HILO >> Sandwich Isles Communications Inc. is planning a corporate restructuring that will remove owner Al Hee from “any management responsibilities or involvement” with the company in the wake of Hee’s convictions this summer on federal tax charges, the Hawaiian Homes Commission was told Tuesday.
Sandwich Isles President and Chief Executive Officer Janeen-Ann Olds also told the commission the company is “working on” finally contributing money to launch a job training and scholarship program for Native Hawaiians envisioned in the 1998 licensing agreement that gave Sandwich Isles the exclusive right to provide telecommunications services on Hawaiian Home Lands.
That license calls for Sandwich Isles to contribute 0.5 percent of its profits to the job training and education program for Hawaiians, but Hee told the commission last month the program was never funded because the company never made a profit.
Sandwich Isles has received more than $242 million in federal subsidies since 2003, which has prompted Commissioner William K. Richardson to question how the company could have failed to ever make a profit. The SIC telecommunications network provides telephone and data services to about 3,600 customers on Hawaiian Home Lands.
After her presentation to the commission, Olds clarified that SIC would now like to move forward with the job training and education program, and maintained the company has the resources.
“Our fiduciary duties are pursuant to the license agreement, so what weʻd like to do is work with the department and come up with support where we can,” Olds said. “We would just like to go ahead and work with the department and get it done.”
Hee resigned as a member of the Sandwich Isles board in the wake of his tax convictions, but Sandwich Isles remains a subsidiary of Waimana Enterprises Inc., which Hee still controls.
Olds said in an interview that “we are looking at restructuring of SIC. At this point, we continue to look at what options are available.” When asked whether SIC might sever its relationship with Waimana, Olds replied only that “we are looking at what options are available.”
Hee, 61, was convicted July 13 in federal court in Honolulu of six counts of filing false income tax returns and one count that he corruptly impeded the Internal Revenue Service from correctly calculating and collecting his taxes, offenses that could draw prison terms of up to three years on each count.
Hee was convicted of concealing from the IRS that Waimana deducted $2.75 million as business expenses that it had paid to cover Hee’s personal expenses. Hee was also convicted of filing false federal tax returns because he failed to list those payments as personal income.
Among the supposed business expenses cited by prosecutors were $718,559 the company paid for college tuition and living expenses for Hee’s three children; $92,000 in payments for massages for Hee; and $121,878 in credit card charges made by Hee for personal expenses, according to the federal indictment.
The indictment also listed $722,550 in payments by Waimana as “false wages” to Hee’s children, whom the indictment alleged actually did little or no work for the company. The indictment also alleged Waimana claimed as wages $590,201 that was paid to Hee’s wife, when she allegedly did no work for the company.
Hee’s convictions prompted the Federal Communications Commission this summer to suspend federal subsidy payments to Sandwich Isles that are worth about $1.36 million per month. In an Aug. 7 letter to Sandwich Isles announcing the suspension of payments, federal officials cited concerns about fees paid by Sandwich Isles to affiliates such as Waimana, and said they plan to investigate whether Sandwich Isles’ transactions from 2002 to 2015 complied with FCC rules.
Olds told the Hawaiian Homes Commission on Tuesday the company has already submitted the equivalent of 40,000 pages of accounting and other documents to federal officials in connection with the FCC audit.
Olds is a Kamehameha Schools trustee, and a group of Kamehameha alumni have written to the Probate Court to ask that she not be reappointed as a trustee. The alumni, including former Kamehameha Schools trustee Douglas Ing, cited Olds’ involvement in Sandwich Isles, where she served as chief legal counsel before she became president of the company. However, four other trustees have offered their support for Olds.
Olds declined to discuss her application for reappointment as trustee of the $11 billion Kamehameha Schools trust, saying she was attending the Hawaiian Homes Commission meeting in Hilo on Tuesday in her capacity as president of Sandwich Isles.