Ethics panel For years, the state Ethics Commission has been easygoing in dealing with state officials who fail to disclose their finances in the time required by law.
tightening
disclosure
timetable
The state commission will enforce
a 30-day period for officials
to file financial statementsBy Tim Ruel
truel@starbulletin.com
But now, the Ethics Commission is getting less flexible in an attempt to quell any legal questions.
New state officials and high-ranking employees, including department directors and members of state boards and commissions, must file personal financial statements covering the previous calendar year within 30 days of starting their jobs, unless the Ethics Commission grants an extension. Every year, many people miss the deadline, usually for honest reasons, and the commission doesn't always find out right away.
The Ethics Commission used to have a flexible policy. If an official or employee forgot to file a financial statement, and missed the deadline, the commission reminded the official, and typically granted another 30 days to comply.
From now on, the deadline is 30 days after officials start their jobs, just as the law says, said Dan Mollway, executive director of the Ethics Commission.
The commission can fine people $50 for missing the deadline, but it hasn't done so since 2000. It's just as effective to contact people and remind them, without fining them, Mollway said. Most people eventually submit their statement, he said.
"I think we would just say to get it in as soon as possible," Mollway said.
One thing that won't change is that if an official does not file on time because of an honest mistake, Mollway will not seek to levy a fine.
Still, the story behind the policy change is revealing.
Ted Liu, a businessman who was formerly a managing director for Morgan Stanley, started Jan. 10 as director of the state Department of Business, Economic Development and Tourism. Liu sought an extension of the 30-day deadline for filing his financial statement, and was given a new deadline of Feb. 28. Liu said he needed the extension because he had been busy restructuring the department, meeting with people and getting ready for the start of the legislative session.
As it turned out, Liu had to appear before a joint hearing of two state Senate committees on Feb. 27, the day before he turned in his financial statement.
Before the hearing, a state lawmaker contacted the Ethics Commission to seek Liu's financial information. The ensuing conversation prompted Mollway to begin adhering to the letter of the 30-day requirement, Mollway said. He declined to name the legislator. Mollway said he made the change to avoid questions or controversy.
Lawmakers on the Senate tourism and economic development committees delayed a vote to confirm Liu's appointment, to allow time to review his financial filing, which Liu submitted on Feb. 28. A further hearing has not yet been scheduled.
Mollway, who has been with the commission for about two decades, said the policy change was not aimed at the Lingle administration, though he noted that more state officials and employees are coming from the private sector, haven't worked for the state before and may not know the rules.
There are more than a hundred state boards and commissions, with more than a thousand people serving on them who must disclose their financial interests every year to the state Ethics Commission. Top heads of state government, including Legislators, department directors, deputies, division chiefs and the governor, must disclose their finances.
Keeping track of all those people isn't possible, Mollway said. The Ethics Commission has three secretaries, one clerk and an annual budget of $654,000 after rent, he said.
For the record, Liu is a wealthy individual, according to his filing and state property records.
Liu owns at least $1 million worth of shares in New York-based Morgan Stanley, as well as a home on Hawaii Loa Ridge, purchased five years ago for $1.9 million. Liu took out a $1 million home mortgage loan with Bank of Hawaii, and currently owes between $550,000 and $850,000 to the bank.
Last year, Liu reported total income of between $151,000 and $260,000 for consulting services. State guidelines require that officials provide a range of amounts, not exact amounts.
As a state department head, Liu's annual salary is $85,302.
So why did he take the job and the pay cut that goes with it?
"It wasn't the money, obviously," Liu said. "I think we're doing some good.
"Hokey as that may sound ... why else would you take a pay cut?"
After Liu was offered the state position, he resigned from a private investment company he co-founded, PacifiCap Group, which has a financial relationship with the state department that Liu now runs. An agency of the department has committed $3 million to PacifiCap investments.
Liu said he still has a financial interest in PacifiCap's investments. Liu added that he no longer makes decisions at the company, and he receives no fees.
Financial statements of high-ranking government employees are public record, including those of Gov. Linda Lingle, Lingle's chief of staff, department directors, their deputies, and all 76 state lawmakers. Public disclosure is basic practice of honest government that most people accept, Mollway said. He noted that some extremely wealthy people may balk at telling everyone how much they own.
In Hawaii, public financial statements of state officials are posted on the Web at www.state.hi.us/ethics/noindex/pubrec.htm.
"I have come to learn that there's a price of public service," Liu said.
Financial statements of state board members and commission members are kept confidential.
How long will Liu continue to serve as director, at such a reduced rate of pay?
"So long as we're doing good," Liu said. He points to a positive response from the Bush administration to a request by Lingle for the White House to serve Hawaii-made coffee.
"If we stop doing good, I'll do something else, because I don't need this job" for the money, Liu said.
Hawaii State Ethics Commission