State of Hawaii

Isle firm allegedly
hid political funds

An investigation of SSFM
International finds the firm
ran a donation slush fund

By Rick Daysog

One of the state's largest engineering firms allegedly operated a slush fund to funnel thousands of dollars in campaign donations to local politicians, according to the state Campaign Spending Commission.

In court papers filed Friday, a private investigator working for the commission said SSFM International Inc. and Chief Executive Officer Michael Matsu- moto used a special checking account to advance money to relatives and friends to make political contributions to Honolulu Mayor Jeremy Harris and Gov. Ben Cayetano.

"Evidence exists that the officers and directors of SSFM have attempted to devise a system of concealing the true identities of the political donors and evade the legal limits of contributions," said Terry Pennington, president of the private investigative firm of Goodenow Associates Inc. "Numerous witnesses have testified under oath that between 1996 and December 2001, Michael P. Matsumoto has personally asked them to make their political contributions, directed which candidates they should contribute to, determined the amount of money they should contribute to the candidates and then either advanced or reimbursed them the funds to do so in the exact amount of the contribution."

Matsumoto and SSFM's attorney Steven Hisaka did not return calls. Cayetano was not available for comment, and a Harris campaign spokeswoman declined comment.

Michael Matsumoto wrote this $4,000 check to his sister-in-law; investigators say it covered political donations.

The Star-Bulletin previously reported that relatives of SSFM's officers contributed nearly $200,000 to key local Democrats during the past six years. Of that amount, $92,500 went to Harris' 2000 re-election campaign, while Cayetano received about $71,000. Maui Mayor James "Kimo" Apana collected about $30,000 from people linked to SSFM.

Under state law, donors can give no more than $6,000 for the governor's race and $4,000 for the mayor's race. Contributors also are barred from giving money under false names.

SSFM, founded in 1959, is the state's fourth-largest engineering firm with annual revenues of about $9.5 million. The 130-employee firm has received millions of dollars in nonbid contracts from state and county agencies.

Pennington said his investigators have interviewed many witnesses who said under oath that Matsumoto asked them to give money to candidates he selected. Four witnesses said Matsumoto either advanced them the money or reimbursed them, Pennington said.

He also cited a $4,000 check dated Dec. 13, 1997, from Matsumoto's special checking account at First Hawaiian Bank to his sister-in-law Susan Matsumoto. State campaign spending records show that Susan Matsumoto and her husband, Dennis Matsumoto, contributed $1,000 each to the Cayetano campaign three days later.

Susan Matsumoto sent another $2,000 check to the Cayetano campaign on April 6, 1998, but that check was written during the previous December and was likely covered by funds advanced by Michael Matsumoto, Pennington said.

Dennis Matsumoto, Michael Matsumoto's brother, declined comment yesterday. Dennis Matsumoto previously told the Star-Bulletin he used his own money to make political donations.

Susan Matsumoto could not be reached for comment. But she recently testified under oath that Michael Matsumoto did not advance funds to her to make political contributions, Pennington said. She said that her mother-in-law, Mitsuno Matsumoto, asked her to make the contributions and later reimbursed her. Mitsuno Matsumoto died on Aug. 8, 1998.

Pennington's comments were in response to a request by SSFM to quash or modify subpoenas issued by the commission seeking banking and other financial records. Pennington said the commission needs to get at SSFM's business records to sort through various testimony by donors linked to the local engineering firm.

SSFM is opposing the subpoenas, saying they are overly broad and burdensome. The firm noted it gave the commission the opportunity to review its expense ledgers, but the commission rejected the offer.

"Goodenow Associates Inc. and the commission are trying to short-circuit the process and obtain SSFM's confidential business records before utilizing more appropriate, less invasive means," SSFM said.

Circuit Judge Sabrina McKenna will hold a hearing on March 25.

Campaign Spending Commission

E-mail to City Desk


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