Political donation
inquiry expands

The state Campaign Spending
Commission looks into large gifts
from accounting firms

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By Rick Daysog
rdaysog@starbulletin.com

The state Campaign Spending Commission is broadening its investigation into illegal political donations by government contractors by taking a close look at local accounting firms.

The investigation has centered on excessive contributions by engineers, architects and general contractors. But it will begin interviewing officers of the local CPA firms about their contributions to the campaigns of former Gov. Ben Cayetano, Gov. Linda Lingle, Honolulu Mayor Jeremy Harris and ex-Lt. Gov. Mazie Hirono.

The commission also will investigate donations from accountants to the mayoral campaigns of former City Councilman Mufi Hannemann, ex-Maui Mayor James "Kimo" Apana and former Big Island mayoral candidate Fred Holschuh.

Executive Director Bob Watada said the commission has retained a local private investigative firm to gather records and interview potential witnesses. The commission may also seek to issue subpoenas for donors' bank records, he said.

"We see the same pattern of contributions coming from these organizations," Watada said. "It looks very bad when the people looking at the books have to pay to play."

A computer-assisted study of more than 20,000 campaign contributions by the commission found that employees of seven local CPA firms and their spouses gave nearly $400,000 to seven gubernatorial and mayoral candidates during the past two elections.

Over $200,000 -- more than the combined amount raised by CPAs for Harris, Lingle and Hirono -- went to Cayetano's 1998 campaign. Democrats received nearly $350,000, or more than 80 percent, of the tally.

During the same period covered by the study, the seven firms have received about $20 million in nonbid state and city contracts.

On a company-by-company basis:

>> Employees at KPMG LLP and their spouses gave more than $104,000 to Cayetano, Lingle, Harris, Apana, Hannemann and Holschuh;

>> Grant Thornton LLP's executives and their relatives gave a total of $59,175, including $34,000 to Cayetano and $12,100 to Hirono;

>> People linked to Ernst & Young LLP gave about $57,000 to Cayetano, Lingle, Hirono and Harris;

>> Partners at Nishihama & Kishida CPAs Inc. and their spouses gave more than $52,000 to Cayetano, Hirono and Hannemann;

>> PriceWaterhouseCoopers LLP's employees gave more than $42,000 to Cayetano alone. The firm's partners gave less than $6,000 to the remaining major candidates.

Several firms contacted by the Star-Bulletin declined comment or did not return calls. But executives with PriceWaterhouseCoopers, Grant Thornton, and Nishihama & Kishida said the donations were made by individuals and that the firms did not reimburse any employees or coordinate contributions.

Alton Miyashiro, managing principal at Nishihama & Kishida, said partners at his firm make their contributions because they like the particular candidate and support their political ideas, and not because of any government business that their company might receive.

Miyashiro said he contributed to Hannemann's mayoral campaign because they were classmates in high school.

"It's definitely the individual's choice," Miyashiro said.

Politicians have said there is no connection between campaign contributions and the awarding of government contracts.

Cayetano said he never got involved in political fund-raising and had no idea which companies contributed to his campaign.

Harris has said his administration implemented a rigorous consultant review process that eliminates political influence from the contracting process.

Under state law, a donor can give no more than $6,000 to a gubernatorial candidate and $4,000 to a mayoral candidate during a four-year election cycle. Donors are also barred from giving campaign donations under false names.

The investigation's expansion comes as state legislators are considering proposals to overhaul the state's campaign-reform laws, including one that would ban government contractors from making political donations to local politicians.

The expansion also indicates that problems of Hawaii's campaign finance laws may be more widespread that previously considered.

Reg Baker, a former president of the 1,500-member Hawaii Society of Certified Public Accountants, acknowledged that many of Hawaii's largest accounting firms are big political fund-raisers.

But Baker, owner of Reg Baker CPAs LLC who served as treasurer for Lingle's 1998 campaign, said the abuses aren't as prevalent in the accounting field as they are in the architecture and engineering sectors.

Campaign contributions have less of an impact in the awarding of government accounting contracts because most of that work can be done only by big accounting firms, said Baker, who relocated his company to Nevada about two years ago.

"It's just as bad over here as over there," he said. "I've seen it in California, as well. It's not unique to Hawaii."

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Campaign Spending Commission