donor faces U.S.
GMP Associates violated itsBy Debra Barayuga
trust in managing employee plans,
the U.S. Labor Department says
GMP Associates Inc. -- an architectural and engineering firm that has been a major contributor to Hawaii politicians -- has been sued by the U.S. Labor Department for violations relating to its employee retirement and profit-sharing plans.
According to the suit, GMP and its president, Wagdy Guirguis, withheld employee contributions from the paychecks of participants and failed to forward them to the profit-sharing plan within the 30 days required by federal labor laws.
GMP also failed to pay about $82,019 in matching contributions in 1995, plus lost interest, to the plan, the suit said.
In addition, about $6,700 in loan payments withheld from participants' paychecks were not forwarded to the plan.
GMP signs consent decreeThe lawsuit resulted from an investigation by the Los Angeles Pension and Welfare Benefits Administration Regional Office, which enforces the federal Employee Retirement Income Security Act, or ERISA.
Guirguis this week said he and GMP attorney Roger Fonseca signed a consent decree with the Pension and Welfare Benefits Administration Dec. 29 that will settle the matter.
Fonseca said an agreement was worked out before the lawsuit was filed but the department requested additional information from GMP, preventing the lawsuit and a consent decree from being filed simultaneously.
"We're very pleased with the outcome because it turned up fair to us, the company and employees," Guirguis said.
But David Ganz, Los Angeles regional director for the Pension and Welfare Benefits Administration, said the department has not yet agreed to a settlement.
The Labor Department said GMP and Guirguis failed in their fiduciary duties, resulting in losses exceeding $137,000.
Firm expects money backThe suit seeks restitution for any losses and asks the court to order Guirguis and GMP to step down as fiduciaries of the plan and to appoint an independent fiduciary.
It also asks that Guirguis and GMP be prohibited from serving as fiduciaries to any employee benefit plans covered by federal pension laws.
GMP disputed some of the claims, including how much was owed and how much time was considered reasonable to pay into the plan, Fonseca said.
Guirguis said the negotiated settlement owed to the plan already has been paid. "At no time was the plan at any risk. The people from the Department of Labor realized that -- that's why we are very happy with the outcome."
GMP settled because it would take too long to produce the documents to disprove the allegations, Fonseca said.
One of the agreements reached was that if GMP can prove dollar amounts in the consent decree turn out to be incorrect, some of the money will be returned to GMP.
"I think we'll be able to get money back to the tune of $30,000," Fonseca said.
Three return contributionsGuirguis intends to continue the plan and some contacts have been made to independent parties who who can take over its administration, Fonseca said.
GMP Associates has received millions of dollars in nonbid city contracts and has contributed to political campaigns in Hawaii -- including those of former Gov. John Waihee, former Senate Ways and Means chairwoman Ann Kobayashi, who ran unsuccessfully for Honolulu mayor in 1994, and former Honolulu Mayor Frank Fasi.
Kobayashi and Waihee, who served as director and legal counsel of GMP Associates after leaving the governor's office, were asked by the Campaign Spending Commission in October 1996 to return contributions. Each received combined contributions of more than $4,000 from GMP Associates and G-Power Inc., a firm controlled by Guirguis. The commission felt that since GMP and G-Power are both Guirguis companies, the contributions exceeded the legal limit of $4,000 from any single source.
Fasi earlier that year returned $2,000 after learning contributions from GMP and G-Power exceeded the state's campaign contribution limit.
No penalties were imposed on G-Power, Waihee or Kobayashi.G-Power attorneys have claimed the company never intended to violate the law.