCC chair.

There is also a correspondence in timing between the purchase of Verizon Hawaii’s assets by the Carlyle Group, with many well-known connections to both Democrat and Republican national political leaders and appointees, and the FCC’s subsequent ruling in SIC’s favor.

Sandwich Isles Communication’s cable-laying contractor is MasTec, named for its founder the late Jorge Mas Canoza, Cuban exile leader. On the Mas Tec board, in Joseph Kennedy II, whose family connections with Mas Canoza go back to the Bay of Pigs.

Amazingly for a $500 million fiber-optic communications company, Sandwich Isles does not have a web site.

Sandwich Isles Communications shares offices with Waimana, Inc., Richardson-Luke, and Ku’iwalu.

As of today, June 2, 2005, Sandwich Isles Communications has not released to this writer a complete list of company officers and directors and their total remuneration….

Andrew Walden is the publisher and editor of Hawaii Free Press, a Big Island based newspaper. He can be reached via email at

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Catbird Note: See also Hawaiian Telcom Communications, Inc. Application For Review In the Matter of Sandwich Isles Communications, Inc., Before the Federal Communications Commission, Washington, D.C. – CC Docket No. 96-45 – Filed on June 15, 2005:


For more, GO TO > > > Vultures in Hawaiian Home Lands

$ $ $

Ms. Mariene Dortch
Office of the Secretary
Federal Communications Commission
445 12th Street S.W.
Washington, DC 20554

RE:    Support of Hawaiian Telcom’s Request for Reconsideration of Sandwich Isles Communications Study Area Waiver – CC Docket 96-45

Dear Ms. Dortch,

I urge you to support Hawaiian Telecom’s request of reconsideration of Sandwich Isles Communications study area waiver. I believe wholeheartedly that it is not in the best interests of the Universal Service Fund to be supporting this project. Most of the DHHL areas are unoccupied and will be for the foreseeable future. Thus I have some real serious issues with the USF subsidizing this boondoggle at a cost of nearly $14,000 per customer.

On top of that, some of the DHHL areas are being serviced by Hawaiian Telcom currently, e.g. Hilo Hawaii DHHL lands. From my view there will be serious issues arising from Hawaiian Telcom’s ability to service these customers in the future. I urge you to take a close look at this. Along with the fact that Sandwich Isles Communications will be skirting the rules of their licenses and service non-DHHL areas through their sister company ClearCom Inc. Thus going head to head with Hawaiian Telcom etc.

You can read evidence of this dream of SIC in numerous publications, like Forbes “Dreaming and Scheming Hawaiian Style, 10/2002,” Maui News, Hawaii Business News

Thank you for your time in this matter.


< Name Withheld By Request >

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June 4, 2002

Fiber-optic firm taps
federal gold mine

A Hawaii company will get $500 million to lay
a rural network that may see little use

By Anthony Sommer, Honolulu Star-Bulletin

LIHUE – Work has begun on a privately owned $500 million fiber-optic cable telecommunications system ultimately linking all Department of Hawaiian Home Lands residents currently without telephone service. Even if it services all the homes possible, the price tag will be $25,000 per home.

Of the total cost, $400 million will be paid through a loan from one federal agency that will be almost entirely repaid by another federal agency that assesses a fee on every telephone user in the United States.

The company building the system is Sandwich Isles Communications Corp. Wiring of Hawaiian Homes properties from Anahola to Kekaha, a total of 51 miles, began in Anahola in March.

Over the next five years, Sandwich Isles plans to lay 1,500 miles of fiber-optic cable linking the Department of Hawaiian Home Lands’ 69 housing developments scattered across six major islands. Included are undersea cables between the islands.

The plan is to provide state-of-the-art telecommunications to 20,000 homes.

But the 20,000 homes do not yet exist. The number represents the families who are on the Hawaiian Homes waiting list for new home.

At the current rate of DHHL home construction (about 500 new homes per year), the 20,000 dwellings will not be completed for another 40 years.

The initial service will reach less than 5 percent of the existing 5,400 DHHL homes statewide: only those that do not have existing service from Verizon.

Many of those who know about it think it is huge investment to provide services that will be rarely, if ever, used.

“Our question is, How do they make money with this thing?” said Kevin Kotsura, chief legal counsel of the Public Utilities Commission.

“Someone spotted a big pot of federal money just sitting there and went out and grabbed it,” said one Kauai official with extensive experience in applying for and receiving government grants.

“The money isn’t in operating the system, it is in building it.”

Neither Sandwich Isles nor the federal agencies providing the funding would say how much of the funding is for administrative costs and how much profit the company will be allowed on construction.

That information would give an edge to competitors, they said, even though there don’t appear to be any companies interested in serving Hawaiian Homes properties. Verizon officials said they don’t intend to compete with Sandwich Isles for the service the new company wants to provide.

Sandwich Isles comes equipped with a high-profile political pedigree. Robert Kihune, retired vice admiral and recently appointed Kamehameha Schools trustee, is chief executive officer.

Al Hee, brother of Office of Hawaiian Affairs Chairman Clayton Hee, is president.

In 1995, it made an agreement with Hawaiian Homes to build the system. There was no bidding and the project costs the department nothing.

Under the 1996 Federal Telecommunications Act, which encourages new companies, Sandwich Isles’ rates will not be regulated by the state Public Utilities Commission.

The financing includes $400 million in loans from the U.S. Agriculture Department’s Rural Utilities Service and perhaps another $100 million from unnamed “private investors.”

Most of the federal loan will be paid off by another federal agency, the Federal Communications Commission, through the Universal Service Fund, administered by the National Exchange Carriers Association.

The money comes from a federal charge on every monthly bill for every telephone user in the United States. For a residential customer, it works out to about $10 a year.

How much of the $400 million debt will be paid by DHHL customers and how much by every other telephone user in the United States through the Universal Service Fund?

Sandwich Isles has been tight-lipped about how its debt will be structured. But it says that’s because it doesn’t really know how the system will evolve.

“We have kind of a social mission,” said Gil Tam, Sandwich Isles vice president for government and community relations. “We don’t want to be a big telephone company like Verizon. Our mission is to serve Hawaiian Home Lands.”

“We definitely believe it will be utilized, but we don’t know yet what businesses the availability of the system will attract,” said Tam.

“I think it is clear to everyone that we need a first-class infrastructure to attract high-tech businesses to Hawaii and our mission is to build that infrastructure on Hawaiian Home Lands,” he added.

When the Star-Bulletin asked Roberta Purcell, administrator of the Telecommunications Division of the Rural Utilities Service (which is making the loan available) how much of the debt service would come from the Universal Service Fund, she responded: “Much of the information you are seeking is either proprietary or must be obtained directly from Sandwich Isles itself.”

Purcell refused to discuss the justification for spending a half billion dollars when there is no indication any significant number of Hawaiian Homes residents has been underserved by Verizon.

Asked how many of her acquaintances in Anahola currently lack service from Verizon, longtime Anahola resident Sondra Grace had to pause a minute.

“I can think of one old guy who doesn’t have a telephone and he lives out in an isolated valley,” she said.

“I’m not sure he’d want it even if it were available.”

* * * * *

January 16, 2003

Letters to the Editor – West Hawaii Today

High tech folly?


One day the white trucks and heavy equipment arrived. Most were bearing addresses of MasTec Oklahoma and MasTec Minnesota. All were flying Old Glory. My initial reaction was  the Big Island is being invaded by mid-American oil drilling wildcatters.

Quickly the flags came down and the addresses were covered over with magnetic MasTec Hawaii signs. There followed a brief WHT article heralding the coming good  a half billion dollar deal to provide free Internet access for Hawaiians.

As my esteemed, late Auntie Sheila used to say, “I smell a fish.” How long before this half billion dollar projection escalates due to unforeseen conditions (i.e. blue rock).

My observation is that putting six large strands of fibre-optic wire underground adjacent to our only highway will limit future lane expansion. How long until buried cable is obsolete, replaced by wireless technology?

Please, someone out there enlighten me. I fail to see the upside. This island is paradise on Earth. We have the best weather and the cleanest/warmest ocean. A great environment that also happens to be in the richest/most stable country.

I find it amazing that I haven’t read anything questioning this colossal project except for an letter penned by B. Houser. Basically, Houser said “imagine the beauty when all our infrastructure is underground.” Am I dreaming to think that these six large wires have so much over-capacity that they will be able to replace all the existing electric and cable poles?

My self-righteous indignation is based on fear that a few individuals and companies are using taxpayer’s funds for their own feeding frenzy.

I called my local representative, Leningrad Elarionoff, for information and he said something ironical. He is part Hawaiian, but won’t have access, because it is limited only to the people living in designated Hawaiian Homelands areas.

As you read this, traffic on the Kawaihae Road is delayed because there are so many telephone poles in the way of the digging.

Imagine how many thousands of homes for local Hawaiians can be built with a billion dollars.

Hopefully, after our new governor breaks up the airline monopoly, she can explore this issue. We deserve better.

Ron Roberts, Waimea

* * * * *

Response to a Letter from a Concerned Citizen


United States Department of Agriculture
Rural Development

Rural Business-Cooperative Service-Rural Housing Service-Rural Utilities Service
Washington, DC 20250

December 30, 2002

Dear (Name Withheld):

Thank you for your E-mail to Ann M. Veneman, Secretary of the U.S. Department of Agriculture. On behalf of the Secretary, we are responding to you E-mail concerning the funding of Sandwich Isles Communications, Inc. (Sandwich Isles).

Sandwich Isles has received loans totaling $167 million from the Rural Utilities Service (RUS), Telecommunications Program. The loans to Sandwich Isles are unique in that funding is provided to establish an intra-island and an inter-island fiber optic network to serve subscribers on the Hawaiian Homelands situated on six different islands. Due to the high cost of plant per subscriber, a large portion of the revenues will come from the Universal Service Fund (USF) and access charges. The USF is administered by the National Exchange Carrier Association. USF funds will be made available to Sandwich Isles on the same basis as to any other qualified recipient.

The Department of Hawaiian Homelands has licensed Sandwich Isles to serve the Hawaiian Homelands. Similarly, the Hawaii Public Utilities Commission issued a Certificate of Authority restricting Sandwich Isles to serving the Hawaiian Homelands. Therefore, it appears that Sandwich Isles would exceed the authority given to it by the duly authorized Hawaiian authorities if it expanded its service territory.

All RUS borrowers are subject to the nondiscrimination provisions of Title VI of the Civil Rights Act of 1964, as amended. To date, we have no evidence that indicates Sandwich Isles has acted in a discriminatory manner.

We hope that this information is helpful.


< Signed >

Hilda Gay Legg
Rural Utilities Service


The Citizen’s Answer

To: Hilda>

Date: Sat, 11 Jan 2003 00:19:14 -1000

Ms. Hilda Gay-Legg
United States Department of Agriculture
Rural Utilities Service
STOP# 1510
Washington DC 20250

Dear Ms. Hilda Gay-Legg,

As far as I’m aware of the of funding of this project is going to eventually total 400 million dollars in USDA RUS loans over the life of this activity. These loans are going to be paid off by the Universal Service Fund. The problem I have with this project is not with the Universal Service Fund paying off the loans. It’s with the USDA RUS providing loans to SIC to build this project which is violating Title VI of the 1964 Civil Rights Act.

When this project is complete, only native Hawaiians living on Department of Hawaiian Homelands can access this network.

Quoting from the United States Department of Justice web site in regards to Title VI of the 1964 Civil Rights Act, it “prohibits discrimination on the basis of race, color, and national origin in programs and activities receiving federal financial assistance.”

Quoting from the letter you sent me “Sandwich Isles has received loans totaling 167 million from the Rural Utilities Service (RUS), Telecommunications Program.” Last I checked this is a federal government entity. Since this project is for Native Hawaiians only, despite your claims that all RUS borrowers must conform to the nondiscrimination provisions of the 1964 Civil Rights Act, as far as I can see USDA RUS in this matter is violating federal law.

I am aware the Sandwich Isles Communications’ license from the Hawaii Public Utilities Commission allows SIC to operate only on Department of Hawaiian Homelands.

Since this is the case, why did USDA RUS loan this money to SIC when its obvious it would violate federal law.

I am going to be sending your letter and my response to Mr. John Ashcroft, Attorney General of the United States among others and see what he has to say about this project.


< Name Withheld by Request>


May 14, 2003

Summit loans questioned

Money loaned to the bankrupt firm’s CEO resulted
in improper payments, a new lawsuit contends

By Tim Ruel, Honolulu Star-Bulletin

A politically adept telecommunications company financed primarily by the federal government has several connections to troubled firm Summit Communications Inc., including a $456,793 loan that is being questioned by a bankruptcy trustee.

Sandwich Isles Communications Inc., headed by Al Hee, loaned the money in March 1998 to Summit through Summit’s then-chief executive and part-owner, Harold C. Johnston, according to a lawsuit.

In 2001, Harold Johnston received $8,400 in interest payments from Summit for the loan.

Harold Johnston denied loaning the money to Summit….

~ ~ ~

For more, GO TO > > > The Rise and Fall of Summit Communications

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July 9, 2003

Audit spurs criminal probe

The Attorney General’s Office is investigating issues
raised at the Hawaii Visitors & Convention Bureau

By Tim Ruel, Honolulu Star-Bulletin

The state Attorney General’s Office has opened a criminal review into points raised by the critical audit of the Hawaii Visitors & Convention Bureau.

The criminal justice unit of the Attorney General’s Office is looking into the matter, said Linden Joesting, a deputy attorney general. Joesting declined to say what aspects of the audit are being probed, because it’s an internal matter….

… continued at Hawaii Visitors & Convention Bureau


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April 27, 2001

Burial Council questions need
for fiber optics system


WAILUKU –– A proposed $500 million fiber optics cable system that would provide high-tech hookups to every parcel of Hawaiian Homes land on six islands was met with criticism – and suspicion – by the Maui/Lanai Islands Burial Council Thursday.

“These lines are telling a different story,” said Leslie Kuloloio, a former member of the council who was testifying on his own behalf, as he pointed to a map covered with red lines over land and under the ocean that would connect the project.

“These lines aren’t geared for Hawaiian Homes – they’re geared for a big picture 50 years from now,” he said.

The system has been proposed by Sandwich Isle Communications, an Oahu-based public utility company certified as a rural telephone company by the state Public Utilities Commission and Federal Communications Commission. The company, formed in 1995, is owned and operated by Native Hawaiians.

Although Sandwich Isle spokesman Gil Tam insisted the main purpose of the project was to offer state-of-the-art communications to Hawaiian homesteaders, the Native Hawaiians of the Burial Council feared their lands were being used to create a huge network for the public at large as well as commercial ventures and, possibly, the military.

“What about the Department of Defense? The Department of Energy?” wondered Kuloloio.

“Are they another part of the big picture that we don’t see? How many Hawaiians have computers and Microsoft? We’re at the bottom. What we need is water. I’d like to see all these lines be waterlines.”

Chairman Charles Kauluwehi Maxwell Sr. and Vice Chairwoman Dana Naone Hall were especially surprised that the cable would run all the way to LaPerouse Bay just to connect a small piece of Hawaiian Homes land that no one on the council even knew was part of the trust.

“I’m shocked, I’ve never even heard of that being homelands,” said Maxwell.

“There’s nothing there but lava. There’s no water there. People won’t be able to live there for at least 50 or 100 years.”

Maxwell pointed out that costs for the project will soar even more because of all the archaeological work that will be needed to address the expected concentration of ancient graves and historic sites through the South Maui corridor to connect LaPerouse. He said it would also needlessly disturb the bones of the ancestors.

“How is this (project) practical?” he asked. “I can’t see digging through intense, intense (layers) of archaeological sites and burials for (a community) that might not even occur.”

Hall called the draft environmental assessment prepared for the project “premature,” because the system would be built in phases and things would inevitably change over the years.

She also called the archaeological assessment prepared by Cultural Surveys Hawaii Inc. of Oahu “extremely inadequate” in describing the minimal impacts on burials that would result from widespread trenching.

Maxwell said the Burial Council has “had a lot of problems” with work done by Cultural Surveys Hawaii in the past and suggested that Sandwich Isle hire a Maui firm.

Kuloloio was also concerned that there had never been a public hearing about the system for Hawaiian homesteaders on Maui.

Tam said the idea for the project came from Hoaliku Drake, a past chairwoman of the Hawaiian Homes Commission. He said $400 million of the needed money would come from a loan from Rural Utility Services in the U.S. Department of Agriculture. The other $100 million would come from private sources.

The public would end up helping Sandwich Isle pay back the federal loan through charges on monthly telephone bills.

Tam said when AT&T broke up several years ago, a fund was created by Congress to enable rural areas to keep up with cities in terms of technology. At that time, the charge was $1 per customer each month. Current charges were not available.

Tam said those fees “help companies like ours to pay back the loan.”

No one on Hawaiian Homes land will be charged for any infrastructure. Individuals will only be expected to pay for their service.

The installation for Maui County would come to $30 million, with most of that being spent for Maui island.

Hall asked how Sandwich Isle would recoup its costs or ever make a profit considering that, in the near future, there probably will be barely 500 Native Hawaiian families on homestead lots across the island.

Tam finally acknowledged that the general public will be the major subscribers of the project. After the meeting, he admitted that the users might include the military.

“Anybody could” end up paying to tap into the network, he said.

Sandwich Isle hopes to obtain state or county permits to construct as many of the trenches as possible in public rights of way.

The Burial Council voted unanimously to require the developer to revise the environmental assessment, particularly the archaeological assessment. Members also asked to be included as a consulting party in further discussions.

Tam assured the panel that the company would not pursue a “finding of no significant impact” for the project and would remain in close communication with the Burial Council.

“We really want to do the right thing,” he said.

* * *

April 20, 2001

All In The Ohana

Sandwich Isles Communications Inc. is starting
a family of companies.

By Jacy L. Youn, Hawaii Business Magazine

When Sandwich Isles Communications completes its fiber-optic cables throughout Hawaii, a number of local companies will have already enjoyed benefits as a result of the high-speed network.

Summit Communications, which was incorporated in 1996, went fully operational the following year, providing telecom solutions for multi-tenant buildings. In March 1998, with just 15 employees, Summit entered into a long-term service contract with Sandwich Isles Communications, dedicating roughly one-third of its staff to the project.

According to Summit General Manager Chad Johnston, the contract is worth at least $5 million. It is a five-year project with an option to extend.

“We get about $100,000 a month,” says Johnston, “So they are a big portion of our revenues.” Last fiscal year, Summit reported revenues of about $1.9 million and is looking at a 40 percent increase this year, with sales expected to reach $3.2 million.

Johnston says working with Sandwich Isles has allowed Summit to expand by about 15 to 18 employees. A few, like Johnston, are expatriates. “In the near future our company may increase to 50 percent of what we otherwise would’ve been, because of this network,” he says. “I think Sandwich Isles wants to provide opportunities for our population here.”

Sandwich Isle’s Gil Tam, vice president for administration and community affairs, says that whenever possible they contract and support local businesses. Ohana Telcomm/Construction Inc. was incorporated in February 1999, after being approached by Sandwich Isles five years ago to do construction and material management for the project, which hadn’t even come on-line yet.

“The Sandwich Isles project was actually one of Ohana’s missions or charters,” says Randy Funn, president for Ohana. Sandwich Isle’s contracts with Ohana range from $100,000 to $5 million, and as of February, Ohana had completed seven projects. As a result, Ohana earned 2000 revenues of $5 million and hired at least 50 employees statewide.

“We’ve hired about six or seven expatriates, over 50 percent of our staff is part-Hawaiian, and we even have three employees that are actually moving onto these Hawaiian Homestead Lands as well,” says Funn. Although Sandwich Isles doesn’t require contractors to meet ethnic or racial guidelines, a majority of the companies that get contracts do make efforts to employ native and part-Hawaiians. “It’s a consistent philosophy,” Summit’s Johnston says. “Not to the point of reverse discrimination, but just to provide opportunities for our fellow Hawaiians.”

Alden Kealoha, owner of Maui-based Kealoha Construction, says that nearly all of his dozen or so employees are either native or part-Hawaiian. Kealoha Construction signed two contracts, valued at $166,000 and $138,000 respectively, to construct equipment buildings for Sandwich Isles on Maui this year. Revenues from these contracts will contribute to Kealoha Construction’s anticipated $3 million in annual sales.

All in all, the Sandwich Isles project has resulted in the creation of roughly 500 jobs statewide, the majority of which are temporary construction and contractor positions.

But according to Tam, Sandwich Isles’ ability to sustain employment remains one of its longer-term goals: “Right now we’’re sustaining about 100 jobs, and that’s before we even launched the network.”

For more, GO TO > > > The Rise and Fall of Summit Communications

$ $ $

Nepotism, Sole-Source Contracting, and Corruption

How OHA, Hawaiian Homelands, and Kamehameha
Schools/Bishop Estate Make Rich Hawaiians
Even Richer at Everyone Else’s Expense

by Kenneth R. Conklin, Ph.D.

This web-page was started in December, 2001 after a new version of the Native Hawaiian Recognition Bill was introduced in Congress: S.1783. The new bill contained a curious section that was never a part of earlier versions of the bill. This Section 9, entitled “Ethics,” is an explicit waiver of the federal law that prevents people from holding federal government positions where they or their close relatives and family members can profit from the decisions they make.

The main supporters of the Hawaiian Recognition bill are huge, wealthy institutions whose administrators and staff stand to profit enormously if the bill is passed. Thus, it was clear why Section 9 was included in the bill.

These people are shamelessly exploiting the Hawaiian grievance industry, getting land, money, and power for themselves by claiming to work on behalf of poor, downtrodden Hawaiians.

Passing the bill will let them pass lots of other bills — i.e., passing the Native Hawaiian Recognition Bill will give land, money, and power to large institutions and wealthy Hawaiians, allowing them to pass along to everyone else their BILL for housing, healthcare, education, infrastructure development, and lavish lifestyles.

Party on! …



Section 9 of the Native Hawaiian Recognition bill S.1783, introduced in the Senate on December 7, 2001, is entitled “Ethics.” This section is inappropriately named. It should be re-named “The Dawson/Hee Provision: License for Nepotism and Corruption.”

Here is the text:

“The provisions of section 208(a) of title 18, United States Code, prohibiting involvement by a Federal Government officer or employee in particular matters where the officer or employee or his or her spouse or minor child has a financial interest shall not apply to Native Hawaiians employed by the United States Office for Native Hawaiian Relations if the financial interest that would be affected by the particular matter involved is that resulting solely from the interest of the officer or employee or his or her spouse or minor child that results from his or her status as a Native Hawaiian.”

This language of Section 9 of S.1783 means that nepotism and financial conflict of interest are explicitly permitted, so that the people who run the federal office for Native Hawaiian Relations could be the same people (or their close relatives) who own and operate businesses in Hawai’i receiving minority set-asides or who otherwise engage as service-providers under contracts administered by the federal office.

We know that such practices have produced gross corruption in many Indian tribes, most notably the Mashantucket Pequots (Dan Inouye, Chairman of the Senate Committee on Indian Affairs responsible for recognizing that tribe originally, has raised over $100,000 in campaign contributions from Mashantucket Pequot tribal members and service-providers and has attended their local events in Connecticut).

Section 208(a) of title 18 of the United States Code was probably written specifically to prohibit the sorts of flagrant corruption which Section 9 of the new Akaka bill seeks to allow.

(For more, GO TO > > > U.S. Bureau of Indian Affairs.)

Section 9 is new — nothing like it was in earlier versions of the Native Hawaiian Recognition bill. The author of this website is naming this new Section 9 the “Dawson/Hee Provision” in (dis)honor of Beadie Dawson and the Dawson Group, together with Clayton Hee who is Chairman of the Office of Hawaiian Affairs.

Information is provided below, from published sources, about the nepotism and sole-source contracting already being practiced by the families of Beadie Dawson and Clayton Hee based on their “Native Hawaiian” ancestries and their political connections with the Office of Hawaiian Affairs.

Such nepotism, wealth-building, and corruption will surely intensify if the Native Hawaiian Recognition bill passes, because then family members and close business associates can become officials in the federal agency that will be writing specifications and contracts for projects on “Hawaiian Homelands” and for other aspects of the new Hawaiian “nation.” . . .



The Office of Hawaiian Affairs has reportedly appropriated up to $9 Million to lobby for passage of the Native Hawaiian Recognition bill. At the time the lobbying budget was approved, Haunani Apoliona was Chairman of OHA, although Clayton Hee was formerly and is now again currently the Chairman….

Here is an excerpt of a newspaper article from February 28, 2001 describing the lobbying effort (

The Office of Hawaiian Affairs is poised to spend millions of dollars in what could rank as the state agency’s most ambitious publicity campaign to gain federal recognition for Hawaiians and deflect court challenges that threaten its very existence. Called the “Post-Rice Overall Strategy” in the aftermath of the landmark Rice vs. Cayetano case, the proposal amounts to a blitzkrieg of local and national public relations efforts intended to “protect Hawaiian rights and programs, protect Hawaiian assets and rebuild broad-based support for a Hawaiian agenda,” according to a draft copy of the strategy….

Though OHA trustees will not say what they expect the campaign to cost, unofficial estimates range from $2 million to $9 million.

The agency has an investment portfolio worth more than $350 million. By a majority vote, its trustees have the final authority to spend money on projects they deem appropriate to fulfill the agency’s mandate.



During 2001 a massive sole-source contract came to public awareness, in which a developer will use federal funds to build and operate a massive money-losing fiber-optic cable network to link every parcel of Hawaiian Homelands on 203,000 acres of land throughout all the Hawaiian islands.

The project is using money from the federal tax added to every American’s phone bill to pay for helping remote, sparsely-populated rural areas get telephone service (however, many Hawaiian Homelands are not located in rural areas, and already have telephone service).

The developer is the brother of OHA Chairman Clayton Hee, and his small company was assembled with most of its management employees having close relationships with OHA, Kamehameha School/Bishop Estate, the Hawai’i legislature, and the political establishment.

~ ~ ~

Three articles were published about this scheme during 2001; and an excerpt is provided from the third one:

December 31, 2001

Savvy developer wins federal money
to wire homelands

The Honolulu Advertiser

A local politically connected company is eligible for as much as $400 million in federal loans to weave fiber-optic cable through Hawaiian Home Lands on six islands, even though much of the land is undeveloped and lacks roads, water and electricity. With the ability to draw on federal money rather than finding private investors to pay for the start-up, the project has the potential to be one of the most expansive high-tech ventures ever undertaken in Hawai’i.

At the center of the project is Al Hee, who has hired a number of people with significant Democratic political connections and experience, including former legislators and several people connected with Kamehameha Schools.

The foundation for Hee’s Sandwich Isles Communications Inc. was laid in 1994, when the Hawaiian Homes Commission awarded him the exclusive right to provide telecommunications services on all Hawaiian Home Lands. The exclusive license was approved without any competition or bidding after Hee’s plan was evaluated for the department by former state Sen. Mike Crozier.

Crozier said he is friends with Hee and considers him “a genius,” but that he evaluated the proposal fairly.

With contract in hand, Hee applied for and received low-interest federal loans from the U.S. Department of Agriculture under a program designed to provide telecommunications services to sparsely populated rural communities that wouldn’t otherwise get fiber-optic cable.

Part of the reason Sandwich Isles Communications has attracted interest in Hawai’i political circles is that the company has ties to a variety of politicians and current or former executives involved with Kamehameha Schools, another politically influential local institution.

Al Hee said his brother Clayton, chairman of the board of trustees of the Office of Hawaiian Affairs, is not involved in the project. Sandwich Isles did hire Clayton Hee’s wife, Lynne Waters, to produce videos for presentations to business leaders, homesteaders and others on the company’s operations.

Among the company’s 22 employees are former Democratic House Majority Leader Tom Okamura and former state Rep. Devon Nekoba, who both carry the title of agency coordination officer. Hee said the two advise company executives on government policy matters.

Ties to Kamehameha Schools, formerly known as the Bishop Estate, include Gil Tam, the company’s vice president of government and community relations, formerly director of administration and interim chief executive officer for Bishop Estate; and Robert Kihune, chief executive officer, now a Kamehameha Schools trustee.

The Hawaiian Homes Commission chairwoman in 1994, when the commission approved Hee’s license, was Hoaliku Drake, the mother of former Bishop Estate trustee Henry Peters.

Clayton Hee is a friend of Peters and was hired as a cultural affairs researcher for the Royal Hawaiian Shopping Center, a subsidiary of the former Bishop Estate/Kamehamaha Schools.

The new fiber-optic network Hee is building may not be profitable by itself, but it qualifies for ongoing subsidies from the Federal Communications Commission. In effect, the FCC will cover the operating costs of the network and pay Sandwich Isles a profit based on the value of the telecommunications equipment installed, Hee said.

Hee said he plans to borrow more than $400 million from the federal Rural Utilities Service to build what will eventually be a $500 million interisland fiber-optic network. He expects private money will be invested eventually, but no outside investors have been found so far.

Hawaiian Home Lands are tracts available at low cost to Native Hawaiians for businesses and homes. Hee has promised to [use] the federal money to install the latest generation underground fiber-optic telecommunications network, wiring all 69 parcels of Hawaiian Home Lands, a total of 200,000 acres.

Crozier said he “did the due diligence” and scrutinized Hee’s proposal, then recommended the commission approve it. The commission agreed, and voted unanimously to grant Hee an exclusive license to provide telecommunications services on Hawaiian Home Lands. The license was awarded under a section of the Hawaiian Homes Commission Act usually used to grant utilities what amount to easements, giving them access to install wires, pipes, poles or other equipment.

Francis Apoliona, spokesman for the Department of Hawaiian Home Lands, said that section of the act probably was not intended to grant monopolies to utilities, and the way the rule was used in this case is “unparalleled.” There was no competitive process to decide who would get the license, but Hee points out the commission never has required utilities to compete for the right to provide services on Hawaiian Home Lands.

The scope of the investment Hee is planning is huge. He said it will cost $60 million to string undersea fiber-optic cable links between the islands. Environmental reports for the project indicate it will cost the company another $100 million to dig trenches and bury cable on the Big Island; $35 million to install cable on Oahu; $30 million on Maui, Moloka’i and Lana’i; and $10 million on Kaua’i.

When that money is spent, Hee will have wired together all Hawaiian Home Lands and built the state’s third interisland fiberoptic network.

Sandwich Isles is free to sell telecommunications services to non-Hawaiians, and some observers have speculated that may be how Hee plans to make money. But Hee said the system was designed as a rural service for Hawaiians, not as a telecom provider for the state.

The planned system … runs through Waikiki in a configuration that may help Sandwich Isles market its services to customers far from Hawaiian Home Lands. Hee’s project is advancing at a time when similar privately financed businesses on the Mainland are struggling or collapsing because the demand for data transmission services hasn’t been nearly as strong as experts predicted. (See Global Crossing.)

Other industry observers are pessimistic that Sandwich Isles’ enormous undertaking ever will lead to a profitable business independent of federal subsidies. Those analysts, who asked that their names not be used because they might want to do business with Sandwich Isles, said the company is spending astonishing sums to provide service to relatively few far-flung customers, which translates to high costs and low revenue.

Roberta Purcell, assistant administrator of the telecommunications program of the U.S. Department of Agriculture’s Rural Utilities Service, confirmed that the federal government will be covering the cost of Sandwich Isles’ operations in its early years….

* * * * *





Albert HeePresident of Sandwich Isles Communications, Inc.

October 11, 2002

Dreaming & Scheming Hawaiian Style

By Carleen Hawn, Forbes Magazine

While foolhardy telecom chiefs choked their companies with debt to fund broadband rollouts, Al Hee contrived to have the U.S. government subsidize his state-of-the-art network. Look out, Verizon.

It is 8 a.m. on a blazing July day on the big island of Hawaii. Five miles south of the airport, amid the lava flows that span the island’s barren west coast, there springs up a lonely housing development called Laiopua. Budless flower beds and freshly paved sidewalks indicate the newness of the place. The uniform clapboard homes are well kept. Most are painted pink or yellow. Some have rusting car chassis in their driveways.

A small crowd has formed around the one building that stands out: a windowless cinderblock structure with a green metal roof. It is a festive gathering, including homeowners and several Hawaiian elders. One man chants a pule, or prayer, in Hawaiian. Another blesses the ground with water and ti leaves. A tall and imposing man–clearly the honored host–steps forward and unties a lei of maile plants, then bends to dig at the earth with a carved wood o’o stick.

This is a consecration ritual, all right, but not for some monument or native burial site. This crowd is here to bless the newest leg of a $500 million fiber-optic network that will soon bring high-speed Internet access and cheap phone service to the 225 households at Laiopua, a government-subsidized site deemed too poor and too desolate to merit even basic service until now. But the broadband rollout won’t come from Verizon, whose Hawaii unit has had a local monopoly here for most of 12 decades. It comes courtesy of the guy with the o’o stick, a native Hawaiian and first-time telecom entrepreneur named Albert S. N. Hee.

Hee, 48, is president of Sandwich Isles Communications, the rural carrier he founded in 1995 to serve the residents of Laiopua and 22,000 other native Hawaiians who inhabit the Home Lands, 200,586 acres of sparse, rugged terrain set aside by the federal government in 1921.

“This isn’t about making money, completely,” says Hee. “I wanted to do something for my people, to change things for the community of Hawaiians.”

By the time his buildout is complete in 2005, SIC’s network will link Hawaii’s six largest islands with 1,500 miles of underground and undersea cable filled with 48 strands of gleaming fiber-optic glass capable of transmitting 2.4 billion bits of data per second.

It will have all the slick features of the multibillion-dollar pipes that bankrupted once-high-flying carriers like Global Crossing and WorldCom. The only difference is Al Hee didn’t have to go into hock on Wall Street to build his network. Hee got the government to pay for it, more or less.

It gets better: While Hee landed federal largesse because he will serve underprivileged natives of Hawaii, he is also building out his network in Honolulu and other cities to compete with Verizon and other incumbents for higher-spending businesses and richer residential customers.

“It’s all about dreaming and scheming,” says Hee, clad in his trademark Hawaiian shirt and Bermuda shorts and standing barefoot on the plush white rug in his glittering office. He gazes out 27 floors above the bustling business district of Honolulu and adds: “I dream up something and then scheme and scheme until I find a way to make it happen.”

That irks his rivals. At a time when vanquished telecom titans such as former Qwest chief Joseph P. Nacchio call for a government bailout to revive a devastated industry, a rookie they never heard of has beaten them to it.

“We question the reasonableness of it,” says Joel Matsunaga, vice president at Verizon’s Hawaii unit. “They’re getting loans from the government, then they’re going to get other subsidies to pay off the loans. To compete with other providers in an open market just isn’t fair.”

SIC’s network, because it targets underserved rural areas, is being financed with $400 million in long-term, low-interest loans from the Department of Agriculture’s Rural Utilities Service (RUS). The agency has subsidized rural delivery of water and electricity since 1935, adding phone service in 1950.

SIC, an RLEC (rural local exchange carrier) licensed to serve only rural communities, landed the largest grant the agency has ever made.

The loans have a term of 20 years at 5% to 6% annual interest. The remaining $100 million of SIC’s $500 million price tag will come from private funds, including some of Hee’s own cash.

The residents of Laiopua and their ilk need Hee’s help. Thirty percent of native Hawaiians are functionally illiterate; 45% are on welfare. SIC’s network will help provide home-schooling and remote health care as well as phone calls. Many customers previously had no wired phone service at all; the only way they could dial 911 was by using a cell phone.

Hawaii’s Home Lands, some 69 tracts on six islands, are overseen by the state’s Department of Hawaiian Home Lands (DHHL), established in 1961 and tasked with developing affordable housing for native Hawaiians, many of whom are homeless or can’t afford to live in urban centers.

But most of the land is so desolate and fallow that it had long gone ignored by developers and utilities. Except for a few homesteads near urban centers, Hawaii’s main carrier (formerly GTE and now Verizon) never built out its networks to serve the Home Lands.

If this sounds strange, it should. For decades the Federal Communications Commission has used a Universal Service Fund to subsidize carriers to help provide affordable phone service to remote areas. But carriers are required to serve such “high-cost” areas only if they have networks in place to do so. The FCC can’t require Verizon to extend to a new remote region that is unlikely to produce a profit.

In 1992 DHHL asked GTE to provide service to a new homestead called Maku’u near the city of Hilo on Big Island. Verizon said it would have to charge DHHL $1 million for installation, or about $10,000 per subscriber. With a budget of just $15 million, DHHL couldn’t afford it. Nor could the customers themselves.

This is when DHHL turned to Al Hee, a well-known businessman who made his fortune in the late Eighties building a hydroelectric power plant on Hawaii.

The younger of two sons, Hee was born into a working-class family in Honolulu in 1954. His mother, a native Hawaiian, worked as cashier at the famously pink Royal Hawaiian Hotel on Waikiki beach. Hee’s father, a Chinese-American, was a site inspector for the Honolulu Board of Water Supply. Father and son would trek through the large water mains beneath Honolulu’s streets, an experience that later inspired Al’s foray into fiber optics.

Hee attended the Kamehameha Schools on Oahu, a highly regarded private academy for Hawaiians set up by the late Princess Bernice Pauahi Bishop. Later he won an appointment to the U.S. Naval Academy at Annapolis. When he left for school in 1972 it was the first time he had ever set foot off the islands. Hee bristled under the rigors of military life but says it served him well in business. “You can’t quit, that’s what it taught me. It gave me the undeniable belief that I can do whatever I put my mind to.”

Annapolis helped Hee in other ways, too. It was through a former classmate that he later made the acquaintance of Michael Powell, now chairman of the FCC. The two remain friendly.

“Albert is an extraordinary entrepreneur. His goal is quite noble,” Powell says.

“SIC is a labor of love for him as much as it is a business. He could be willing to take a hit [on it], because you know he’s not going to recover that money from the customer.”

SIC customers will pay no more than $20 a month for their phone service, as much as 20% less than what Verizon charges its subscribers. That owes in part to SIC’s getting back-end subsidies from the Universal Service Fund.

“That’s not fair competition,” Verizon’s Matsunaga complains.

But then, Al Hee is an opportunist. He graduated from Annapolis in 1976 and served in New Jersey before returning to Hawaii in 1980. The state was in a real estate boom, and resort developers faced a lack of desalinization plants and power utilities. In 1985 the Federal Energy Regulatory Commission began deregulating power, and Al Hee made the most of it. “I figured if buying utility stocks was smart, then owning a utility must be smarter,” he says.

Hee sowed the seeds of his first fortune when he got a contract to develop a hydroelectric plant on the Big Island in 1986. He raised financing and kept a small equity stake in the plant, later selling his share for several million dollars, which formed the basis for his current holding company, Waimana Enterprises.

Waimana (Hawaiian for “water power”) later formed SIC.

When DHHL, the state Home Lands agency, approached Hee in 1992, he had been looking for a way to “give back” to the Hawaiian community. Ray Soon, now head of DHHL, approached him and explained the homesteaders’ predicament. Soon asked whether Hee could help find a way to develop a telecom infrastructure for the homesteaders. The catch was that DHHL would not be able to pay for it. Remarkably, Hee agreed.

Hee tried to raise money from private investors like Mitsubishi but found no takers. Then a Hawaiian friend, who had worked in the first Bush Administration, alerted him to the rural loan program.

In 1995 DHHL gave Hee an exclusive license for voice and data services, letting Hee register with the FCC as a rural local exchange carrier and qualify for government-backed loans. Still, it took several trips to Washington, D.C., and one helicopter ride over DHHL land with an RUS loan agent in tow, to build his case.

Now Hee had to build the network and find a way to turn a profit on it. He spent several years lobbying for construction permits from state utility commissioners, local mayors and other pols.

“It was a headache,” Hee recalls. He also hired a consultant to plan the project and lined up contractors and network specialists like Tyco, NTT and little-known Summit Communications for the actual laying of the network.

In 1997 SIC broke ground near four rural homesteads on the north side of Oahu. By 1999 construction was under way for three more homesteads on Maui and Molokai.

Two years later SIC had completed nearly 5% of its buildout and was serving 11% of the 22,539 residents on nine homesteads, including Laiopua. It was at this point, Hee says, that he came up with a big idea for how to make money off SIC. It happened one night as he drove home from work and suddenly remembered the subterranean tours of water mains that he had taken with his father years before.

“What’s the most expensive part of building a telecom network?” Hee asks. “Digging up the streets to lay the fiber. Oahu has miles and miles of vacant water pipes lying fallow,” he adds, then smiles shrewdly.

“They’re a liability to the city”--and a boon to Al Hee.

He figured he could use the water mains to easily extend his network to central Honolulu and take on Verizon.

The problem: SIC’s federal license as a rural carrier permitted it to serve only rural areas.

The solution: ClearCom, a CLEC (competitive local exchange carrier) that he formed four years earlier. “In business we call these parallel paths,” he reasons.

ClearCom will use SIC’s central switching offices to link the communications traffic of urban customers to the public network. Because for at least the first few years ClearCom won’t have to pay SIC for access, Hee figures he can undercut incumbent rivals on price.

Now-defunct CLECs, like NorthPoint Communications and Covad, were bankrupted by the huge access fees they had to pay to the Bells.

In June 2002, following an open auction in which SIC was the only bidder, Al Hee and ClearCom were granted an exclusive license with Honolulu’s Board of Water Supply to lease all of its abandoned water mains in perpetuity.

ClearCom has agreed to pay an annual fee of $1 million, and when the network is complete ClearCom also will pay the board a dollar a year for every foot of pipe it uses. Hee will also deliver voice and data service to the water board itself at a 50% rebate.

So Al Hee uses government subsidies to build a telecom network for rural consumers and parlay it into profits by serving urban residents and businesses.

This irritates his detractors, but he doesn’t flinch.

“My [SIC] license is dependent upon providing service to the Home Lands. As long as I do that, I’m good. Worst-case scenario, someone sues and it takes 10 to 15 years to work through the courts. By then my network will be built. Will they then tear it up? No way.”…

See also Clayton Hee


Alliance Capital Management – The largest institutional owner of Temple-Inland Inc. and a piggy-bank for some other notable corrupt organizations – like ENRON.

As of Sept 30, 2001, the top institutional holders for ENRON were:

#1 – Alliance Capital Mgmt with 42,939,048 shares; followed closely by

#2 – Janus Capital Mgmt with 41,361,200 shares;

#3 – Putnam Investment Mgmt (Marsh & McLennan) with 23,122,100 shares;

#4 – Barclays Global Investors (a member of the Committee of 300) with 23,047,196 shares; and

#5 – Fidelity Mgmt & Research with 20,790,452 shares…..

The remaining of the top 15 investors included: Smith Barney; State St. Global Advisors; Aim Mgmt; Vanguard Group; Morgan Stanley; Northern Trust; Deutsche Bankers Trust; Massachusetts Financial Service; Presdner Rcm; Cs First Boston Investment. . . .

* * *

And just WHO owns

As of Sept 30, 2001, the top institutional holders were:

#1 – General Electric Co.

#2 – Citigroup

#3 – Pfizer

#4 – Tyco Int’l

#5 – AOL – Time Warner

#6 – Microsoft

#7 – MBNA Corp

#8 – American International Group

#9 – Kohl’s Corp

#10 – AT&T Wireless

#11 – Bank of America

#12 – The Home Depot

#13 – Comcast Corp

#14 – Liberty Media Corp

#15 – Schering Plough

See also: Temple-Inland Inc.

For more on ENRON, GO TO > > > The Story of Enron


Admiral B.R. Inman, USN (Ret.)Bob Inman is a native of Rhonesboro, Texas. During 30 years of active duty in the U.S. Navy, he rose to flag rank and spent most of his career in intelligence. He directed the National Security Agency including duty as deputy director of the Central Intelligence Agency. His decorations include the Defense Distinguished Service Medal, the Navy D.S.M. and the Legion of Merit.

Following retirement from active duty in 1982, Admiral Inman served as the first chairman and CEO of the Microelectronics and Computer Technology Corporation (MCC) and later as head of Westmark Systems, Inc., both in Austin.

He now serves as a member of the board of directors of Fluor, Science Applications International, SBC Communications, Inc., Temple-Inland and Xerox. He serves in a volunteer status as a director of the Public Agenda Foundation and the Center for Excellence in Education. He serves as a trustee of the California Institute of Technology, Southwestern University, the American Assembly, and the Center for Excellence in Education. His primary occupation is investing in startup companies.

Admiral B.R. Inman is a distinguished alumnus of the University of Texas.

See also: Temple-Inland


Clayton Hee – Off and on Chairman of Hawaii’s Office of Hawaiian Affairs (OHA); brother of Alfred Hee.

September 11, 1998

“I believe certain trustees received kickbacks
worth hundreds of thousands of dollars.”

–Margery Bronster

The trustees deny the state’s allegations and blame the Cayetano administration for exploiting the controversy

By Rick Daysog, Star-Bulletin

Raising the possibility of criminal charges, Attorney General Margery Bronster says Bishop Estate trustees received kickbacks, participated in illegal political campaign contributions and mismanaged Kamehameha Schools.

Yesterday, Bronster filed a 58-page petition in probate court targeting the removal of the estate’s majority trustees Henry Peters, Richard Wong and Lokelani Lindsey, saying the three trustees enriched themselves at the expense of the trust’s beneficiaries.

Bronster alleged that trustees Peters and Wong received kickbacks from a Hawaii Kai land deal involving Wong’s brother-in-law, Jeff Stone.

Lindsey, meanwhile, mismanaged Kamehameha Schools and used trust employees to run personal errands and help renovate her Hauula home, the attorney general alleged.

“I believe certain trustees received kickbacks worth hundreds of thousands of dollars from relatives via elaborate real estate transactions,” Bronster said in a letter to Gov. Ben Cayetano, who ordered the investigation more than a year ago.

“Trustees have hired friends, relatives and political allies who have given little or no service to the trust and trustees have also routinely made sweetheart deals with this same assortment of relatives, cronies and other hangers on.”

Bishop Estate attorney William McCorriston denied that any breaches of trust have occurred, saying trustees and their individual attorneys look forward to answering the charges in a court of law.

“They are looking forward to having this resolved by judicial resolution in a court of law — hopefully by a judge who won’t be influenced by the electronic lynching by the media or be persuaded by anything except the evidence that will be presented,” McCorriston said.

Yesterday’s removal petitions also sought surcharges against Peters, Wong and Lindsey, saying the majority trustees offered jobs to friends and relatives. The jobs paid high salaries but offered little services to the estate.

Some of the hirings forced the estate to create unbudgeted positions to accommodate the new hires, the state said. They included:

Local attorney and Peters’ friend, Al Jeremiah Jr., was paid $35,000 to conduct menial and clerical labor in helping to inventory the Baker/Van Dyke collection of Hawaiiana, the state said.

Office of Hawaiian Affairs trustee and Peters’ associate, Clayton Hee, was hired by the estate’s Royal Hawaiian Shopping Center Inc. subsidiary as a cultural affairs researcher, according to the state.

State Rep. Terrance Tom, a former colleague of Peters’ in the Legislature, has been paid a monthly retainer of $4,000 for negligible legal services, the state said. Tom has denied wrongdoing in the past.

A company headed by Big Island businessman Larry Mehau is being paid $40,000 a month to provide security services at Kamehameha School’s main gate. Mehau is a friend of Wong and Lindsey.

[The article doesn’t mention Royal Hawaiian Shopping Center’s long-running contract with Mehau’s Hawaii Protective Services for security services at the shopping center.]

Peters’ former employer, Dura Constructors Inc., received more than $2.7 million in nonbid construction work from the Bishop Estate starting in 1995. Dura renovated Peters’ home in Maili….

The removal requests come more than a year after the state launched its investigation into allegations of financial mismanagement, breaches of fiduciary duties and manipulations of the student admission process at the estate-run Kamehameha Schools.

See also: Albert Hee


Gilbert Tam – From RICO lawsuit Harmon v. Federal Insurance Company; P&C Insurance Company; Marsh & McLennan, Inc. et al.:

Gilbert Tam is a Director, P&C Insurance Company, Inc. and the former Administrative Group Director for Kamehameha Schools Bishop Estate. Tam is currently an officer with Bank of Hawaii, which has substantial financial connections with KSBE.

Tam was also a co-investor in the McKenzie Methane deal at the time he was a KSBE manager. Plaintiff alleges that Tam’s actions, through his complicity, deceptions, and breach of fiduciary duties, in collusion with some or all of trustees of KSBE, with other managers and employees of KSBE, with other officers and directors of P&C, and with outside contractors, attorneys, politicians and others, constituted a conspiracy to defraud P&C and the beneficiaries of the Estate of Bernice Pauahi Bishop; racketeering; mail fraud; wire fraud; extortion; and violation of IRS interim sanctions regulations….


Grant Johnston – President of Summit Communications; son of former president, Harry Johnston.

See also: Summit Communications, Inc.


Guaranty Financial Services – A large financial services group and primarily owned by Texas-based Temple-Inland Inc.

From the Guaranty Bank website:

Guaranty Financial Services (“GFS”) operates a full-service bank and engages in mortgage banking, insurance brokerage and real estate activities.

•• Guaranty Bank (“Guaranty”) is a $16 billion full service bank with more than 140 offices in Texas and in California. Guaranty offers a full range of consumer deposits and loan products. Additionally, Guaranty is nationally recognized as a real estate lender, a primary provider of services to the mortgage banking industry, and a provider of financing programs for middle market companies.

•• Guaranty Residential Lending, Inc. (“GRL”) has offices nationwide and is a leader in mortgage origination and servicing. The mortgage servicing portfolio is more than $10 billion. The company provides single-family home loans to more than 50,000 families annually nationwide.

•• Guaranty Insurance Managers, Inc. (“GIMI”) and its related entities offer a comprehensive range of financial products and services, including personal and commercial lines, annuities, life and health insurance, and risk advisory services. GIMI is ranked in the top 1% of insurance agencies in the nation and is the second largest in the state of Texas.

•• Lumbermen’s Investment Corporation (“LIC”) is a land development and commercial real estate investment company, with investments and residential community development as well as commercial real estate properties in nine states from Florida to California.

See also: Temple-Inland Inc.


Harold Johnston – Former president of Summit Communications.

February 20, 2002

Local Telecom Reorganizing

Summit Communications files for Chapter 11

By Kelli Abe Trifonovitch

Summit Communications, Inc., a Hawaii-based telecommunications firm has filed for Chapter 11 protection and has named a president. The company provides local and long distance service to multi-tenant buildings and call center services. The state of Hawaii has highlighted Summit in the past as an example of a high technology company doing business in Hawaii.

Summit was co-founded in 1996 by former GTE Hawaiian Tel executive Harold Johnston, who still holds a major stake in the company. His son, Grant Johnston, has been named President. Grant joined Summit in 2001 as general manager of the call center operation.

Grant Johnston says Summit has had steady sales growth since it was founded. “Economic conditions within our industry as well as the events of September 11th negatively affected business, so the filing allows the company some breathing room,” he said in a statement.

Johnston also said that they are in the process of contacting customers to discuss Summit’s plans for continuing and expanding the business.

He said, “We are a Hawaii company and will be here for our customers for the long term since we value our reputations and understand our responsibilities.”…

See also: Summit Communications, Inc.


Hawaii Visitors & Convention Bureau – The bureau that’s needed to tell the world how beautiful Hawaii is.

July 9, 2003

Audit spurs criminal probe

The Attorney General’s Office is investigating issues raised at the Hawaii Visitors & Convention Bureau

By Tim Ruel, Honolulu Star-Bulletin

The state Attorney General’s Office has opened a criminal review into points raised by the critical audit of the Hawaii Visitors & Convention Bureau.

The criminal justice unit of the Attorney General’s Office is looking into the matter, said Linden Joesting, a deputy attorney general. Joesting declined to say what aspects of the audit are being probed, because it’s an internal matter.

The Hawaii Tourism Authority asked the Attorney General’s Office to review findings of the state audit, which was released last week. The audit faulted the authority for lax oversight of the bureau’s $151.7 million in state contracts to market Hawaii to travelers. The authority was created in 1998 to contract with the Hawaii visitors bureau, a private agency funded mainly by taxpayer dollars.

On Thursday, bureau officials admitted the organization had done some things wrong, none intentionally. Tony Vericella, president and chief executive of the visitors bureau, said he had paid back $670 in state-funded personal expenses, and apologized.

The bureau said it never should have paid invoices forwarded by Joe Blanco, Gov. Ben Cayetano’s tech czar, which bureau Chairman Tony Guerrero described as “wrong, wrong, wrong.” The audit questioned the arrangement as a way of evading the state procurement code. Blanco denies the accusation.

The bureau will no longer allow Japan Airlines to pay for the benefits of bureau Vice President Kiyoshi Mukumoto, which the audit said carried the appearance of a conflict of interest.

And the bureau said that, if it could do things over again, it would have put a Taiwan promotional contract out to bid, rather than awarding it to a company run by Wei-Wei Ojiri, who was a bureau vice president at the time. The bureau said Ojiri had technically resigned before the contract was awarded to her company.

Guerrero could not be reached for comment yesterday.


Joseph P. Kennedy, II – Former congressman from Massachusetts; director of MasTec, Inc.

March 13, 1998

U.S. Rep. Joseph P. Kennedy II
is retiring from politics

By JEAN McMILLAN, Associated Press

BOSTON (AP) – Rep. Joseph P. Kennedy II announced Friday he will not run for re-election and plans to leave politics to run the nonprofit agency formerly headed by his late brother, Michael.

Kennedy, eldest son of the late Sen. Robert F. Kennedy, also cited a desire to spend more time with his wife and his twin sons from his first marriage.

“This last year has brought me new recognition of our own individual vulnerabilities and the vagaries of life,” Kennedy said. “I want to focus as well on responsibilities to my own family, both my immediate family and the larger one.”

Kennedy, 45, made the announcement at the offices of Citizens Energy Corp., a nonprofit heating assistance corporation he took over after Michael died in a New Year’s Eve skiing accident.

Kennedy said he would devote his energies to that work, but he did not rule out running again for political office.

Kennedy, a member of the House Banking & Financial Services Committee, said he was proud of his work on issues such as health care, affordable housing, Social Security, Medicare and educational opportunity.

Kennedy represents the 8th District, covering much of Boston and Cambridge. The seat was once held by his uncle John F. Kennedy, and the late House Speaker Thomas P. “Tip” O’Neill Jr.

Kennedy, who was 15 when his father was assassinated in 1968, won overwhelmingly in six elections for Congress since 1986.

In August, Kennedy announced that he would not run for governor. Although he had been viewed as a heavy favorite in the race, his public standing slipped following negative publicity during the first half of 1997.

First, his ex-wife, Sheila Rauch Kennedy, published a book accusing him of trying to force her into agreeing to an annulment of their marriage.

Then, Michael was investigated for allegedly having sex with the family’s teen-age baby sitter.

On July 4, one of Joe Kennedy’s twin 17-year-old sons was burned as he and the congressman lit fireworks at the family compound in Hyannis Port. Fireworks are illegal in Massachusetts.

In August, cousin John F. Kennedy Jr. called Joe and Michael Kennedy “poster boys for bad behavior.”

* * *

Kennedys in Politics

By The Associated Press

Rep. Joseph P. Kennedy II’s retirement leaves at least five Kennedy family members in politics:

Sen. Edward M. Kennedy, D-Mass.

Rep. Patrick Kennedy, D-R.I.

Maryland Lt. Gov. Kathleen Kennedy Townsend.

Ambassador to Ireland Jean Kennedy Smith.

Mark Shriver, member of the Maryland House of Delegates. Son of Sargent and Eunice Kennedy Shriver.

~ ~ ~

Joseph P. Kennedy II’s life at a glance

A look at Joseph P. Kennedy II’s political and private life:

Aug. 13, 1973 — Causes sport utility vehicle to roll over on Cape Cod, leaving one of his female passengers paralyzed.

1976 — Graduates from University of Massachusetts-Boston with degree in legal education services. After graduation, manages uncle Sen. Edward M. Kennedy’s 1976 re-election campaign.

1979 — Marries Sheila Rauch. The couple have twin sons the following year.

1979 — Becomes president of Citizens Energy Corp., which helps provide low-cost heating oil for the poor.

November 1986 — Elected to Congress, succeeding Tip O’Neill.

1991 — Divorced and later marries an aide, Beth Kelly; granted annulment of his first marriage.

November 1996 — Easily re-elected to sixth congressional term.

March 1997 — Published reports say ex-wife’s book would accuse Kennedy of trying to bully her into agreeing to annulment. She criticizes Roman Catholic church’s role in annulment.

April 25 — First report alleging that brother Michael Kennedy had affair with his children’s teen-age baby sitter. District attorney begins investigation.

April 30 — Boston newspapers publish polls showing annulment and baby-sitter scandals taking toll on Kennedy’s political popularity.

June 7 — Apologizes to delegates at a state Democratic convention for his family’s problems.

July 8 — District attorney drops Michael Kennedy investigation.

July 19 — Matthew Kennedy, one of Joseph Kennedy’s twin sons, suffers minor burns during fireworks mishap at family compound on Cape Cod. Fireworks are illegal in Massachusetts, but state fire marshal says he will not pursue charges.

Aug. 6 — Creates state campaign committee in preparation for running for governor.

Aug. 11 — John F. Kennedy Jr. criticizes Joe and Michael Kennedy in George magazine, calling them “poster boys for bad behavior.”

Aug. 28 — Announces he will not run for governor in 1998.

Dec. 31 — Michael Kennedy dies in skiing accident in Colorado.

March 13, 1998 — Announces he is won’t seek re-election and will leave politics.

* * *

May 29, 2001

Haitian Connections

How Clinton’s cronies cashed in on foreign policy.

One of the famous foreign policy interventions of the Clinton Presidency was the controversial decision to return Jean Bertrand Aristide to power in Haiti in 1994. This newspaper supported Mr. Clinton, arguing that with U.S. prestige committed and with the restoration of democratic government in the impoverished island as a goal, the President deserved support.

So it is worth revisiting the status of Haiti today, especially to ask how it came to pass that in the wake of this intervention, President Clinton’s political associates – including a former Democratic Party finance chair, a former White House counselor and Joseph P. Kennedy II – ended up in commercial relationships with the Aristide government’s monopoly-owned telephone company.

Since 1994, both as president and later as the power broker behind the presidency of René Preval and the Lavalas Party, Mr. Aristide has ruled Haiti like a mob don. He has extorted the business community, trampled on the 1987 constitution and terrorized his political and economic opponents. Just this past week the Coast Guard sent a ship of 121 Haitian refugees back to the island. Nearly 700 have tried to escape by sea this year.

Haiti’s November 26 Presidential election, in which less than 5% of Haitians voted, was a sham. Five international human rights organizations released a joint statement in January denouncing the election’s violent political climate. Amnesty International called upon the Lavalas Party to condemn acts of intimidation and violence committed in the party’s name. The European Union voted to withhold aid.

In response, the Clinton Administration in January sent Anthony Lake, a former Clinton national security adviser, to Port-au-Prince. He came back with an eight-point agreement in which Mr. Aristide promised better behavior in the future.

The Lake agreement was one free pass too many for Mr. Aristide’s battered opponents (just this past Monday, a house was shot up where opposition leaders were meeting, wounding three). They have grown increasingly eager to tell what they know about Mr. Aristide’s business activities–both now and in Washington during the 1991-94 exile that followed his overthrow by General Raul Cedras.

Regarded as Haiti’s legitimate president at that time, U.S. authorities granted Mr. Aristide access to the country’s frozen assets, most notably the long distance telephone royalties due to Haitian Teleco.

According to Christopher Caldwell, writing in the July 1994 American Spectator, Mr. Aristide “raised hackles at the Latin America division of AT&T by ordering the proceeds from Haiti’s international phone traffic moved to a numbered Panamanian account.”

In November 1993, The Wall Street Journal reported that Mr. Aristide was paying Democratic Party operative Michael Barnes $55,000 a month to lobby for U.S. action to reinstate him.

With the help of U.S. troops, he returned to Haiti. After regaining Haiti’s presidency, the telephone monopoly continued to be useful. Because Haiti is one of the top three markets in the region for long distance calls from the U.S., the monopoly is a cash cow. Mr. Aristide placed loyal Lavalas followers in charge of it, keeping it under his control….

Says one U.S. telecom expert with knowledge of Haiti’s system: “The real sweetheart deals are the ones that have a connection inside Teleco. Those are the deals that make people filthy rich.” . . .

The wide recognition in Haiti that such deals are available has made the presence of independent U.S. long distance provider Fusion Telecommunications International a topic of much discussion among the Haitian business community.

Fusion’s board of directors reads like a who’s who of Democratic Party heavyweights.

Fusion’s CEO is Marvin Rosen, who was the finance chairman of the Democratic National Committee during the 1996 Clinton fund-raising scandals.

Fusion’s board of directors includes Joseph P. Kennedy II, former Mississippi Governor Raymond Mabus and Bill Clinton’s White House chief of staff and Arkansas confidant Thomas “Mack” McLarty, now with Kissinger McLarty Associates….

The Fusion board also includes Joseph R. Wright, a former director of the Office of Management and Budget under President Reagan.

Listed as chairman of the Fusion Advisory Board is former President Bush’s White House Chief of Staff John Sununu. …

Last fall, when we began to inquire about Fusion’s long distance service to Haiti, the company’s in-house counsel refused to either confirm or deny that it even offered service in that market. Numerous follow-up calls since to her and other members of management were never returned. Mr. McLarty denied any knowledge altogether about Fusion’s involvement in Haiti. Mr. Kennedy did not return our query.

It was only after our Mary O’Grady independently confirmed Fusion’s activity in Haiti and wrote about it for the Americas column that Mr. Kennedy’s office gave us a statement: “Joe has no joint venture, partnership or business arrangement with the president of Haiti or for that matter, anyone in Haiti.”

The statement also says that Mr. Kennedy is not involved in running Fusion. Mr. Kennedy’s denial is interesting given his February 7 op-ed in the Boston Globe where he wrote on the occasion of Mr. Aristide’s inauguration: “I was proud to help bring more than $1 million in private investment from Fusion into Haiti.”

We are not suggesting that Fusion’s business in Haiti is illegal. And we are not so naive as to be shocked at the spectacle of prominent political figures exploiting their former lives as public officials. We are saying that Fusion’s Haiti deal is sleazy. For people connected with the Clinton Presidency-cum-political machine to attach themselves like pilot fish to the bleeding ruin of Haiti under Jean Bertrand Aristide, in the wake of an enormous commitment of American prestige and money on behalf of Haiti’s people, doesn’t survive any conceivable smell test.

It also smells that it is so hard for Fusion’s Clintonites to acknowledge secret business deals with Mr. Aristide, the sole owner and operator of the Haitian economy, who is in power thanks to a U.S. intervention.

And yes, we do wonder if this is the tip of yet another Clinton iceberg.

The Bush Administration, particularly Colin Powell at State, should be alert to this phenomenon as it revisits the venues of the Clinton foreign policy legacy.

See also: MasTec, Inc.


MasTec, Inc. – A Florida-based company that’s one of the prime contractors for the construction of Sandwich Isle’s fiber optics cable network.

September 30, 1999

All in the Family

By Jim DeFede, Miami New Times

Attorney Hank Adorno had represented the interests of Jorge Mas Canosa for more than a decade and was both a friend and a trusted advisor to the patriarch of Miami’s exile community. Adorno was also considered to be very close to Mas’s son, Jorge Mas, Jr.

Both men own summer homes in Pinehurst, North Carolina, and are golfing buddies. And so it came as no surprise that following Mas Canosa’s death in November 1997, Adorno was called on to help Mas Jr. run the family business, MasTec, a billion-dollar telecommunications company.

In January 1998, Adorno was named executive vice president of MasTec, responsible for overseeing the company’s operations both domestically and internationally. It was made clear, however, that Adorno wasn’t just another vice president. He would be running the company and reporting directly to MasTec chairman, Jorge Mas, Jr. . . .

Twenty months later “family” relations appear to have reached a record low. Six months ago Adorno abruptly resigned from MasTec and returned full-time to his law firm. And earlier this month the firm withdrew as counsel representing MasTec subsidiary Church & Tower in its legal battles with Miami-Dade County over a controversial paving contract.

Few details have emerged to illuminate the behind-the-scenes wrangling that prompted these dramatic changes. … But according to sources familiar with the events, problems arose from a clash between Adorno and Joel-Tomas Citron, who joined the MasTec board of directors at the same time Adorno arrived.

Before joining the publicly held MasTec, Citron, who was born in Sweden, sat on the boards of directors of several telecommunications companies and trade associations in Europe and the United States. It was through those companies he met Jorge Mas, Jr., who invited him to join MasTec’s board. . . .

It could no longer be run as the small, family-owned business it had been during the days of Jorge Mas Canosa. For instance, even with several thousand employees the company had no human resources department. There wasn’t even an organized system of personnel files. “What billion-dollar company doesn’t have a human resources department?” one former employee asks.

Establishing such departments, as well as hiring seven new vice presidents, caused costs to rise sharply during Adorno’s tenure. According to the Miami Daily Business Review, administrative costs rose 70 percent in 1998, to $140.5 million.

Lawsuits also continued to plague MasTec. The paving contract scandal in Miami-Dade County kept Church & Tower from being paid or from winning new contracts. In addition Broward County officials fired Church & Tower from a pair of projects for what county officials claimed was subpar work. . . .

As 1998 came to a close, Adorno hoped he had put the worst behind him. In October he had sold the company’s Spanish subsidiary, as well as some of its operations in Latin America, informing investors that the company would concentrate on work in the United States. But MasTec was still posting losses at the end of the year. . . .

It appears Citron set up Adorno as the fall guy for the company’s problems, even though most of them preceded Adorno’s arrival. In March Adorno abruptly resigned. Two months later the board of directors elevated Citron to president of MasTec.

Despite Adorno’s departure, the ill will lingered between him and Citron, and manifested itself in some strangely petty ways. For example, sources familiar with the company and the law firm say MasTec stopped paying its legal bills, even though Adorno & Zeder continued representing it in the paving-contract dispute with the county. Preparing for next year’s trial, the firm had up to five attorneys working full-time on the case.

MasTec simply ignored billing statements from Adorno & Zeder. At one point MasTec officials suggested that if the law firm wanted its money, it should consider renegotiating its billing rates. By then MasTec already owed Adorno & Zeder nearly $250,000, and the company’s refusal to pay became an issue with the firm’s partners. … MasTec eventually paid the money it owed, and the law firm quietly withdrew as counsel. . . .

Which raises some interesting questions: Where was Mas Jr. during all this? After bringing Adorno onboard, did he do enough to support and protect his old friend? Was he so hurt by Adorno’s sudden departure that he allowed his company to withhold payment of its bills? And who exactly is running MasTec?

Mas Jr.’s interests may lie elsewhere. He has taken over his father’s leadership post with the Cuban American National Foundation and raised his political profile during the June rafter crisis involving the Coast Guard. Mas Jr. however, isn’t above mixing business and politics. According to sources, he believed recent events had forged a special bond between him and Miami-Dade Mayor Alex Penelas. In addition to working closely together on the rafter issue, Mas Jr. saw it as a positive sign that the mayor attended the Biscayne Boulevard street-naming ceremony in honor of his father.

As a result, during the last week of August, Mas Jr. dispatched younger brother J.C. Mas to meet with officials in the county attorney’s office to discuss a quick settlement to the paving-contract lawsuit. But Mas Jr.’s hopes that his newfound rapport with the mayor would soften the county’s hard line against his company were quickly dispelled by the attorneys handling the case. J.C. Mas was sent packing.

Which goes to show that when it comes to business, friendship doesn’t matter.

But then again, Mas Jr. knew that already.

~ ~ ~

From Originally published by Miami New Times Sep 30, 1999.

©2002 New Times, Inc. All rights reserved.

* * *

May 2, 2002

The Race for Florida

by Alvaro Fernandez

It’s all about the Florida governor’s race……in all its glory: The good (it’s your decision), the bad (there’s plenty of that), and the ugly will all be exposed, dissected and discussed on a weekly basis. . . .


President Harry Truman used to say: The buck stops here! It’s a philosophy Janet Reno adheres to although she seems to be constantly criticized for having the guts to live comfortably with her straightforwardness. . . .

But Reno’s biggest detractors are a large number of the right wing, republican Cubans in Miami; a group that by their actions have demonstrated to have no philosophy at all, unless you include the power of greed and money as a new form of nihilism. Then again, I don’t know if they would understand the meaning of nihilism.

Which brings me to my point. For many years — at least since the age of Ronald Reagan — the Cuban American National Foundation and its maximum leader, the deceased Jorge Mas Canosa, led that hard-right Cuban group. Recently we’ve seen them break up into many splinter organizations that have attempted to take up the slack with little of the past success and efficiency. Leadership has much to do with that.

As most know, the Mas Canosa family created a financial empire in the form of Church & Tower. The corporate entity is now named Mas-Tec North America. The Mas Canosa sons head it: the most visible being Jorge Mas Santos.

Last week Miami Dade Circuit Judge Stanford Blake found a Church & Tower subcontractor guilty of swindling Miami-Dade County of a half million bucks for work never done. The subcontractor is Antonio J. Reyes. He was sentenced to six years in the state pen. Well done, but what about the contractor in charge? Or does the buck (as President Truman would say) never stop with the powerfully connected in Miami-Dade cases?

If you don’t know the story, it’s at least five years old. The fact is that this case appears more like a hockey puck, than the proverbial buck, where the focus of the investigation has been passed, over the years, from person to person: avoiding, of course, the contractor responsible for the original contract.

Again to remind you: the contract began as less than a $20 million deal, Church & Tower being the low bidder. Over time and numerous change orders, it swelled to $58 million.

I must stipulate that the county currently has a pending civil lawsuit against Church & Tower over the contract. As reported in The Miami Herald, in an article written by Lisa Arthur, Miami-Dade is “trying to recoup as much as $17 million from the company (Church & Tower) over alleged overbilling and faulty work……

“Prosecutors believe the bulk of the ill-gotten $1.4 million (the reason Reyes was sentenced) in overbillings went to Church & Tower and MBL (another Church & Tower subcontractor).” There is also the question of change orders and low bidding.

But it’s not the focus of this column. I’m referring to the double standard we live with here in South Florida. It’s a situation that allows many to criticize and insult a woman that had the gumption to face her detractors at a Calle 8 radio station in the heart of Little Havana. A woman named Reno who has been vilified by semi-secret organizations like Americans for Jeb Bush chaired by a Cuban-American state legislator. . . .

It’s a double standard that criticizes and intimidates the many who are tired of the same old flag waving and meaningless rhetoric at the expense of constitutionally guaranteed liberties. In my opinion it’s a strategy based on self-defense. That’’s why I bring up the Mas-Tec example.

Jorge Mas Santos heads Mas-Tec. If you look back on the catastrophic Elian saga, you’ll remember Mas Santos in front of TV cameras demanding justice from Reno. The buck stopped with her, he informed us.

That’s why for years I’ve been asking the question: If Church & Tower is the contractor on deals with the county that have gone sour; or if contracts have not been fulfilled accordingly; then why is it that the subcontractors are the only ones paying the price?

Because if the buck stops at the top, then it’s time Mas-Tec officials answered some questions: queries being raised for nearly a decade now.

The structure of these deals also interests me. First you have the bidding contractor –– the guys with the political juice. They then hire subcontractors who may then hire a third layer, or another subcontractor. In the case presented by The Miami Herald, Mas-Tec hired MBL Paving who then hired Thermoplastic & Signs (the Reyes company). In the end, The Miami Herald reported that on the one deal we’ve referred to here, Church & Tower received the greatest portion of the money paid for the work that was supposed to have been done by Thermoplastic.

It’s called layers and buffers, or simply legal insulation….

Here’s where the double standard comes in: hiding behind Miami-style politics, the scoundrels do away with the loot. All the while calling Reno (and others like her) the immoral one.

Her sin: she deemed fit to send a seven-year-old boy back to his father’s arms.

* * *

April 25, 2002

MasTec Appoints Ernst & Young LLP As Independent Auditor

Source: PR Newswire

MIAMI — MasTec, Inc. (NYSE: MTZ) today announced that it has appointed Ernst & Young LLP as the Company’s independent auditor for the year ending December 31, 2002. The appointment follows the adoption of an Audit Committee policy to periodically review the selection of the Company’s auditors. The decision to change auditors was in the normal course of business and not the result of any disagreement between MasTec and its prior auditing firm on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure.

Ernst & Young replaces PricewaterhouseCoopers LLP. MasTec has filed a report on Form 8-K with the Securities and Exchange Commission further detailing the change in auditors.

MasTec ( is a leading communications and energy infrastructure service provider in North America and Brazil. The Company designs, builds, installs, maintains and monitors internal and external networks for leading telecommunications, broadband, energy and Fortune 1000 companies.

* * *

July 31, 2002

MasTec Names Eric J. Tveter as Chief Operating Officer And Outlines Current Market Share Growth Strategy

PR Newswire


MIAMI, PRNewswire-FirstCall — MasTec, Inc. (NYSE: MTZ) today announced that Eric J. Tveter has been named Executive Vice President and Chief Operating Officer of the Company. In this newly created position, he will be responsible for day-to-day operations as well as managing profitable growth of MasTec’s telecommunications, broadband, energy and intelligent traffic system operations.

Prior to joining MasTec, Mr. Tveter was an executive with Comcast Corporation, Time Warner Communications, Cablevision Systems Corporation’s Lightpath business unit, and Metromedia International Group, Inc. where he held various key roles in the industries served by MasTec, most recently as President of Cablevision Lightpath, Inc. . . .

MasTec is a leading communications and energy infrastructure service provider in North America and Brazil. The Company designs, builds, installs, maintains and monitors internal and external networks for leading telecommunications, broadband, energy and Fortune 1000 companies. . . .

* * *

April 9, 2002

MasTec Names J. Marc Lewis Vice President
-Investor Relations

Source: PR Newswire

MIAMI, April 9 /PRNewswire-FirstCall/ — MasTec, Inc. (NYSE: MTZ) today announced it has named J. Marc Lewis as Vice President-Investor Relations.

Mr. Lewis will fill the newly created position of Vice President-Investor Relations to better serve the needs of current and prospective shareholders, institutional investors and other MasTec stakeholders.

Mr. Lewis most recently served as a consultant with Enersect Corporation, a private merchant banking group, and previously was Vice President of Investor Relations with Harken Energy Corporation, an independent oil and gas exploration company, based in Houston….

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

* * *

MasTec Officers & Directors

Jorge Mas, Chairman

Jorge Mas has been our Chairman of the Board of Directors since January 1998 and a director since March 1994. From March 1994 to October 1999, Mr. Mas was our Chief Executive Officer. Mr. Mas has been Chairman of the Board of the Cuban American National Foundation, Inc., a not-for-profit corporation, since July 1999. In addition, Mr. Mas is the Chairman of the Board of Directors of Neff Corp. and is a member of the Board of Directors of Nova Southeastern University.

Jose R. Mas, Vice Chairman & EVP Business Development

Jose Mas has been a member of the Board of Directors since August 2001. Mr. Mas has been our Executive Vice President —— Business Development since August 2001. Mr. Mas has served in a number of capacities at the operating level with us since 1991, most recently as President of one of our service offerings from May 1999 to August 2001. He is also a member of the Board of Directors of Neff Corp.

Austin Shanfelter, President & CEO, Director

Austin J. Shanfelter has been our Chief Executive Officer and President and a member of the Board of Directors since August 2001. From February 2000 until August 2001, Mr. Shanfelter was our Chief Operating Officer. Prior to being named Chief Operating Officer, he served as President of one of our service offerings from January 1997. Mr. Shanfelter has been in the telecommunications infrastructure industry since 1981. Mr. Shanfelter has been a member of the Board of Directors of the Power and Communications Contractors Association (PCCA), an industry trade group, since 1993. He is also the Chairman of the Cable Television Contractors Council of the PCCA. Mr. Shanfelter has also been a member of the Society of Cable Television Engineers since 1982 and the National Cable Television Association since 1991.

Julia L. Johnson, Director

Julia L. Johnson has been a member of the Board of Directors since February 2002. From January 2001 to the present, Ms. Johnson has been President of NetCommunications, L.L.C., a strategy consulting firm specializing in the communications, energy, and information technology public policy arenas. Prior to founding NetCommunications, Ms. Johnson was Vice President of Marketing for MILCOM Technologies, Inc., a military technology commercialization company, from March 2000 to August 2001. From November 2001 to the present, Ms. Johnson has also served as founder and Chairman of the Emerging Issues Policy Forum, a public policy organization established to promote open public policy discussions on key market, industrial and regulatory issues. Ms. Johnson served on the Florida Public Service Commission from January 1992 until November 1999, serving as chairwoman from January 1997 to January 1999. Ms. Johnson also chaired Florida’s Information Service Technology Development Task Force, which advised Florida Governor Jeb Bush on information technology policy and related legislative issues, from November 1999 to July 2001. In June 2001, Governor Bush appointed Ms. Johnson to the Florida Board of Education for a four-year term.

Joseph P. Kennedy, II, Director

Joseph P. Kennedy II has been a member of the Board of Directors since October 1999. Mr. Kennedy is Chairman and President of Citizens Energy Corporation, a not-for-profit energy provider that he founded in 1979, as well as Chairman and/or President of a number of related companies. Mr. Kennedy served six terms as a U.S. Representative during which time he was a member of the House Banking and Financial Services Committee, a senior member of the House Veteran’s Affairs Committee and the co-chair of the Older American Caucus. He also served as the ranking Democrat on the Housing and Community Opportunity Subcommittee.

Arthur B. Laffer, Director

Arthur B. Laffer has been a member of the Board of Directors since March 1994. Dr. Laffer has been Chairman of Laffer Associates, an economic research and financial consulting firm, since 1979; Chief Executive Officer, Laffer Advisors Inc., a broker-dealer, since 1981; and Chief Executive Officer, Laffer Investments, an investment management firm, since 1999. Dr. Laffer is a director of Nicholas Applegate Growth Fund, Oxigene, Inc., Neff Corp., Pacificare Health Systems Inc. and Vivendi Environment.

William N. Shiebler, Director

William N. Shiebler has been a member of the Board of Directors since June 1999. Since March 2002, Mr. Shiebler has been a Managing Director of Deutsche Bank and Chief Executive Officer of the Americas for Deutsche Asset Management. Mr. Shiebler was a Senior Managing Director of Putnam Investments, a Boston based investment management firm, and President of Putnam Mutual Funds from 1990 until 2000. Before joining Putnam, he was President and Chief Operating Officer of Dean Witter Reynolds Intercapital, the investment management division of DeanWitter Reynolds, Inc., and Executive Vice President and director of Dean Witter Reynolds, Inc. Mr. Shiebler is a member of the Board of Directors of Oxigene, Inc. Mr. Shiebler also is a director or trustee of a number of private companies and not-for-profit charitable institutions.

Jose S. Sorzano, Director

Jose S. Sorzano has been a member of the Board of Directors since October 1994. Mr. Sorzano has been Chairman of The Austin Group, Inc., an international corporate consulting firm, since 1989. Mr. Sorzano was also Special Assistant to the President for National Security Affairs from 1987 to 1988; Associate Professor of Government, Georgetown University, from 1969 to 1987; and Ambassador and U.S. Deputy to the United Nations from 1983 to 1985.

John Van Heuvelen, Director

John Van Heuvelen has been a member of the Board of Directors since June 2002. From 1999 to the present, Mr. Van Heuvelen has been a private equity investor based in Denver, Colorado. His investment activities have included private telecom and technology firms, where he still remains active. Mr. Van Heuvelen spent 13 years with Morgan Stanley and Dean Witter Reynolds in various executive positions in the mutual fund, unit investment trust and municipal bond divisions before serving as president of Morgan Stanley Dean Witter Trust Company from 1993 until 1999.

* * *

July 31, 2002

MasTec Names Eric J. Tveter as Chief Operating Officer And Outlines Current Market Share Growth Strategy

PR Newswire

MIAMI, PRNewswire-FirstCall — MasTec, Inc. (NYSE: MTZ) today announced that Eric J. Tveter has been named Executive Vice President and Chief Operating Officer of the Company. In this newly created position, he will be responsible for day-to-day operations as well as managing profitable growth of MasTec’s telecommunications, broadband, energy and intelligent traffic system operations.

Prior to joining MasTec, Mr. Tveter was an executive with Comcast Corporation, Time Warner Communications, Cablevision Systems Corporation’s Lightpath business unit, and Metromedia International Group, Inc. where he held various key roles in the industries served by MasTec, most recently as President of Cablevision Lightpath, Inc.

MasTec <> is a leading communications and energy infrastructure service provider in North America and Brazil. The Company designs, builds, installs, maintains and monitors internal and external networks for leading telecommunications, broadband, energy and Fortune 1000 companies….


Robert Kihune – Chairman of the Board of Trustees, Kamehameha Schools; CEO of Sandwich Isles Communications; Vice Chairman and President of the USS Missouri Memorial Association.

April 23, 2001

Vice Admiral Robert Kihune Speaks at JAIMS

HONOLULU—This spring, JAIMS students were pleased to welcome Vice Admiral Robert Kihune as a guest speaker for a special session on “Leadership for the New Economy.”

Currently a trustee of the Kamehameha Schools, Kihune had much to say to the audience of students and staff on the qualities of leadership.

“Leadership really is an invisible strength,” Kihune said. “It’s really is as mysterious as is powerful. Leadership is colorblind. It doesn’t care whether you’re black, yellow, white, or what. There is no gender bias. You can be a woman and be a leader, as well as you can be a man and be a leader.”

Kihune wanted to stress, especially to the students in the audience, the qualities of what he believes makes a leader.

“If you want to be a leader, first of all you must have the trust of the people,” he said, “you have to have their confidence that you will be working for them. Secondly, you have to have the integrity to do what is right. If you cannot do what you think is right, don’t compromise.”

Also in the audience, were special guests Dr. Fujio Matsuda and Mr. Hideto Kono, both former presidents of JAIMS whom Kihune referred to as examples of leaders who, like him, paid their dues in order to reach the level of success they have attained.

Vice Admiral Kihune was born on Maui, and is a graduate of the Kamehameha Schools and the U.S. Naval Academy. He retired from the U.S. Navy after serving 35 years. He currently serves as a trustee of the Kamehameha Schools, the CEO of Sandwich Isles Communications, Inc., and the president of the USS Missouri Memorial Association.

* * * * *

From The Honolulu Advertiser, 2/16/01: Bush May Stop VIP CruisesThe search for survivors and the quest for answers continued yesterday from Oahu to the Pentagon.

It prompted President Bush to suggest that the military review its practice of allowing civilians to ride aboard sophisticated warships like the submarine that sank a Japanese fishing vessel seven days ago. . . .

At the Pentagon, Pietropaoli confirmed earlier reports that retired Adm. Richard Macke of Honolulu had helped arrange for “individuals for the Missouri Battleship Memorial Association” to tour the sub while on its training maneuvers. He said 14 of the 16 guests were involved with the Missouri association.

Yesterday, retired Adm. Robert Kihune, vice chairman and president of the USS Missouri Memorial Association, said he had not seen the guest list and therefore did not know whether any of the association’s more than 3,000 members were involved….

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

* * * * *

NELHA Pipeline, Jan 1996:

NELHA Bids Farewell to Robert Kihune.

NELHA bid a fond farewell to Robert “Bob” Kihune at the end of December. Bob served as NELHA’s Executive Director from July 1994 – Dec 1995. His leadership helped guide NELHA through one of the most challenging years in the history of the lab. Budget and staff cuts were required in order to meet the fiscal restrictions imposed by the state….

Robert Kihune now serves as the Chief Executive Officer of Waimana Enterprises. “Waimana Enterprises is a Hawaiian-owned corporation with several objectives,” says Bob. “We are bidding on the contract to clean up Kohoolawe, are planning to establish telecommunications infrastructure in Hawaiian Homelands areas, and working to establish a power plant on Hawaiian Homelands at Kawaihae on the Big Island of Hawaii.” The company hopes to employ many native Hawaiian individuals through its various projects….

CEROS Finds New Home at NELHA

Last year, during a visit to Kailua-Kona, Senator Daniel Inouye surprised everyone with an announcement that he intended to move the National Defense Center for Excellence in Research in Ocean Sciences (CEROS) to the Natural Energy Laboratory.

CEROS was established in March 1993 with a $5 million grant to the High Technology Development Corp (HTDC) from the Advanced Research Projects Agency (ARPA).

The federal Defense Appropriation Act created and funded CEROS to support and stimulate a broad spectrum of research in the State of Hawaii, through grants to “leading edge” research projects in ocean sciences. Senator Inouye wished to move CEROS to NELHA as part of his overall mission to bring more economic development activities to the neighbor islands.

CEROS has now officially been transferred from HTDC to NELHA and William “Bill” Friedl has been named executive director. Bill replaces Jeffrey E. Haun who resigned last year….

For more, GO TO > > > Act 221

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Isle News, 7/96: . . . Plans to build a new power plant to supply electricity on the Big Island may be stalled after the state last week canceled the sale of $50 million in bonds to raise funds for the private facility.

Waimana Enterprises planned to sell over 55 megawatts of electricity generated by the plant to Hawaii Electric Light Co, which supplies power to over 25,000 residents on the island of Hawaii. The plant was to be built on Hawaiian Home Lands in West Hawaii, and state officials say the cancellation came after public hearings found a majority of residents against it.

Waimana officials say they haven’t given up on the project, but must now locate another funding source….

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Honolulu Advertiser, 11/7/99, by Hugh Clark:

Electrical Projects Stall on Big Island

The Big Island expects to go into 2000 as it entered the 1990s, with pressing electrical needs and lots of uncertainty over proposed projects meant to fulfill those needs.

Two of three proposed power plants remain mired in dispute.

One of the disputes involves Waimana Enterprises at Kawaihae, whose lease was canceled last week. The project, which involved a lease through the Department of Hawaiian Home Lands announced during the Waihee administration, was to have produced $1 million a year in income to homesteaders.

Some homesteaders and others in the neighborhood, however, objected to the proposed $100 million project, led by Albert Hee of Honolulu and backed by Japanese financier Mitsubishi.

Hawaiian Electric Co. had not signed a power purchase agreement with Waimana, and in canceling the lease, Judge Riki May Amano ordered that a full environmental impact statement, which she said should have been done in the first place, be prepared. . . .

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Environment Hawaii, Dec 1999:

Judge Voids Lease for Energy Plant Proposed on Hawaiian Home Lands

The efforts of Albert Hee and his company Waimana Enterprises to develop a 58megawatt co-generation plant at Kawaihae have once more come to a screeching halt.

On Oct 26, Third Circuit Judge Riki May Atnano negated the 1993 lease to Hee of 40 acres on the Big Island, finding that the Hawaiian Homes Commission had not complied with her earlier order requiring it to reconsider the adequacy of an environmental assessment that a previous commission chair, Hoaliku Drake, had accepted for the lease….

[Another Kamehameha Schools Connection: Hoaliku Drake is the mother of ex-trustee Henry H. Peters.]

Background. In 1993, Drake found that the proposed lease and the power plant that Hee intended to build on it would have “no significant impact” on the environment and surrounding community. Drake’s decision was challenged by three homelands beneficiaries, representing themselves pro se. One has since died. The remaining two, Jojo Tanimoto and Linda Dela Cruz, were later joined by the Mauna Kea Homeowners Association … and its president James Growney.

The beneficiaries challenged the project on two points: the environmental assessment was inadequate, they said, and also the determination that Albert Hee qualified for special consideration as a Native Hawaiian corporation (one whose principal is of at least 50% Hawaiian ancestry)….

For more on Robert Kihune, GO TO: Dirty Money, Dirty Politics and Bishop Estate; The Sinking of the Ehime Maru


Summit Communications, Inc. – A well-connected Hawaii telecom company, coming unplugged.

February 15, 2002

Summit Communications files bankruptcy

The local telecommunications company has debts
between $1 million and $10 million

By Lyn Danninger, Honolulu Star-Bulletin

Summit Communications, a local company that provides telecommunications services for clients including Hawaii Visitors & Convention Bureau, filed for Chapter 11 bankruptcy protection yesterday.

Summit, founded in 1996, listed debts of between $1 million and $10 million, estimated assets of between $1 million and $10 million and between 50 and 99 creditors on its bankruptcy filing.

Telecommunications services provided by Summit include alternative local and long-distance telephone services to multi-tenant buildings and call center services.

Company president Grant Johnston said the company does not plan to lay off any of its 40 employees. Summit reduced its staff by about 20 percent in June 2000. Management and administration staff also took a 20 percent pay cut, he said.

“Now the plan is to get some temporary relief from creditors to re-group and get back on track,” he said.

With approximately $3 million in annual revenues, Johnston said the company had been growing. But economic ups and downs in the telecom industry, the fallout from Sept. 11 and difficulty getting vendor financing hurt the company….

Summit’s contract with the Hawaii Visitors and Convention Bureau is worth between $30,000 and $50,000 per month, depending on the bureau’s marketing activities and the volume of calls handled by Summit, said Barbara Okamoto, HVCB’s vice president of customer trends and communications.

Okamoto said the Bureau plans to retain its contract with Summit….

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September 10, 2002

State, feds seek Summit trustee

The telecom firm owes more than $1 million
to the state and feds

By Tim Ruel, Honolulu Star-Bulletin

The fate of a million-dollar tax delinquency is coming to blows in the bankruptcy of telecommunications services firm Summit Communications Inc.

In the past several weeks, the U.S. Attorney’s Office, the U.S. Trustee’s Office and the state Department of Taxation have raised the heat in Summit’s bankruptcy proceedings. They support the appointment of an outside trustee to manage and investigate the firm’s finances.

Summit owes $528,603 to the state and $512,315 to the federal government for taxes, according to claims in Summit’s Chapter 11 reorganization bankruptcy case.

In an early August court filing, attorneys for the U.S. government cited Summit’s “gross mismanagement and incompetence” as a justification for the appointment of a trustee.

Summit opposes the appointment of a trustee and disputes the government’s assertions. It says the appointment of a trustee will raise the expense of administering its bankruptcy case, a point the U.S. government concedes. Having a trustee at the helm would reduce confidence in the firm, potentially warding off customers, and make it harder for Summit to emerge from bankruptcy successfully, according to a filing by Summit’s attorneys Steven Guttman and James Duca.

Summit is seeking an extension of time to submit its in-house plan for reorganization, which was due two months ago. The government says Summit shouldn’t get an extension. A hearing on the disputes is scheduled for Monday before U.S. Bankruptcy Judge Robert Faris.

During a brief hearing yesterday, Summit and its creditors said they would meet outside court to talk things over. One of the potential topics was whether the government’s desire to appoint a trustee would merit the potential loss of tax dollars, according to Carol Muranaka, special assistant U.S. attorney.

“We are in a bad place, I think, the state and United States,” Muranaka said during yesterday’s hearing.

Among the U.S. government’s assertions:

>> Summit’s current management is related to the management that led the firm to its tax situation. Shortly before Summit filed bankruptcy, Grant Johnston, the son of a Summit co-founder and owner, became president;

>> Summit has made a couple major revisions to its financial statements. As such, the firm’s numbers are not reliable.

In response, Summit said the relationship between its management teams is not relevant. If there’s a question of whether the relationship has interfered with efforts to fix Summit, “no such claim can factually be proven,” the company said.

The company blames its erroneous financial statements on disarray in its finances at the time of filing bankruptcy. Since then, the company says it has hired an outside accountant.

In a March interview, Grant Johnston said Summit ran into major cash-flow problems that were more important at the time than paying taxes. According to Johnston, the firm discovered the tax problem after it changed management in 2001. Johnston could not be reached for further comment yesterday.

Unpaid taxes make up about one-third of Summit’s $3 million total claims.

In a court filing, Summit noted it is current on its post-bankruptcy financial obligations, and it has made $38,223 in adequate protection payments to the federal government.

The state Tax Department, which has supported the federal government’s case for appointing a trustee, has its own bone to pick with Summit. In a recent filing, the state claims Summit has been “tightfisted” with information, hindering a state audit.

Before filing bankruptcy in February, Summit hadn’t filed general excise tax returns since 1997. Also, Summit has refused to file public service company returns, the state said.

There’s a simple reason for that, Summit said: The firm is exempt from public service company taxes, and hasn’t compiled the information needed to compute the tax liability….

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January 6, 2003

Examiner critical of Summit’s finances

The bankrupt telecom firm is a
“mini-Enron,” says a bankruptcy trustee

By Tim Ruel, Honolulu Star-Bulletin

An examiner hired to look at the books of bankrupt telecommunications services firm Summit Communications Inc. says the firm’s leaders have benefited to the financial detriment of creditors.

“It’s sort of like a mini-Enron, or mini-WorldCom,” said Mark Yee, who was hired to review Summit’s financial condition.

Yee, a bankruptcy trustee, has filed a court report that says Grant Johnston and Harry Johnston received questionable payments from Summit and from a separate company owned by Grant Johnston that works closely with Summit.

Summit, which provides call-center and telephone services, filed for Chapter 11 protection from creditors in February 2002. Summit owed more than $1 million in unpaid state and federal taxes, though the company said it has repaid one-fifth of what it owes to the Internal Revenue Service.

Grant Johnston is president of Summit. Harry Johnston is Grant’s father and is a co-founder and principle shareholder of Summit.

Grant also owns a company, Summit Exchange Inc., which provides similar services as Summit Communications, and has its work done by the staff of Summit Communications, Yee’s report said. Yee said the companies should be treated as one and the same. Grant Johnston disagreed.

Grant Johnston also took exception to having Summit Communications labeled a “mini-Enron.”

“(Yee’s) comment … confirms in my mind that he and others are on a fishing expedition,” Grant Johnston said. “They’re looking and fishing for wrongdoing.”

The Johnstons say Yee’s report is inaccurate and misleading, and said they will rebut any allegations of wrongdoing. The fundamental problem with the report, they said, is that they were not given a chance to clear things up before it was filed with the court.

When asked to respond to specific accusations within Yee’s 17-page report, they repeatedly declined.

“There is available an explanation to every question that (Yee) may have come across,” Grant Johnston said Friday. “Whether or not he chooses to believe our answers is up to him.”

It may also be up to U.S. Bankruptcy Judge Robert Faris. Last year, the U.S. Attorney’s Office, the state Department of Taxation and the U.S. Trustee’s Office all backed the court appointment of a trustee to replace Summit’s current management. Summit, in opposition, says the appointment of a trustee would only make it harder for the company to stay in business and pay off debts.

Yee’s appointment was a temporary compromise between Summit and the government. His report supports the appointment of a trustee, as well as further investigation of the firm’s finances. A lawyer for the U.S. government could not be reached for comment Friday.

In his report, Yee said Summit’s latest financial statements to creditors are not to be believed, and that the company is not producing the profits that it claims. Plus, he describes Summit’s past records as being in a mess that is so bad, he said, there is no point in trying to figure it out.

“To get those books in order is going to take a major undertaking,” Yee said.

Summit has acknowledged in the past that it had major problems with record-keeping under previous management, though the Johnstons said the more recent financial statements are accurate.

Summit recently lost approximately 20 percent of its overall business from one of its bigger customers, Sandwich Isles Communications Inc. Summit had provided technical support for Sandwich Isles, which is building a $500 million communications system that would link all Department of Hawaiian Home Lands residents.

Grant Johnston said that loss will not hurt Summit’s plans to reorganize its finances, stay in business and pay off its debts over time. Summit has pared down expenses and increased its call-center business and other revenues, he said.

Since filing for bankruptcy, Summit has reduced its work force to 28 employees from 40.

For much more, GO TO > > > The Rise and Fall of Summit Communications


Temple-Inland Inc. – A Texas-based conglomerate with three core businesses: paper, building products and financial services provided through Guaranty Financial Services.

Top 15 Institutional Ownership Mutual Fund Ownership

#1 – Alliance Capital Mgmt

 Jennison Associates

 JP Morgan Fleming Asset Mgmt (US)

 Wellington Mgmt

 Primecap Mgmt Co

 Morgan Stanley Investment Mgmt

 Barclays Global Investors Intl

 State Street Global Advisors

 Deutsche Inv Mgmt Americas/ Scudder Investments

 Vanguard Group

 Capital Research & Mgmt Co

 Invesco Funds Group (Denver)

 Systematic Financial Mgmt

 Deutsche Asset Mgmt (New York)

 Cullen / Frost Bankers

 See also: Guaranty Financial Services

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To see more VULTURES in the Sandwich Isles, GO TO > > >

Act 221

Aloha, Harken Energy!


Arbitrate This!

A Connecticut Yankee in King Kamehameha’s Court

Birds that Drink from Cesspools

The Blackstone Group

Broken Trust

Buzzards of Paradise

Cisco Systems

Dirty Money, Dirty Politics & Bishop Estate

Flying High In Hawaii

Global Crossing

Hawaiian Airlines

Pointing the Finger at WorldPoint

Predators in Paradise

RICO in Paradise

The Rise and Fall of Summit Communications

The Indonesian Connection

The Morgan, Lewis & Bockius Report

The Sinking of the Ehime Maru

Tracking The Murdoch Flock

Vampires on Gilligan’s Island

Woo vs. Harmon

Yakuza Doodle Dandies



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Last update August 1, 2006, by The Catbird Seat.