One of the most striking moments in the trial of the Hawai`i Kai plant operators came on September 18. The jury had been dismissed for its lunch break after hearing yet another witness, a former employee of MEPAC presumably Services, Inc., tell (among other things) of discussions he had with James Kumagai, a vice president of M&E Pacific, Inc., and the person who generally oversaw Metcalf & Eddy’s operations in Hawai`i.
Judge David Ezra leaned over the bench. Why, he asked counsel, had the court not heard from James Kumagai? Kumagai obviously had direct knowledge of events; he was here in town. In the interests of a fair trial, Judge Ezra said, he was considering calling Kumagai as a witness for the court.
Robert Hackman, attorney for M&E Pacific, was in the courtroom at the time and said he would determine over the lunch recess whether Kumagai would be willing to testify. After the lunch recess, and following a lengthy and animated discussion at the side bar, the judge decided against calling Kumagai.
Silence is Golden
The question lingers, however. For as many years as MEPAC Services had the contract to operate the Hawai`i Kai plant, there were suspicions that the Department of Health was less than vigorous in its enforcement actions against the plant out of deference to Kumagai, a former deputy director of the DOH and, even more significantly, for six years chairman of the Hawai`i Democratic Party.
In the earliest days that MEPAC Services was awarded the contract, allegations of improper ties between M&E Pacific companies and the state Department of Health were made. In August 1986, DOH workers were reported to have said that a gag order had been placed on them concerning the Hawai`i Kai plant.
Those allegations were denied by a spokesman for the department. Nonetheless, when a City Council committee held hearings on plans of the Kaiser Development Corp. to build more than 200 houses — and was trying to determine whether the plant could handle the extra load — the DOH was asked to send representatives to speak to the subject. No one came. According to a report in The Honolulu Advertiser of August 6, 1986, the Council members were told by Ian Lind, then head of Common Cause, that “the technical staff wanted to be here for this discussion, and previous ones, but they were told to be unavailable.” (Lind now publishes Hawai`i Monitor, a monthly newsletter on political influence.)
Questionable Fees
Again in 1986, M&E Pacific came under fire by the Environmental Protection Agency, when an audit concluded that the federal government had paid out $1.2 million more than it should have as a result of improper billings for training services provided by M&E Pacific to workers at the city’s Honouliuli plant in 1984.
The EPA auditors found (as reported by the Advertiser of October 3, 1986) that M&E should have taken no more than 300 staff days for the training, but instead billed the government for 1,730 staff days. Moreover, it “improperly billed the EPA for ‘unallowable costs,’ including the travel of family members from the mainland to Honolulu and procurement of office furniture, video cameras and other items related to the excessive start-up training costs.”
The auditors questioned also the very selection of M&E Pacific. As noted in the Advertiser, the auditors found that “M&E was selected for the job even though it finished second to another firm, Envirotech Operating Services, in the city’s own evaluation of consultant proposals. Hawai`i officials maintained no documentation of why this was done, the EPA audit said.”
A former employee of M&E Pacific said at the time that the city and state were trying, in this way, to get the federal government to pay costs for a permanent training center for sewage treatment plant operators. In 1978, M&E Pacific had done a study on the training center. It was awarded a contract for designing the facility in 1983, after a federal grant of $500,000 had been given to the state for that purpose.
According to a report October 3, 1986 in the Star-Bulletin, “year-end reviews … by the EPA in 1984 and 1985 both note that the program is ‘significantly behind schedule.’ EPA was so dissatisfied with the progress M&E Pacific was making that in the 1984 review, it said ‘DOH should seriously reconsider awarding any additional grants to this firm in the near future.'”
Contracts Keep Coming
Far from that occurring, M&E Pacific has continued to receive a substantial number of contracts with the state and other public agencies. As mentioned in the October 1991 edition of Environment Hawai`i, M&E Pacific contracted with the Army in 1990 to survey industrial facilities contributing wastewater to the Schofield Barracks wastewater treatment facility.
Determining the dollar amount of state contracts awarded to M&E Pacific is difficult, if not impossible. Because no government-wide record of contracts with individual vendors is kept, one must review contracts on a department-by-department basis. It is difficult enough to track current contracts; those that have been closed out are nearly impossible to trace.
Nonetheless, the company is known to have had substantial contracts with the Department of Transportation, the Department of Land and Natural Resources, and — despite EPA warnings — the Department of Health. In spring of 1990, for example, the DOH turned to M&E Pacific for help in preparing a program to clean up leaking underground storage tanks. The value of that one contract alone was $374,284, with most of the money coming from the federal Leaking Underground Storage Tank Trust Fund (known better as the “LUST Trust”).
The Kumagai Connection
While James Kumugai’s close ties to Democratic state officials may help M&E Pacific win state contracts, he has not been stingy when it comes to lending his influence to others.
Readers of the September 1990 edition of Environment Hawai`i may recall mention of a study ostensibly surveying the need for a hazardous waste treatment, storage and disposal facility on O`ahu. That report, which cost the state $200,000, was prepared by a group calling itself the Pacific Environmental Research Group, whose services the Office of Environmental Quality Control had engaged without putting the job up for bid. The OEQC, under the administrative authority of the Department of Health, was headed by Marvin Miura at the time the contract was awarded, in late 1988. (Miura quit his post to run for mayor of Maui in 1990; immediately upon his departure, an FBI inquiry into his administration of the office commenced, according to reports published in The Honolulu Advertiser.)
PERG may not be a well known name in the field of environmental studies, but it was not wanting in political influence. The bid-exemption request on file at the Department of Accounting and General Services states that PERG was intending to use the services of the following people in preparing the report: Renton Nip (legal advice); Allen Kajioka (architect); Jimmy Kumagai (civil engineering); James Yamamoto (planning); Ronald Kim (financial); Ko Hayashi (community coordination); and Paul Defalco (EPA coordinator). Nip is chairman of the state Land Use Commission; Kajioka sits on the commission as well. Hayashi is affiliated with the more progressive wing of the state Democratic Party and has close ties with Governor Waihe`e. Ronald Kim, an accountant, was treasurer of Miura’s failed campaign for mayor.
None of the parties listed ended up doing any work on the final report, denounced by Deputy Health Director Bruce Anderson as being of such questionable credibility “that it is our opinion it should not be used as a reference for future deliberations” on hazardous waste issues (as quoted in the Advertiser).
Volume 2, Number 5 November 1991
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