WASHINGTON — Over the past decade, Martin Kao has become one of the most prolific political donors to come out of Hawaii. And you’ve probably never heard of him.
Kao doesn’t work for Alexander & Baldwin, R.M. Towill or any of the other major companies whose employees flood politicians’ campaign coffers, and you won’t find his name on any list of billionaires who call the islands home.
Instead, Kao is the President and CEO of Navatek LLC, a Honolulu-based defense contractor that designs state-of-the-art ship hulls for the U.S. Navy. Kao has maintained a relatively low profile while he and his family have quietly pumped hundreds of thousands of dollars into the campaign coffers of dozens of state and federal politicians.
Now, some of these donations are coming under increased scrutiny, especially as Navatek expands its operations beyond Hawaii’s borders.
A Civil Beat analysis of Federal Election Commission data shows Kao and top executives from Navatek, which was born out of Pacific Marine & Supply Co., donated nearly $450,000 to federal candidates and causes from 2002 to 2019.
When combined with the contributions of principals from Pacific Marine and its various offshoots and affiliates that number increases to more than $700,000.
But it’s the donations from Kao and other Navatek principals that stick out most.
Nearly 75% of contributions were made between 2013 and 2019. That increase comes after the December 2012 death of U.S. Sen. Dan Inouye, Hawaii’s most powerful politician who steered billions of dollars into the Aloha State through his position on the Senate Appropriations Committee.
In the years since Inouye died, Navatek executives donated heavily to other members of Hawaii’s federal delegation, including tens of thousands of dollars to Reps. Tulsi Gabbard and Mark Takai, both of whom served on the House Armed Services Committee.
Kao and his employees also bet big on U.S. Sen. Brian Schatz, who was appointed to replace Inouye and, like him, is now on the Appropriations Committee.
Federal Election Commission records show Schatz has received nearly $90,000 from Kao and others who list Navatek as their employer.
They donated another $125,000 to political action committees supporting other key lawmakers who have their fingers on the strings of the federal purse, including Democrats Dick Durbin, Tammy Baldwin, Chris Coons, Jack Reed, Jeanne Shaheen and Jeff Merkley.
Recently they began donating generously to Republican Sen. Susan Collins of Maine, and appear to be tied to dark money contributions that have drawn a complaint to the FEC from the watchdog Campaign Legal Center in Washington, D.C.
Each senator has a seat on the Senate Appropriations Committee, and many of them also represent states where Navatek has opened satellite offices.
“What these people from Navatek did was diversified their political portfolio rather than stake all their bets on one senator,” said John Hart, who’s the chairman of Hawaii Pacific University’s communication department and a long-time political observer. “They are giving a lot of money to a lot of different people and they are focusing on appropriations. In other words, they are going where the money is.”
Kao did not respond to Civil Beat’s requests for an interview that were made through Navatek Vice President Eric Schiff. Schiff, who has donated more than $80,000 to federal campaigns, said he could not comment on behalf of the company and that any statements would have to come from Kao directly.
Collins in particular has been a recent beneficiary of Kao and his company’s donations. The Maine Republican is one of the highest ranking members on the Appropriations Committee, and in August, she visited Navatek’s offices in Portland, Maine, to celebrate an $8 million contract she said she helped steer toward the company.
Federal Election Commission records show Kao and two of his employees, Lawrence Lum Kee and Clifford Chen, donated more than $16,000 to Collins’s campaign between 2018 and 2019, which was the year the contract was awarded.
Their family members, including Kao’s wife Tiffany Lam Kao, donated another $50,000 to Collins with many of the contributions coming on the same day. Three donors in particular with similar names — Christopher Michael Lam, Christopher Maxim Tory Lam and Christopher-Michael T. Lam — also gave the maximum allowable under the law, $5,600 each, to Collins’ campaign on the same day.
In addition, a mysterious Hawaii-based company called the Society of Young Women Scientist and Engineers LLC donated $150,000 to a pro-Collins super PAC despite there being no record of the business having any source of income with which to make the contribution.
Last month, the Campaign Legal Center, a nonpartisan watchdog that tracks money in politics, asked the Federal Election Commission to investigate the donation.
The Society for Young Women Scientist and Engineers LLC, according to the legal center, looks like it was set up solely to keep the identity of the donor secret, which could be a violation of the law.
The Legal Center compared the donation to those made by Lev Parnas and Igor Fruman, two associates of President Donald Trump’s personal attorney Rudy Giuliani, both of whom were indicted by the U.S. Justice Department for making illegal “straw man” donations through LLCs meant to hide their identities.
The Society for Young Women Scientist and Engineers doesn’t appear to have any legitimate business dealings or source of income, and the company’s sole business agent listed in government documents, Jennifer Lam, shares a name with Kao’s wife, Tiffany Jennifer Lam Kao.
Hart said the fact that Navatek has banked so heavily on Collins could pay dividends should she win her bid for re-election in November.
Her votes to confirm Brett Kavanaugh to the U.S. Supreme Court and acquit President Donald Trump of impeachment put a target on her seat, Hart said, and Democrats are highly motivated to retake control of the Senate.
If Collins can hold on in Maine, and Republicans can maintain their majority in the Senate, her seniority would put her in line to head the Appropriations Committee. For Navatek, that would mean having another well-placed friend in Washington.
“If she survives it will undoubtedly be partially dependent on these people and this PAC that funded her when not a lot of other people would,” Hart said. “She’s one of those people who right now doesn’t have a lot of friends so she will remember who these people are when she wins.”
The fact that Kao and his Navatek employees donate so heavily to political campaigns is not in and of itself surprising. Maritime and defense contractors in general give millions of dollars to politicians across the country.
According to an analysis of FEC data from the Center for Responsive Politics, the defense sector spent $13.9 million on campaign contributions in the 2019-2020 election cycle alone while companies involved in sea transport donated about $1.7 million.
Among the top contributors were PACs and employees affiliated with Lockheed Martin, Northrop Grumman and Raytheon Co. Defense contractors also spent huge sums on lobbying.
The Center for Responsive Politics found that in 2019, the defense industry hired 677 lobbyists to sway Congress and help steer contracts to more than 200 different clients. The cost of all that influence, according to the analysis, was more than $111 million.
The maritime industry by comparison spent $26.8 million. Lobbying disclosure forms showed Navatek alone spent more than $240,000 in 2019, which was nearly double what the company spent in 2018.
Donating to political campaigns also appears to be built into the company’s DNA. Navatek comes from a family of well-connected businesses tied to Pacific Marine & Supply Co. and Pacific Shipyards International.
Steven Loui is the chairman of Pacific Marine & Supply and, like Kao, donates regularly to political campaigns. Pacific Marine & Supply was founded in 1944 by Loui’s father, Fred H.M. Loui, and has since become one of the most influential maritime organizations in Hawaii.
When the elder Loui launched the company it mainly serviced Navy ships during World War II. After he died and his son, Steven, took over in 1973 at the age of 21, the business expanded and diversified its operations.
Among the companies to emerge from its portfolio are Navatek, Pacific Shipyards International, HSI Mechanical and Unitek Hawaii, some of which have spawned their own independent offshoots.
Loui did not agree to an interview with Civil Beat, but in a written statement said that Pacific Marine and Kao’s interest in Navatek were separated several years ago when the company split to form two separate businesses, Navatek and Navatek Boat Builders.
“Pacific Marine bought Navatek Boat Builders LLC and it is operated as an independent company,” Loui wrote.
“Martin Kao purchased Navatek LLC and has ownership and management control of the enterprise. The result is Pacific Marine, Navatek Boat Builders LLC and Navatek LLC are separate, distinct and independent companies with different stockholders and management control.”
The companies thrived due in part to their connections to U.S. Sen. Dan Inouye. Up until his passing in December 2012, Inouye was the chairman of the Senate Appropriations Committee.
Inouye was particularly fond of congressional set asides, so much so that he had earned a nickname the “King of Pork.”
“It may please you or it may not please you,” Inouye once said while speaking with Big Island business leaders. “I’m the No. 1 earmarks guy in the U.S. Congress.”
In 2009, the Associated Press analyzed more than $200 million in earmarks Inouye sponsored in the 2010 defense appropriations bill that were for projects in Hawaii even though the Pentagon generally did not want them, the news organization reported.
The analysis found that of the $200 million in earmarks, more than $25 million was destined for Hawaii-based companies that had donated more than $102,000 to Inouye’s campaigns through its executives and employees since 1997.
According to the Associated Press, another $33 million in earmarks were for major defense contractors, such as Boeing and Lockheed Martin, that had donated $114,000 to Inouye’s campaigns through the companies’ political action committees.
Both Navatek and Pacific Marine were highlighted in the article — executives from the companies had donated $29,000 to Inouye’s campaigns since 1997.
The Associated Press found that Inouye had set aside $2.2 million for Pacific Marine in the defense budget so that the company could build a model amphibious transport vehicle for the U.S. Navy.
Two years prior, in 2007, Navatek had presented a similar vehicle to the Navy during a competition to design the next generation of military transport ships, but the company’s proposal didn’t meet the Navy’s standards. Inouye’s earmark forced the military’s Office of Naval Research to pay for the vehicle anyway.
While good government and watchdog groups were critical of Inouye’s earmarks — saying the practice fostered the appearance of a “pay to play” culture in Washington — both Inouye and Navatek defended the process.
In a 2010 op-ed in the Honolulu Star Bulletin, Michael Schmicker, who was the vice president for corporate communications for Navatek, argued that “intelligent” earmarks were good public policy.
At the time, Republicans wanted to end the practice of letting lawmakers like Inouye dish out taxpayer dollars to pet projects in their districts.
Schmicker said doing so would only hurt local companies, such as Navatek, that struggled to compete with larger defense contractors, such as Lockheed Martin, Boeing and General Dynamics. While Schmicker did not list the companies by name he said they were all part of the “Big Six” that in 2008 alone received $110 billion in contracts.
“Unfortunately, large corporations have a vested interest in incremental, evolutionary change,” Schmicker said, adding that “‘disruptive’ technologies threaten their existing ‘legacy’ products and services.”
“Meanwhile, small companies like ours,” he said, “consistently invent, research and produce technologies of critical value to the U.S. military, sometimes at a fraction of the cost big, high-overhead defense contractors can do it for. But without ‘intelligent’ earmarks, we can’t get past the ‘gatekeepers’ and show what we can do.”
Federal Election Commission data shows that from 2002 to 2018, Schmicker donated more than $100,000 to political campaigns across the U.S., including in Hawaii, Illinois, Arizona and Alaska.
Inouye did more than simply send federal money to Navatek and Pacific Marine. He actively lobbied on behalf of the companies.
For instance, in 1996 when Pacific Marine applied to take part in a national pilot program in which the U.S. Environmental Protection Agency worked with local businesses to develop new technologies and practices to cut down on pollution and hazardous waste, Inouye convinced Vice President Al Gore to help by sending a letter to the agency administrator requesting she take a look at the Hawaii company’s proposal.
On another occasion, when Pacific Marine wanted to use one of its foreign built vessels to test a ferry system in Hawaii, Inouye pushed for a congressional exemption from the Jones Act, a federal law that only allows American made ships to transport goods between U.S. ports.
In 2011, while expressing his support for a federal program to help small businesses, Inouye took to the Senate floor to boast of Navatek’s successes.
When the senator died Navatek needed to adjust. Kao himself said as much in an interview with Hawaii News Now in January 2013, just weeks after Inouye’s death.
Inouye had been the not-so-invisible hand that steered billions of dollars from Washington to Hawaii for more than a generation. Without him Navatek, Pacific Marine and many others that had profited from his generosity needed to adapt.
“I think too often people misinterpret any kind of congressional spending as a gift of some sort,” Kao told Hawaii News Now. “What’s important to us is that the customer always has to come back wanting more, not because Congress mandates it, but because we provide true value.”
One place Navatek and Pacific Marine turned was the Hawaii Legislature.
In 2014, lawmakers approved a tax credit designed to help Pacific Shipyard International, the state’s largest private ship repair company, move to a new location in Honolulu Harbor. The state’s tax department estimated that the credit could cost the state up to $1.2 million a year.
Navatek and Navatek Boat Builders also received nearly $1 million in state grants that year to design new watercraft for the Department of Land and Natural Resources and ocean recreation areas along Oahu’s south shore to assess whether regulations at the time were adequate to protect public safety.
Typically such grants in aid go to nonprofits rather than for profit companies.
When lawmakers were questioned about their approval of the provisions by the Honolulu Star-Advertiser they admitted the companies, which had relied so heavily on Inouye, could use a lift.
“The plain fact is that most officials don’t pay attention to the contributions after awhile, especially when the numbers get so big cumulatively.” — former Gov. Neil Abercrombie
“In the past, Sen. Inouye helped Navatek with these kinds of issues,” said Scott Saiki, who was the House majority leader at the time. “Now that he is unable to do so, the Legislature felt that there was a public purpose in providing this assistance.”
Hawaii Campaign Spending Commission records show that Kao, Loui and the executives of their various companies and affiliates didn’t just spend their money on federal races. Since 2006, they have given more than $250,000 to various state candidates with the majority of that coming after Inouye’s death.
Among the top recipients were former Gov. Neil Abercrombie, current Gov. David Ige and former Congresswoman Colleen Hanabusa, who ran against Ige in 2018.
Other top recipients included Lt. Gov. Josh Green, Sen. Donovan Dela Cruz, Sen. Michele Kidani and Rep. Sylvia Luke. Saiki, who is now Speaker of the House, also received thousands of dollars.
Former state Rep. Isaac Choy was one of the Legislature’s most critical opponents of the tax credits and grants that lawmakers set aside for Pacific Shipyards and Navatek.
In 2017, as the companies convinced the Legislature to give them a better deal on the tax credits, he publicly decried the process, saying it looked like Hawaii’s politicians were bending to the will of their biggest donors.
“You have to pay to play, right?” Choy said in a recent interview with Civil Beat. “That’s what I said then and I stand by it now.”
Vassilis Syrmos, who is the vice president of research and innovation at the University of Hawaii, said Navatek appears to have done a good job evolving in a post-Inouye political landscape.
The senator, Syrmos said, had helped a lot of companies get off the ground by directing federal dollars to various companies and projects that helped build the infrastructure needed for businesses to take hold in the islands.
When Inouye died there were a number of companies that shriveled up or moved away. Others, such as Navatek, persevered.
Syrmos pointed specifically to Oceanit, a high-tech engineering firm that received millions of dollars in direct spending from the Defense Department due to Inouye’s influence.
The same AP analysis from 2009 found that Inouye pushed provisions to give Oceanit $10 million for two projects, one to develop a network of telescopes for the U.S. Air Force and the other to improve technology to improve the nation’s missile defense systems.
The AP found that Oceanit employees, including CEO Patrick Sullivan, had donated $26,700 to Inouye’s political campaigns since 1997.
Federal Election Commission records show that Sullivan and others with his company have continued to funnel money to federal candidates and their PACs, to the tune of $225,000 over the past 18 years.
“I think a lot of companies do that as a strategy to receive funding through the appropriations process,” Syrmos said. “In order to guarantee some type of appropriation you need to create multi-state support from different appropriators and work much closer with a larger group of individuals whether they are government lobbyists or even politicians.”
Sullivan did not respond to a Civil Beat request for an interview made through his company.
Abercrombie doesn’t buy into the idea that Inouye — the most powerful politician in Hawaii, who verged on the edge of invincible — would be cowed into sending money to favored contractors simply because they donated to his campaign.
For more than 20 years, Abercrombie was a member of the U.S. House Armed Services Committee as a representative from Hawaii.
While he sponsored plenty of earmarks, sometimes with Inouye, Abercrombie told Civil Beat in a recent interview it was always with the intent of improving military capabilities in Hawaii or helping local companies, such as Navatek or the Pacific Shipyard, compete with the larger, more established defense contractors.
“The plain fact is that most officials don’t pay attention to the contributions after awhile, especially when the numbers get so big cumulatively,” Abercrombie said. “The money doesn’t really mean anything in terms of who you pay attention to. You pay attention to the people who you think are actually going to get something done.”
From 2001 to 2008, Abercrombie received more than $50,000 in donations from employees of the Navatek and Pacific Marine family of companies while raising a total of more than $4 million for his reelection campaigns.
While running for governor in 2010 and 2014, state campaign spending data shows, Abercrombie received nearly $60,000 from the companies’ employees while raising a total of more than $2.4 million.
Navatek, Pacific Marine and others companies that received work through federal earmarks, he said, had proven track records that showed an ability to succeed.
In terms of the contributions coming from the business executives and company PACs, Abercrombie blames the U.S. Supreme Court for allowing unlimited amounts of money to flow into federal elections.
Companies large and small both donate to political campaigns, Abercrombie said, but for the smaller companies like Navatek the donations serve a greater purpose — it makes them more visible.
“Let’s face it, Dan Inouye isn’t here anymore,” Abercrombie said.
While both Schatz and U.S. Rep. Ed Case are on their respective chambers’ appropriations committees, they have nowhere near the seniority Inouye did when he died.
Abercrombie said Navatek officials still need to make sure the other politicians in Washington don’t forget about the work they do even though their headquarters is nearly 5,000 miles away in the middle of the Pacific.
“That’s really what it comes down to,” Abercrombie said. “Whether it’s Honolulu, Oakland or Iowa Falls, they’re saying, ‘Please give us a chance. Please keep an eye on us. It’s not all about Raytheon. It’s not all about Lockheed. It’s not all about Boeing. It’s not all about General Dynamics.’
“These little companies have a lot they can offer, too.”
Civil Beat readership has more than doubled in the past nine months. That’s incredible growth for which we’re so grateful.
But for a small nonprofit newsroom that provides free content with no paywall, readership growth alone can’t sustain our journalism. The truth is that less than 1% of our monthly readers are financial supporters.
To remain a viable business model for local news, we need a higher percentage of readers-turned-donors.
Will you consider becoming a new donor today?