Garcia, who is winding down his second term and not running for any political office this fall, was fined $6,500 by the Honolulu Ethics Commission for breaking conflict of interest rules and misusing city resources while acting as the executive director of the Kapolei Chamber of Commerce, a side job that pays him $60,000 a year.
The fine is the largest in the history of the Ethics Commission. It’s more than triple the $2,000 penalty levied against infamous former council member Rod Tam, who improperly spent nearly $12,000 of city money on meals that had nothing to do with business and was later convicted of theft and other charges.
According to the Ethics Commission, Garcia failed to disclose that he worked for the Kapolei Chamber of Commerce before voting on 52 bills or resolutions that the business group had testified on in front of the council.
Of those 52 votes, 38 were related to the controversial $5.2 billion rail project. The remaining 14 involved issues such as rezoning agriculture land to commercial and residential uses around Kapolei.
The Ethics Commission also found that Garcia had used his city email account to send 82 emails from 2008 to today that involved Kapolei Chamber of Commerce businesses.
Garcia issued a statement Monday, apologizing for his actions and noting that he had already paid his $6,500 fine. He also said he did not “intend to deceive, mislead or in any way deliberately violate” any laws.
“Again, my sincerest apologies to the people of the City & County of Honolulu for giving them further cause to lose faith in their government,” Garcia said. “I sincerely regret the violations and seek nothing more than to do the right thing now, and for the future.”
Breaking the News
The Ethics Commission investigation into Garcia began after KITV reported on March 24, 2011, that the council member worked for the Kapolei Chamber of Commerce, which was a “staunch” supporter of the rail project.
When Civil Beat followed up with Garcia on the allegations from the KITV report, he told us, “Don’t tell me I’m a whore and getting paid off and I’ll do anything for rail.” At the time, Garcia was the chairman of the council. He was replaced by Ernie Martin a few months later.
The Ethics Commission found that Garcia was inconsistent when reporting potential conflicts of interest. For example, from April 2008 to March 24, 2011 Garcia filed 33 disclosures of conflict of interest, 10 of which arose from city business related to his wife’s employer.
But when the commission asked about Garcia’s disclosure policy related to the Kapolei Chamber of Commerce, the Ethics Commission discovered that the analysis of a conflict of interest “was based on a rule of thumb: if there was no direct financial benefit to him personally, there was no conflict of interest.”
This interpretation, the commission ruled, was “misguided and illogical.”
“This is a case where the nature of the conflict was obvious — (Garcia’s) employer or the Board members who controlled his employment took positions on important issues before the Council. There is no valid excuse for his misconduct. We note, however, that Councilmember Garcia disclosed his employment relationship with the Chamber in most of annual financial disclosures. Because of that fact, we do not conclude that he intended to mislead or conceal his business relationship with the Chamber.”
“To his credit, Councilmember Garcia has been cooperative and truthful in the investigation of this case. He immediately corrected his conduct by filing conflict disclosures regarding the Chamber’s interests once informed to do so by Commission staff. He has also acknowledged and taken responsibility for his misconduct.”
Garcia’s Immediate Response
On April 18, 2011 — less than a month after the Ethics Commission opened its investigation — Garcia filed 11 disclosures of interest statements, and eventually filed a total of 69 in 2011. This is compared to the 27 filed by the other eight council members combined. So far in 2012, he’s filed 65 disclosure statements versus 14 for all his colleagues put together.
Ethics Commission Executive Director Chuck Totto said this was a bit of an overreaction, and something that further highlights Garcia and his staff’s misunderstanding of conflicts of interest rules.
“It’s reflective that he doesn’t know what a conflict of interest is,” Totto said. “Nestor’s a good man, I think. He just doesn’t understand this.”
The Ethics Commission noted that Garcia had attended ethics training three times before KITV reported in March 2011 that he worked for the Kapolei Chamber of Commerce. One of the main topics covered in those meetings were identifying conflicts of interest.
A Hefty Fine
Totto said the commission had the opportunity to fine Garcia much more than the $6,500, but that it was based on a settlement between the council member’s attorneys and the government oversight board. Had the commission decided to impose a similar fine to one it issued to former council member Todd Apo for a single conflict violation — $500 — the penalty could have reached $26,000.
While Totto said the $6,500 fine is the largest imposed in the Ethics Commission’s history, he makes clear that the ability to charge for violations is only four years old.
He also said Garcia’s fine is much larger than the one slapped on Tam because the rules governing conflict of interest are clearer than those related to meal expenditures. This vagueness, Totto said, probably let Tam wiggle out of a heftier fine, although he was eventually forced to pay restitution for the $12,000 he improperly spent.
“Even though there may have been more individual incidents with Rod Tam, it was a murkier area,” Totto said. “This in particular with Nestor Garcia was very clear. It’s your employer coming in to testify on a bill. You have to disclose that. And the fact that you didn’t for so long and on so many issues that were so important to the public makes it more egregious.”
In Totto’s press release about the violation, he said there’s a “broader issue” at stake in the Garcia ruling, one that allows council members with a conflict of interest to still vote on bills.
“Only councilmembers have this privilege,” he said in the release. “All other City officials and employees, including the Mayor and the Prosecuting Attorney, are disqualified from participating in matters where they have a conflict of interest. The Ethics Commission has tried unsuccessfully to convince the councilmembers to change the law so they will be held to the same standard as all other City officials.”
Monday’s announcement about Garcia marks the second time in a week that a City Council has been found in violation of ethics rules.