by Andrew Walden
Meet the new boss, same as the old boss.
David Shapiro has plucked out a passage from Ben Cayetano’s autobiography Ben” (pp 519-520, emphasis added) which gives and insider’s eye view of Neil Abercrombie’s proposed Director of the Department of Business, Economic Development and Tourism, Richard Lim:
Shortly after he became Speaker, (Calvin) Say was offered and accepted a directorship on the board of directors of City Bank. Many legislators hold full-time jobs with private employers, but the propriety of a legislator sitting as a director was questionable. Unlike employees, a director owes a fiduciary duty to his company and its stockholders. This can pose a potential conflict with the fiduciary duty the legislator owes to the public. …
It is always useful to have a House Speaker on the payroll, just ask the musubi moguls at Warabeya, USA. Cayetano continues:
One morning, I got a call from Evan Dobelle, the recently appointed president of the University of Hawaii, which provided some insights to Say’s role with City Bank.
“Governor, do you know a Richard Lim from City Bank?”
“Not well, but I know who he is. Why do you ask?”
“Well, Lim asked for a meeting, and he brought along Calvin Say and Brian Taniguchi. Pres [Prescott Stewart, a Dobelle staff person] was with me. I discussed ideas that the faculty and students have for University Avenue, past the Varsity Theater down to King Street. Then Lim started talking –— and he did all of the talking while Calvin and Brian looked on. The tone of Lim’s words bothered me. In essence he seemed to be suggesting that if I wanted to get anything done at the University I should call him.”
“What did Calvin and Brian do?” I asked Dobelle.
“Well, afterward I turned to Calvin and Brian and said, ‘What was that all about?’ ” he replied.
“Did they say anything?”
“No. They just sat there looking down at their shoes — and that bothered me more than what Lim was saying. Calvin has been helpful to me and the University. I couldn’t understand his behavior.”
“Looking down at their shoes?”
Years later, I got a slightly different version of the Lim-Dobelle meeting from a former UH regent who had arranged the meeting and was also in attendance.
“I was asked to arrange a meeting with Dobelle and I did,” the regent told me. “I have no idea what Lim wanted to meet about, so I asked Calvin and Brian if they knew. They both said they didn’t.”
“How did Lim come across?”
“Well, he did all of the talking, and after a few minutes I felt Dobelle didn’t like what he was hearing. And I think everyone was kind of caught off guard by what was being said.”
“Including Calvin and Brian?”
“Probably — I think they were surprised too.”
Dobelle thought Lim was trying to intimidate him. If he was, then having that Speaker of the House and the chairman of the Senate Ways and Means Committee in tow only added to that impression. If Say and Taniguchi were surprised by Lim’s words, the right thing for them to do would have been to contact Dobelle later and clear up any misunderstanding. They didn’t. …
In 2004 Calvin Say lost his directorship when City Bank was bought out by Central Pacific Bank. Central Pacific paid a premium $91.83 price per share, up from its original offer of $21.83 less than a year earlier. So Say didn’t walk away empty-handed. His director’s stock options provided a handsome return.
Richard Lim probably didn’t walk away empty handed either after such a sweet offer from Dan Inouye’s cronies at CPB. And here, according to ProPublica, is how CPB ended up in late 2008 after becoming entangled in the subprime mortgage crisis:
Sen. Daniel K. Inouye's staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth.
The bank, Central Pacific Financial [2], was an unlikely candidate for a program designed by the Treasury Department to bolster healthy banks. The firm's losses were depleting its capital reserves. Its primary regulator, the Federal Deposit Insurance Corp., already had decided that it didn't meet the criteria for receiving a favorable recommendation and had forwarded the application to a council that reviewed marginal cases, according to agency documents.
Two weeks after the inquiry from Inouye's office, Central Pacific announced that the Treasury would inject $135 million….
Inouye reported ownership of Central Pacific shares worth $350,000 to $700,000, some held by his wife, at the end of 2007 [5]. The shares represented at least two-thirds of Inouye's total reported assets. Inouye has requested a delay in filing his annual financial disclosure for 2008, which was due this spring, and he declined to provide the current value of his investment. Since the end of 2007, the bank's stock has lost 79 percent of its value.
Central Pacific was founded in 1954 by a group of World War II veterans including Inouye who were emerging leaders in Hawaii's Japanese American community.
One has to wonder whether the sweetheart deal which bought out Richard Lim’s competing power base at City Bank contributed to the financial crisis at CPB just four years later. Was the buy out motivated by business, politics or both?
According to Abercrombie’s announcement of the nomination, “Mr. Lim came to City Bank via International Holding Capital Corporation (the parent of International Savings and Loan) where he was president and chief operating officer from 1987 to 1994.”
Just as CPB bought out City Bank, City Bank bought out International Savings and Loan in April, 1994 giving stockholders $15.53 in cash along with .589 shares of CB Bancshares for every share they owned. The S&L was to operate separately from CB’s banking operations, but by 1996, CB was “dissolving its thrift subsidiary in an effort to reduce expenses and placate regulators”.
The Abercrombie announcement also informs readers that “Mr. Lim, 59, is a co-founder of Sennet Capital, a Hawaii-based merchant banking firm that provides assistance to Hawaii companies with respect to mergers and acquisitions, capital sourcing and strategic planning.”
A look at Sennett’s website shows it to be deeply involved in arranging financing and merger and acquisition financing for Hawaii “tech” companies benefiting from ACT 215/221 tax credits and other companies benefitting from state and federal subsidies for alternative energy. Act 221 tax credits were restructured by the Lingle administration early this year in a way which no longer makes them interesting to “businesses” which have no real intention of ever making a profit. And many federal subsidies for alternative energy projects run out December 31st.
Just as with International Savings and Loan and City Bank, Mr Lim may once again manage to get off the elevator at the top floor—just before the cables are cut.
Will he use DBEDT to launch his next ride to the top?
Billionaire Pierre Omidyar’s Kanu Hawaii group—whose activists populated the core of Abercrombie’s campaign and may likely populate his administration—tipped their hand in testimony submitted to the House Committee on Agriculture February 18, 2009 where they lobbied for a barrel tax which would have raised the price of imported oil to $100/barrel. Some wanted us to pay $125.
The barrel tax was not the only cause championed by Kanu Hawaii in 2009. Kanu Hawaii boss James Koshiba testified April 2, 2009 to Sen. Roz Baker's (D-Maui Memorial) Committee on Economic Development & Technology 'in support of another bill--HB1503--relating to Limited Liability Companies.
Citing his experience with "a consulting firm"..."a loan fund"..."a venture capital fund"... (and) "a technology company", Koshiba gushed, "many trusts, foundations, and high net worth individuals in the islands are interested in investments that produce both a social (or environmental) and financial return....HB 1503 would provide an important tool to double-bottom-line businesses, and dual-dividend investors to participate in ventures that do well (economically)...."
And what is a "double-bottom-line" company? Koshiba explains, "companies that were founded to pursue a social or environmental mission and which generate a profit...."
Now you know what they will be doing—and what words they will be using—in order to line their pockets at your expense as they ride the next doomed elevator car to the top.
Meet the new boss, same as the old boss.
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