Prior to July 2014, some public servants who oversaw the multi-million-dollar budgets of high-profile state entities didn’t have to disclose their financial interests.

That changed when then-Gov. Neil Abercrombie — with some hesitancy — allowed new disclosure requirements to become law without his signature.

At the time, the Legislature determined the state Ethics Commission did not have the resources to search all financial disclosures for conflicts of interest. The bill would enable the public to help, supporters said.

Lawmakers passed it unanimously and sent it on to the governor.

The Hawaii State Ethics Commission would be tasked with reviewing all financial disclosures for conflicts of interest under the proposed bills, which would keep most of the disclosure information from the public. Civil Beat file photo

Resignations ensued, including the well-publicized departure of two members of the University of Hawaii Board of Regents, tasked with overseeing the 10-campus system, before the law even passed. Two more regents left later.

When completing financial disclosure documents, public servants must either write the exact amount or select a dollar range to give the public an idea of their pay, debt, property value and investments. Civil Beat publishes a database detailing those financial disclosures.

Now, a new set of bills may walk back some of those requirements, but opponents say that would mean less transparency in state government.

Unpaid members serving on 14 state boards, commissions and agencies would still be required to disclose these dollar amounts to the Ethics Commission, but the public wouldn’t see them under House Bill 2192 and Senate Bill 2609. A board member’s employer would still be listed, for example, but their salary would be redacted.

UH Regents Saedene Ota and John Dean, who resigned from the board in June 2014. University of Hawaii Board of Regents

The same goes for financial information about a board member’s spouse and dependent children.

Agencies such as the Board of Land and Natural Resources, the Public Utilities Commission, Land Use Commission and Ethics Commission would be among those affected.

Supporters of the bills say the current law makes it hard to recruit top-notch volunteers who have privacy concerns. Critics say the public has a right to vet the financial interests of public officials.

Dan Gluck, executive director of the Ethics Commission, said he recognizes that it’s difficult to balance the needs for high-quality volunteers and transparency.

Still, Gluck said he opposes the bills.

Gaining Momentum

Despite unanimous approval in 2014, the measures have cleared committees that include some of the same lawmakers who passed it before. The bills are headed to floor votes in both chambers.

The House bill was introduced by Speaker Scott Saiki. He previously told Civil Beat that he wrote it after hearing complaints from former UH regents.

“My concern is that the disclosure of financial amounts hinders the ability to recruit different kinds of people for very significant boards and commissions,” Saiki said.

Sen. Donovan Dela Cruz, chair of the Ways and Means Committee, said he introduced SB 2609 after asking high-profile businessmen how the state could get more help from the private sector.

Speaker Saiki speaks to media with Senate president Kouchi, Congresswoman Hanabusa, Sen Dela Cruz and Sen Brian Schatz.
Dela Cruz, left, and Saiki, at the podium, both introduced bills to make less financial information available to the public. Cory Lum/Civil Beat/2017

Dela Cruz said he thinks current board members are qualified, but he said the state should “open up the pool to bring in strong leadership” from other industries.

“We cannot attract highly qualified people from the business sector … and we desperately need the expertise of people outside government to help us with these challenges,” Dela Cruz said. “We’ve lost a lot of good people that, unfortunately, bring a lot to the table but are uncomfortable participating.”

Colbert Matsumoto, an insurance company executive, was one of the businessmen who inspired Dela Cruz to write the bill. Matsumoto supports disclosure of financial information to the Ethics Commission but thinks it shouldn’t be made public, in part because of identity theft concerns.

He said it should be up to the Ethics Commission to find conflicts of interest.

“We need to strike an appropriate balance between the willingness of people to serve and our attempts to try and maintain the integrity of government processes,” he said.

Matsumoto served for a year on the Honolulu Authority for Rapid Transportation board, which oversees the rail project construction.

When he was appointed to the board in 2016, it was not disclosed that Tradewind Capital Group, a real estate investment firm founded and chaired by Matsumoto, owned properties along the rail route. Questions were raised about a potential conflict of interest, though Matsumoto said at the time that Tradewind didn’t purchase the properties based on speculation that the rail line would eventually drive up property values.

‘Major Step Backwards’

SB 2609 passed on a 3-1 vote last week at a Senate Judiciary Committee hearing.

Sen. Laura Thielen was the lone “no” vote.

“The public should have the ability to look at are these board members getting any time or financial pay or relying on … any of these entities that are going to get the contracts that they’re working on,” Thielen said. “I feel that’s a major step backwards.”

Sen Laura Thielen member of Public Safety, Intergovernmental, and Miliary Affairs.
Thielen was the lone opponent  of the Senate measure in the Judiciary Committee. Cory Lum/Civil Beat

Sen. Karl Rhoads, vice chair of the committee, voted in favor of the bill but with “reservations.”

He said he voted for the bill in committee because Chairman Brian Taniguchi supported it, and tradition dictates that vice chairs follow their chairs’ lead. Rhoads said he will likely vote against the bill on the Senate floor.

“My feeling is that some of these boards, like the (University of Hawaii) Board of Regents, … it’s a huge budget, and I think the current law makes a lot of sense,” Rhoads said. “If you want to exercise that kind of authority, then the rest of us have a right to know what your (financial) interests are.”

Corie Tanida, executive director of Common Cause Hawaii, said more bills than usual this year “attempt to manipulate what information is available to the public, for good or bad.”

She pointed to an amendment passed earlier this month in House Bill 1853 that would allow state officials to conceal the addresses of all properties they own in financial disclosure forms. Currently, state officials may only conceal their current address, but must reveal the addresses of all other properties they own. 

The exact compensation for legislative employees is public record, but HB 1768 and SB 2870 would change the law to provide only salary ranges.

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