Hawaii’s state budget and finance director is facing an ethical dilemma as Gov. Josh Green’s administration works to establish a fund for victims of the Maui wildfires.

Luis Salaveria, who is playing a role in planning the fund that would benefit Hawaiian Electric Industries, also owns Hawaiian Electric stock, according to a financial disclosure filed with the Hawaii State Ethics Commission earlier this year. 

That should disqualify Salaveria from taking any official action that could affect the company, according to the Hawaii Ethics Code. But what, if anything, Salaveria plans to do to address the situation is unclear. Salaveria declined interview requests, and a written statement did little to clarify the situation.

“The department of budget and finance is not usually involved in matters pertaining to the ownership and operations of private industry,” Salaveria wrote in a response to questions from Civil Beat. “However in an over abundance of caution, I have reached out to and am working with the State Ethics Commission to get guidance and direction in order to prevent any real or perceived conflict of interest.”

The stock owned by Salaveria is valued at between $50,000 and $100,000, according to the financial disclosure report.

The ethics code prohibits state employees from taking any official action that would directly affect a “business or other undertaking in which the employee has a substantial financial interest.”

According to the Hawaii Ethics Commission’s “Guide to the State Ethics Code,” a person has a “financial interest” in a business if the person, or the person’s spouse, civil union partner or dependent child has any ownership, “including owning shares of stock in a business.”

The code defines “official action” broadly, to include “anything you do as a state employee that involves your personal judgment or discretion.” That, according to the ethics commission, “includes giving your advice, approval, disapproval, opinions, or recommendations about something even if you are not the final decision maker.”

In this case, the Green administration is finalizing details of a Maui fire victim recovery fund likely to be financed by defendants in lawsuits brought by victims of the Aug. 8 fires, which killed at least 99 people and razed much of Lahaina. Potential contributors include Hawaiian Electric Industries, which has been named in dozens of suits, along with its Maui Electric subsidiary.

The fund would compensate people who suffered personal injury or death but not property damage. Green has said he expects victims receiving payments under the fund would be required to drop other legal claims – a provision that could benefit Hawaiian Electric and shareholders, such as Salaveria.

Robert Harris, director of the Hawaii State Ethics Commission, referred questions to Salaveria.

Jim Kelly, Hawaiian Electric’s vice president for government and community relations and corporate communications, declined to comment. 

It is not clear how many other public officials with a hand in shaping the fund own Hawaiian Electric stock. But the company’s shares have long been viewed locally as a safe investment: a power monopoly that charged ratepayers the nation’s highest rates for electricity and rewarded investors with a hefty dividend.

Report: Utility’s Liabilities Could Exceed Its Value

But Hawaiian Electric has been battered financially since the wildfires. The company’s stock closed at $12.64 on Wednesday, well below its 52-week high of $43.71. Rating agencies have downgraded the company’s bond rating. And the company announced it would suspend its dividend for the fourth quarter for the first time in more than a century.

In an in-depth analysis published in September, Moody’s Investor Service reported Hawaiian Electric’s liabilities from the fire could far exceed the company’s value – similar to what faced Pacific Gas & Electric Co. before the company was forced into bankruptcy. 

“Early indications are that, in a worst-case scenario, Hawaiian Electric’s potential liabilities could be of a similar magnitude relative its size,” Moody’s wrote. 

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation.