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Editor’s note:This article is part of a series on Hawaii’s runaway school bus costs. Read other articles in the series.
The FBI is investigating Hawaii school bus companies for possible collusion in setting prices, Civil Beat has learned.
Former Attorney General Margery Bronster confirmed that she was recently retained to represent the Hawaii School Bus Association.
“Because of the status of the investigation, it’s difficult to get into any of the details,” she told Civil Beat. “I can say that we are fully cooperating with the investigation, and we do deny having been involved in any wrongdoing.”
Her firm does not represent the 10 individual companies comprising the association, but Bronster said she believes most of the contractors have retained separate counsel of their own.
FBI spokesman Tom Simon would not confirm the investigation, citing Department of Justice rules that prohibit confirming or denying even the existence of cases in which no charges have been filed.
“My understanding is that no charges have been filed in any investigation involving school buses in the state of Hawaii,” he said.
Civil Beat learned of the FBI probe from Lindy Akita this week after it published an analysis revealing that there has been no competition for regular school bus contracts from the Hawaii Department of Education in the last four years. In that same time, the state’s school bus contract costs have risen sharply — from $47 million per year to $72 million — while ridership has stayed steady.
Two FBI agents showed up at Lindy Akita’s home about five months ago, the CEO of Akita Enterprises told Civil Beat. Akita is also the school bus association’s treasurer.
“These guys came to my home at 7 in the morning, just as I was leaving for a game of golf,” the 84-year-old Kauai contractor said. “They said, ‘We’re investigating whether there is collusion among school bus owners.'”
Akita arranged to meet the agents after his golf game. When he got to the meeting, there were four agents — two of whom said they had been to visit nearby Yamaguchi Bus Service.
An unidentified male who answered the phone at Yamaguchi Bus Service told Civil Beat that he has “been advised not to talk with anybody about that. I guess it’s still ongoing.”
Carolyn Tanaka, spokeswoman for Roberts Hawaii, the largest school bus contractor, emailed Civil Beat with the following statement about the investigation:
“We are aware that the federal government is looking at competition on school bus routes and we are cooperating with the investigation. Our company prides itself on providing reliable and cost-effective bus transportation for Hawaii schools and is committed to working with the DOE to improve the quality and efficiency of our service.”
Akita was not hesitant to share what he told the investigators.
“I told them exactly what I’m telling you,” Akita said. “Nobody’s stopping anybody from bidding, and I don’t know what the other guys are going to bid. That’s the risk you take when you bid.”
Moana Dudoit, CEO of Dudoit’s Bus Service on Molokai, said she also received a house call from the FBI a few months ago.
“They think the contractors are going in and telling each other ‘Don’t bid for my contracts and I won’t bid for yours,'” said Dudoit, whose current contract with the department began in 2005, before prices rose sharply. “I think that’s stupid. Who would do that? No contractor would go in to another contractor and say that.”
She said a large percentage of the school bus cost increases can be attributed to fuel prices.
Akita said that he has always been fair with the state and even lost money on some of his contracts because it’s expensive to maintain the newer computerized buses.
“The older buses don’t give problems like the newer buses,” he said, adding that he had to send his mechanic to the mainland for training in how to maintain them. “You have to have special computers and all this equipment to analyze everything on those buses.”
Meanwhile, the cost of buying and shipping the vehicles here from the mainland has risen significantly. Shipping alone is $15,000 per bus, he said.
He said dozens of contractors over the last few decades have folded under the weight of rising expenses.
“I don’t know how everybody else operates, but I know how I operate my business,” he said. “I can tell you something: I am not gouging the state. Most of us are not gouging. I’m not giving you baloney or BS.”
Akita told Civil Beat last month that there is no agreement among contractors not to compete, but that he recently told other members at a meeting that he plans to extend his contracts — an option open to companies — in the future rather than rebid for them. It has been during the rebid process that companies are increasing their prices as much as 200 percent overnight.
Bronster said questions about the lack of competition ought to be directed to the individual companies.
“I think, quite frankly, the issue of why people are bidding or not bidding is really not something that would be discussed at the (Hawaii School Bus Association),” she said. “An association has certain roles, and it is to discuss things that are of mutual interest, but not like that.”
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