The money pit has been hollowed out for decades now, so the natural inclination is to keep falling back in.
However, where Sandwich Isles Communication is concerned, the state Department of Hawaiian Home Lands and its overseeing Hawaiian Homes Commission should be looking for a way to pull up stakes and move elsewhere.
Sandwich Isles is a telecommunications carrier to about 3,600 customers on Hawaiian homelands. It has also been at the center of a legal maelstrom that led earlier this year to the sentencing and imprisonment of its founder, Albert Hee, on federal tax evasion charges.
The case involved shocking examples of the way Hee spent federal subsidies funneled to the company, ostensibly to support the delivery of services to homesteaders. Instead, he was found to have spent $2.9 million in company funds on personal expenses, real estate and luxuries such as vacations.
The Federal Communications Commission, as a result, has suspended paying millions in subsidies to the carrier while it audits how Sandwich Isles spent all its money.
And until the facts on the spending emerge, the state Consumer Advocate has recommended that the Public Utilities Commission hold off recertifying the company, an approval required if it is to
resume business as usual.
That’s the whole point: This is the time for DHHL to see if its communications needs could be handled some other way.
Anyone with the homesteaders’ interests at heart should support casting a wide net for alternatives, too. Instead, groups such as the Sovereign Councils of the Hawaiian Homeland Assembly have asked the Hawaiian Homes Commission to recertify Sandwich Isles so the tainted company can continue receiving the federal funds, estimated at about $1.4 million a month.
It’s all complicated, of course, by the fact that Sandwich Isles has been operating under an exclusive license DHHL awarded in 1995 for service to Hawaiian homesteaders. Technically the award went to Hee’s company Waimana Enterprises Inc., but the next year Waimana partially assigned that authorization to its subsidiary, Sandwich Isles.
In return for the license and the federal subsidies, Sandwich Isles installed the fiber optic cable connecting its customers. It may seem hard to surrender that costly infrastructure.
But the fact remains that in the intervening years, better technologies have emerged that could yield other solutions — from providers without the stained record of the current vendor.
Just to recap those questionable practices: Over two decades, Sandwich Isles paid Waimana millions of dollars in management fees, much of which went to Hee for personal expenses. It’s these payments that are being audited to evaluate how Sandwich Isles fulfilled requirements of its license.
The PUC has until Oct. 1 to give its answer on certification to the FCC. At this point, it seems plain the answer should be a resounding “no.”
DHHL needs to know what its options are. Given the need for legal clarity in this quagmire — understanding the constraints of the license, for starters — the state’s investing $150,000 in a contract to hire the Washington law firm Keller and Heckman LLP seems defensible.
But it’s simply galling that this situation was allowed to careen out of control so that such a hire, using taxpayer funds, is necessary. Further, DHHL needs to reveal findings of a “review and assessment” it claims to have undertaken last year, on how Hee’s crimes have affected homesteaders’ telecommunication services.
The drama is still unfolding. The Universal Service Fund, financed by a small charge levied nationally on consumers’ phone bills, has paid out $242 million to Sandwich Isles, a stunning sum considering the small, 3,600 customer count.
And Hee also took out more than $100 million in loans, much still owing, from the federal Rural Utility Service. A decision on that issue is now pending from federal authorities.
Throwing more good money after bad would be a foolish bet, one that should be avoided. Cutting our collective losses, instead, sounds like the best way to move on from this horrible mess.
