Company tries for a state OK via agency with no say on issue

Embattled telecom-munications company Sandwich Isles Communications has asked the Hawaiian Homes Commission to certify it as an eligible telecommunications carrier so that it can potentially resume receiving millions of dollars in federal ratepayer funds to subsidize its phone and Internet service on Hawaiian homelands.

The move represents an attempted end run around the state Public Utilities Commission, which typically issues such certifications.

Sandwich Isles turned to the Hawaiian Homes Commission after the PUC declined to recertify the company last year pending the outcome of ongoing investigations by the Federal Communications Commission into the company’s finances.

The FCC suspended payments of about $1.4 million a month to the company in June while it conducts an audit of the company’s finances.

It’s far from clear whether the Hawaiian Homes Commission even has the authority to certify Sandwich Isles. And at least one Hawaiian Homes commissioner contends it would be unwise to become ensnared in the company’s “public relations issue.”

The company’s founder, Albert Hee, was sentenced in January to 46 months in prison on tax fraud charges after federal prosecutors say he siphoned some $4 million from Sandwich Isles’ parent company, Waimana Enterprises, to pay for personal expenses.

He was initially ordered to turn himself in to federal authorities today to begin serving his sentence, but that was extended to June 15 under a court agreement dated March 24.

In the event that the FCC does decide to resume payments to Sandwich Isles, which serves about 3,600 customers on Hawaiian homelands, the company wants to be ready, Sandwich Isles CEO Janeen-Ann Olds told the Hawaiian Homes Commission during a public meeting in late February. And that means the company needs to be certified by the state as an eligible telecommunications carrier.

“It’s kind of like, if they decide it is OK to go ahead and turn on the water faucet and go ahead and release funds, there isn’t going to be any water in there because we don’t have our certification,” she told commissioners.

The Honolulu Star-Advertiser obtained audio of the public proceeding last week through an open-records request.

Olds told the commissioners it’s her understanding that the Hawaiian Homes Commission had certified the company in the past.

“For us this is a grave issue,” Olds said. “Every day that gets delayed, it is just one more day that we will lose funding.”

The PUC annually certifies telecommunications carriers to receive federal funding after a thorough review of their finances.

It’s not clear under what authority the Hawaiian Homes Commission can certify Sandwich Isles. Complicating matters, company officials have repeatedly refused to turn over financial information to the Department of Hawaiian Home Lands, which gave the company exclusive access to operate on Hawaiian homelands in the 1990s.

Hawaiian Homes Commissioner William Kahele Richardson said he was concerned about public perception if the commission were to issue the designation.

“You obviously have a PR problem,” he told Olds. “The problem is that it puts us into your political and public relations issues if we were to be the sole issuer of that ETC (eligible telecommunications carrier) designation, because I believe it is a PUC role.”

Richardson added that he had ongoing concerns about Sandwich Isles’ solvency and its continued refusal over the years to provide DHHL with company financial information.

“I’ll just put it out front,” Richardson said. “I have worries about the viability of your company anyway.”

Olds said Sandwich Isles was prepared to turn over financial information to DHHL and its commissioners but needs assurances that it will be kept confidential.

“We have been prepared to discuss financials if we can get a confidentiality,” she said. “We have had your own department personnel tell us not to provide financials because you can’t keep those (confidential). We have been prepared to do that ever since we were asked.”

Discussion on the issue was cut short when commissioners voted to go into private, executive session.

DHHL Director Jobie Masagatani did not respond to questions last week from the Star-Advertiser about whether the commission is considering the certification request — though she made clear during the commission meeting that the PUC questioned the commission’s statutory authority to issue a certification.

She did say that the commission is still working with counsel to resolve Sandwich Isles’ concerns about financial confidentiality.

Meanwhile, PUC Chairman Randy Iwase told the Star-Advertiser on Friday that the commission is still debating whether it will undertake a new review of Sandwich Isles’ certification request, and could make a decision by the end of this week.

The FCC audit was expected to be wrapped up in December, but the process is ongoing, threatening the continued operations of Sandwich Isles.

Olds did not respond to questions about whether the company has had to lay off staff while it awaits a decision by the FCC.

“We are continuing to cooperate with USAC and the FCC as they wrap up the audit process,” Olds said in an emailed statement. “We have responded to inquiries from the FCC to keep them fully informed and to assist with moving the audit forward. To respect the integrity of the discussions, we will not be able to disclose the content of those discussions at this time.”

The Universal Services Administrative Co. is a nonprofit organization authorized by the FCC to collect money from telecommunications firms and distribute it to ensure that remote areas aren’t neglected.

FCC spokesman Mark Wigfield said he couldn’t comment on when any final decision might be made. The FCC subsidy is collected from fees tacked onto phone bills to support phone and Internet service in high-cost, rural areas.