House Speaker Joe Souki this week denied reports that he more than doubled his investment in Hawaiian Electric Industries in late 2013, as top NextEra executives were readying their preliminary bid for the island utility.

The backpeddling is a little awkward for the Maui representative, since the reports involved are his own annual financial disclosures filed with the state Ethics Commission as required by law.

In February 2014, Souki filed a financial disclosure statement which reported a jump in the value of  his Hawaiian Electric Industries stockholdings, now reported to be worth from $50,000 to $100,000. With the stock at that time selling for $25 per share, Souki appeared to own from 2,000 to nearly 4,000 shares.

Speaker Joe Souki. 7 may 2015. photograph Cory Lum/Civil Beat

State House Speaker Joe Souki apparently didn’t pay a lot of attention to the records he filed with the state Ethics Commission regarding his financial holdings.

Cory Lum/Civil Beat

Just  two years earlier, he had reported owning just 729 shares, worth about $20,000 at the time.

The increased investment was reaffirmed in Souki’s most recent disclosure, filed Feb. 2, which reported no changes from the prior year.

But when asked this week about the boost in Hawaiian Electric shares, Souki said the official disclosures he filed were wrong, and the number of shares he owns has not changed since 2012.

“I didn’t buy a single share,” the 82-year old Souki said, noting that he inherited the stock from his parents back in the late 1980s. “I still have just 729 shares.”

“It was a mental error on my part,” he said.

Souki said he selected the wrong category when designating the value of his Hawaiian Electric shares using the Ethics Comission reporting system, which uses letters to designate value ranges.

Souki said he mistakenly selected category “E”, indicating a value of at least $50,000 but less than $100,000.

“I put it in the wrong block,” he said.

He added with a chuckle: “I don’t have that kind of money.”

Another ‘Mental Error’

The Speaker’s initial financial disclosure covering the period from July 9, 2013, through Jan. 27, 2014, failed to report any financial interests. For each of the 10 types of financial interests that are to be disclosed, he checked a box, “Check here if entry is None.”

Income for services rendered? Souki answered “None.”

Ownership or beneficial interest in businesses? Stocks worth $5,00o or more? None. Creditors? None. Real property owned? None.

In the case of financial disclosures, the ethics law authorizes the commission to impose administrative fines for late reports, but it doesn’t provide penalties for false reports, whether intentional or due to negligence.

None of these answers was true.

But despite this, Souki checked off the box certifying his answers as correct.

“CERTIFICATION: By checking this box or signing your name on this form, you signify and affirm that you are the person whose name appears as the ‘Filer’ above and the information contained in the form is true, correct and complete to the best of your knowledge and belief. You further certify that you understand that there are statutory penalties for failing to report the information required by Hawaii law.”

When asked about it this week, Souki seemed confused and was unable to explain how or why he had signed off on this blank document as accurate.

Souki described it as another “mental error.”

As Souki’s incomplete or incorrect financial disclosures demonstrate, legislators can be pretty casual about complying with the disclosure requirements of the ethics law without fear of facing penalties of any kind as a result.

Thumbing His Nose?

The commission’s problems in confronting this are two-fold.

First, there’s a huge practical problem. The commission lacks the budget or staffing necessary to do anything more than minimal reviews of the financial disclosures it receives each year from elected and appointed officials and employees. 

There are currently about 1,900 financial disclosures filed with the commission annually, including nearly 800 board and commission members, as well as legislators, legislative staff, top administrators, fiscal officers and others.  The public only sees the 450 or so that by law are considered public records, but all 1,900 have to be processed, minimally screened, and filed.

Commission staff follow up with those who fail to submit a required disclosure, but once it’s completed, either on paper or online, it’s basically just filed away without additional review.

At one time, the commission experimented with random audits of a few disclosures, but has lacked the resources to sustain that effort.

The state Ethics Commission relies on concerned citizens, the media or, in the case of elected officials, their political opponents, to act as watchdog.

The commission’s primary goal has been to encourage 100 percent compliance with the disclosure requirements rather than to pursue penalties against those to fail to comply fully.

As a result, the commission relies on concerned citizens, the media or, in the case of elected officials, their political opponents, to act as watchdogs, scrutinizing financial disclosures and pointing out discrepancies, omissions, or falsehoods, along with potential conflicts of interest.

In these cases, the resulting adverse publicity is really the primary, most effective, and most potent sanction available.

But when someone like Rep. Souki turns in a report that incorrectly answered “none” to all questions about financial interests, it’s a different issue. It’s kind of like thumbing your nose at the ethics law.

And that’s the commission’s second overall problem. The ethics law itself is pretty thin on enforcement tools.

In the case of financial disclosures, the ethics law authorizes the commission to impose administrative fines for late reports, but it doesn’t provide penalties for false reports, whether intentional or due to negligence.

And because the section of the law dealing with financial disclosures provides specific penalties for certain violations, such as late reports, but is silent on other things like providing misleading or incomplete information, the commission’s authority to more aggressively pursue those types of violations appears questionable.

The commission has supported several bills in recent years that would have made it easier to take action against lobbyists who fail to disclose their lobbying-related expenditures.  So far, these bills have all failed. And no similar bills have been put forward to put additional teeth into the financial disclosure requirements for public officials, including legislators.

Civil Beat compiled financial disclosures from state lawmakers, state officials and Honolulu elected and appointed officials in a searchable database that allows users to easily examine financial records in a variety of ways. Our database includes records from 2014 and 2015 and is updated weekly. Check it out here.

About the Author

  • Ian Lind
    Ian Lind is an award-winning investigative reporter and columnist who has been blogging daily for 15 years. He has also worked as a newsletter publisher, public interest advocate and lobbyist for Common Cause in Hawaii, peace educator, and legislative staffer. Lind is a lifelong resident of the islands. Read his blog here. Opinions are the author's own and do not necessarily reflect Civil Beat's views.