Ag board refers loan
decision to AG’s office

Board OKs state loans to Gay
& Robinson, Ceatech but
doesn't release the money

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By Tim Ruel
truel@starbulletin.com

A controversy over whether the state Board of Agriculture can grant loans against the advice of its own administrator yesterday prevented the board from distributing money out of a new $5 million fund.

At a meeting on Kauai, state attorney Junie Hayashi said the board can only grant the loans if the Attorney General's Office says the board has the power to do so. Hayashi announced the decision shortly after the board emerged from an eight-minute executive session, in which the public was removed from the board's monthly meeting.

The controversy began after the state Legislature created the $5 million fund this year to lend money to aquaculture and agriculture businesses on Kauai that could hire more workers.

Two companies, sugar grower Gay & Robinson and shrimp farmer Ceatech USA, submitted competing applications for the money. The proposals were reviewed by the Agriculture Department's loan administrator, Doreen Shishido, who approved Gay & Robinson's application for $4 million, but rejected Ceatech, saying the company was a bad risk for repayment. Ceatech, which was asking for $4.5 million, has disputed Shishido's analysis.

Normally, Shishido has the last word when it comes to rejecting loans. But Ceatech got a second chance at a state loan -- this time for a smaller amount of $2.5 million -- when the board took Ceatech's application under review yesterday. The board approved the loan, but stopped short of releasing the funds to Ceatech, saying it wasn't sure it could actually do so.

The board also declined to complete its approval of Gay & Robinson's revised smaller loan request of $1.8 million.

At one point in the meeting, board member Gilbert Coloma-Agaran grilled the Agriculture Department's loan division, asking whether the board had the authority to approve the loans. The division's attorney, Myra Kaichi, responded that she could not answer the question because the board's own administrative rules don't address the issue.