Tuesday, April 29, 2008


The non-disclosure game revealed

by Larry Geller

Thank goodness we still have fine investigative reporting in Hawaii.

Ian Lind has just posted an article that deserves to win an award, Superferry disclosed less than 6% of 2007 lobbying costs. Please read it.

Bottom line, they reported only $21,791.56 but spent $379,431.52 in 2007, according to the corrected report filed today that Ian mentions. And look what a reward they got for their investment! But wouldn't we think differently about this if we knew how much they were "investing" in lawmaker's decisions?

The company filed the lower report then amended it only today.

I'll have to admit that this really made me seasick. I'm a citizen and I would like there to be an investigation (I'd like all the speeders and tailgaters to be ticketed, too! What are laws for??). Ian pointed out in his article that hearings are rarely held. So I wrote an email to the Ethics Commission and dashed it off just now. Here it is, an open letter:

Ian Lind has just posted an article, Superferry disclosed less than 6% of 2007 lobbying costs , which ends with this conclusion (boldface emphasis is mine):

The state lobbyist law (Section 97-7 HRS) provides for administrative fines for any person who "Willfully files a statement or report containing false information or material omission of any fact." However, it further provides that no fines can be assessed unless the Ethic Commission convenes a formal hearing and issues a final decision. Such formal hearings are rarely held, and the commission instead concentrates on obtaining voluntary compliance, even if after the fact. This means that there will likely be no consequences, apart from being mentioned here and on other blogs, even as a result of this glaring example of failing to report. They got their special legislation and six months later got caught for failing to make the legally required disclosure. The risk/reward ration is certainly quite favorable and no deterrent to future transgressions.

I would find it disturbing if the Ethics Commission is determined to prove Ian right on this point.

Ian has performed a great service in bringing this matter to your attention with his April 10 letter, but I hope that won't be the end of it. If it is, then the law is neutered. There's no point in the public bringing apparent violations to the Commission's attention.

It would seem that in this instance an investigation would not be complicated, since the crucial facts are filed on your website. It's like having a confession in your hand.

The result of the company's activity in Hawaii has been the expenditure of vast amounts of state money, not only in preparation of a barge, but in daily costs (for example) to operate a tugboat when the ferry is in port (something around $1,000 an hour). There are plans to put in massive harbor projects basically to accommodate this commercial operation. The company is reaping its reward. Had taxpayers or legislators themselves been aware of a large and expensive lobbying investment, the outcome might well have been different.

The risk part is up to the Ethics Commission. If you do nothing, then the risk multiplies as other businesses choose to emulate this example. A wrist slap would also encourage future lawbreaking by demonstrating the economy of breaking the law that Ian remarked upon.

Public education is useful as well, which might be provided by aggressively pursuing this violation. This is not a little company that just goofed, it is a high-profile company with experienced and aggressive management. Your action in this case would be highly educational to others. Inaction would be educational as well.

Ian is correct that this incident will be mentioned on other blogs, but the Ethics Commission's decision to follow up with what I believe is a slam-dunk case (or not) is sure to be a concern as well.

If there is good reason to let them off the hook on this, please advise.

Best regards,
--Larry Geller

Ok, I got the risk part mixed up. Ian was referring to the risk/reward ratio, I meant the risk to the public, should other companies decide they could just file amended reports later and get off the hook. Before you know it, everyone will be doing it. It could become the latest fad at the Chamber of Commerce, faking out the Ethics Commission in this way.

I don't mean to try to embarrass the Commission into a report by reproducing my letter here, that wouldn't work. I am hoping that others will feel similarly and that perhaps my example might lead to more letters, faxes or emails to the Commission. I won't give their contact numbers here, if you feel strongly enough about it, Google reveals all.



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