Contractor admits
to billing fraudBert Shiosaki agrees to testify
against others involved in bid
rigging at Honolulu Airport
An electrical contractor has pleaded guilty to overbilling the state $145,000 for small purchase contracts he received at Honolulu Airport through a bid-rigging scheme that allegedly benefited airport officials, friends and family members.
In return for the contracts, Bert Shiosaki, president of CBS Electric Inc. in Mililani, admitted he made about $8,100 in kickbacks in the form of "political donations," or other favors to airport officials.
Thursday's plea by Shiosaki to first-degree theft is the fourth obtained during an ongoing investigation by the state attorney general's office into what has been described as possibly the largest waste of Hawaii taxpayer dollars, surpassing the $5.5 million lost in the city's Ewa Villages relocation scandal.
The state's investigation has focused on procurement fraud at the airport from the mid-1990s to 2002.
As part of an agreement, Shiosaki has agreed to cooperate with investigators and to testify at any grand jury, civil or criminal proceeding against other individuals who may have been involved in the scheme, said Deputy Attorney General Larry Goya.
Shiosaki also agreed to pay restitution of $145,000, the amount he agreed he overbilled the state.
"Although he may have done some work on those jobs, he padded whatever legitimate expenses there were with whatever he billed for," Goya said.
In a plea agreement, Shiosaki admitted to obtaining state funds by deception during a period from March 3, 1999, to Oct. 5, 2001.
Shiosaki said that when he formed his electrical company CBS Electric, he was contacted by Robert Lee, head of the maintenance inspectors at Honolulu Airport, who asked if he was interested in doing electrical work at the airport. Shiosaki indicated he was interested.
Shiosaki was later called by Lee to submit a bid on some work that needed to be done, which he did. But Lee later called him and told him he needed to submit two "complementary bids" to get the job.
"I understood that to mean that I was expected to get two other bids from other electrical companies to satisfy the state requirements that work to be done on any project for the state was to be awarded to the lowest bid of a least three bids submitted on the project," Shiosaki said. "Logically, I also understood that to get the job I was interested in, the other two bids had to be higher than mine."
Shiosaki said he obtained the cooperation of two other electrical companies whose owners he knew and submitted bid figures from those companies that were higher than his.
"By submitting 'complementary bids,' I knew I was always assured of having the lowest of three submitted bids," he said.
"From that point on, I followed the same procedure whenever I was contacted about submitting a bid for electrical work by the Airport Maintenance section," he said in the plea agreement.
Because he knew he was not in an actual competition, Shiosaki said he built as many contingencies into his bids as possible.
"For example, I was able to maximize the profit from electrical work I did at (Honolulu Airport) by doing things such as billing for the costs of additional workmen to assist me when I did much of the electrical work myself, and using shortcuts that were not normally allowed under union standards," he said. "I realized over time that I could pad my bills and not worry about being caught."
In 2000 or 2001, he said, he attended a meeting with Richard Okada, former administrator of the airport's Visitors Information Program, at Okada's office, along with three other contractors who did work at the airport.
They discussed how to circumvent restrictions imposed on the Airport Maintenance section on the amount of work they could award to any one contractor, Shiosaki said.
One of the suggestions that arose, not necessarily at that meeting, was that the contractors consider creating companies under different names to cover up the fact that the same contractors were getting the "lion's share" of the airport jobs, he noted.
After he had been awarded contracts under the "rigged" system for a year, Shiosaki said he was asked by Lee to make "donations" and to see Dennis Hirokawa, then maintenance superintendent at the Airports Division and a longtime friend.
Shiosaki made "donations" to Hirokawa -- the largest at any one time was $5,000, he said. Hirokawa told him that the money was not for him, but to cover "political" expenses.
Shiosaki said that during the period covered by the complaint, he also donated $1,500 to Hirokawa to cover other receipts, $1,000 for the Airport Division's Christmas kitty and $600 toward what he believed was a golf tournament. He said he also gave Hirokawa an air conditioner.
Shiosaki said that because of his relationship with Lee and Hirokawa, who brought him into the scheme, he was guaranteed contracts on projects at the airport.
"However," he said, "it was my impression that Dennis Hirokawa was the person controlling the bid-rigging scheme."
Shiosaki said he made the donations when asked because he did not want to jeopardize the advantage he had at getting work at the airport.
Shiosaki said that after the attorney general began the investigation, he attended four meetings with other contractors also being investigated, including Okada and Hirokawa. They were urged to stick together and not to say anything to investigators.
Hirokawa and Okada, who were arrested in 2002 but released without charges pending further investigation, have since retired from the Department of Transportation Airports Division.
Hirokawa and his attorney declined comment. Okada could not be reached for comment. Lee has been reassigned to the Highways Division and could not be reached for comment.
Sentencing for Shiosaki is tentatively set for July 15.
The state will not make a recommendation on Shiosaki's sentencing until he has fully cooperated with state and federal authorities, Goya said. First-degree theft is punishable by a maximum 10 years' imprisonment and a fine of $25,000.