Tuesday, September 15, 1998

It’s not
the first time
for Takemoto

Bishop Estate budget chief
was investigated for financial
abuses in 1993

By Ian Lind


Bishop Estate budget chief Yukio Takemoto is no stranger to charges of political favoritism and cronyism.

Last week, the state attorney general's office accused Takemoto of a scheme to improperly wipe out an $18,690 debt by then-Sen. Milton Holt, using payments from four nonbid contractors with the estate.

Takemoto, appointed state budget director by former Gov. John Waihee, spent months at the center of a 1993 legislative probe into state purchasing abuses and dealings of the state Employees Retirement System.

Yukio Takemoto: Accused of
improperly paying off campaign
debts with Estate funds.

The hearings, directed by the late Sen. Richard Matsuura, did not result in any formal charges against Takemoto. But they publicly aired details of several situations in which Takemoto appeared to direct nonbid contracts to friends, or improperly accepted gifts or favors from companies seeking business with the state.

Takemoto resigned under pressure at the end of 1993, and joined Bishop Estate months later.

According to information disclosed during the 1993 hearings, the Waihee administration awarded nearly $13 million in nonbid contracts to Data House, a computer firm headed by Takemoto's longtime friend and golfing buddy, Daniel Arita. Some of the contracts were considered exempt from bidding requirements, while others were awarded on a "sole source" basis.

Takemoto was accused of personally recommending that certain contracts be awarded to Data House even though he had no computer expertise, and either ignored or did not seek out the advice of computer experts on his staff. Throughout the hearings, Takemoto denied his 25-year friendship with Arita played any major role in the contract decisions.

Data House has done substantial amounts of work for Bishop Estate over the past several years.

The Star-Bulletin reported earlier that Data House was paid more than $900,000 by the estate during its 1995-96 fiscal year. According to the estate, Data House was just one of several companies working on a major overhaul of its computer system.

Matsuura's committee was also told that Takemoto improperly pushed a $9.56 million nonbid contract for a state telephone system upgrade to GTE Hawaiian Tel over the recommendations of key staff, a charge that Takemoto consistently denied.

Truth Contest Vaima Soon after his appointment as budget chief, Takemoto stopped putting multimillion-dollar state bond sales out for competitive bid and substituted a nonbid process. The new negotiated deals gave him total control over who would sell state bonds and what fees they would collect.

With Takemoto in charge of the process, two attorneys with close ties to the Democratic Party and Waihee were named as local bond counsel on dozens of bond issues. The two captured all legal work not handled by large mainland firms specializing in bond deals during Takemoto's tenure.

Honolulu attorney Renton L.K. Nip advised the state or bond underwriters on more than 30 bond series issued by the state between 1990 and 1993, state records show.

In 1989, Nip assisted Takemoto in soliciting funds for Waihee's re-election campaign. Nip, then-Land Use Commission chairman, sent letters to a number of companies seeking to do business with the state.

"Mr. Yukio Takemoto of the Department of Budget & Finance has asked our assistance in distributing tickets to you for the governor's fundraiser xxx ," the letter said.

Computab, a computer services firm, was about to sign a $700,000 contract to provide computer equipment to Takemoto's department when it received the letter and 20 fund-raiser tickets, according to a complaint filed later by Desmond Byrne, a former Computab officer.

Bryne called the letter "a very unsubtle attempt to lean on the company" and, because of the pending contract, "Computab had no option but to give."

Another major beneficiary of Takemoto's new bond system was a small island firm, Hawaiian Capital Securities, whose investors included several key Democratic fund-raisers and contributors.

One of those investors, according to business records, was Richard M. Sato, president of Sato & Associates Inc., a Honolulu engineering firm.

Sato is also president of Hui Kokua Kinipopo, the tight-knit booster club which supports the University of Hawaii baseball team. Both Takemoto and Arita serve on the group's board of directors, according to state business registration records.

Sato & Associates was one of the companies named by Bronster last week as taking part in the scheme to pay off a $12,344 campaign debt incurred by former Sen. and Bishop Estate employee Holt.

Sato & Associates paid one-third of Holt's unpaid campaign debt after receiving a false invoice "for goods and services that were never provided," according to the petition that Bronster filed in court. All the companies have received lucrative nonbid contracts from Bishop Estate, Bronster charges.

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