The state Public Utilities Commission made a bold but much-needed move this week when it rejected telecom company Sandwich Isles Communications’ bid to be recertified, essentially cutting off its gravy train of federal subsidies.

As a result of the decision, Sandwich Isles stands to lose about $13.6 million in subsidies through March. The company, which serves 3,600 residents on Hawaiian home lands, has been under numerous investigations since its founder, Albert Hee, was convicted of tax-related charges in July. These include a new Federal Communications Commission investigation and a review by the state Department of Hawaiian Home Lands, with whom Hee’s company has its exclusive license to provide rural data and telecom services.

The PUC stated there “remains uncertainty as to whether all federal high-cost support provided to SIC and Pa Makani (its wireless arm) was used and will be used only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.”

There are ample reasons to question where the federal money has been going. Hee was convicted of concealing from the IRS that Sandwich Isle’s parent company, Waimana Enterprises Inc., deducted $2.75 million as business expenses that it had paid to cover Hee’s personal expenses. Court records show Hee spent lavishly on himself and his family — including $718,559 in college tuition and $722,550 in false wages for his children, jewelry and massages.

Also troubling: The deeper one digs into Hee’s financial dealings, the further up the state’s Democratic political ladder they go. Careful cultivation of those political ties — especially with Hawaii Democrats in Washington, D.C. — certainly worked in Hee’s favor. Since 2003, Sandwich Isles has received $242 million in federal Universal Service Fund subsidies.

Despite the millions from the feds, Hee contends that Sandwich Isles has never turned a profit: It has yet to pay out any benefits to Native Hawaiians under an agreement with DHHL to contribute a minimum of 0.5 percent of its profits from its home lands operations to education and training.

Yet, Hee and company executives found the money to make thousands of dollars in contributions over the years to many of Hawaii’s leading Democratic politicians, an Internal Revenue Service audit and federal campaign spending records show. Among them, the late U.S. Sen. Daniel Inouye, former Gov. Neil Abercrombie, former U.S. Rep. Colleen Hanabusa, former U.S. Sen. Daniel Akaka, U.S. Sen. Mazie Hirono, U.S. Sen. Brian Schatz and former U.S. Rep. Ed Case.

Waimana executives also gave thousands of dollars to the Hawaii Democratic Party and Hee also contributed generously to Democratic Party organizations in other states. Waimana was a sponsor of the 2009 Hawaii State Society Inaugural Ball in Washington, D.C., following President Barack Obama’s election, and more than $60,000 was donated to the Obama Victory Fund in 2011 and 2012. The IRS audit questioned $44,644 Waimana paid in connection with the 2005 funeral for former U.S. Senate Sergeant-at-Arms Henry K. Giugni, a longtime aide to Inouye. Records show the powerful Inouye at times would contact the FCC on Hee’s behalf.

Even as Hee appeals his conviction, fallout spreads around his questionable companies.

Kamehameha Schools trustee Janeen-Ann Olds, Sandwich Isles CEO and Waimana’s former general counsel, is seeking another six years after her term is up Jan. 31 — but she is rightly being opposed by four other trustees and others. Indeed, the financial quagmire involving firms she is supposed to be managing does not instill confidence; the Probate Court should not renew her as trustee.

Also thrown into uncertainty, now that Sandwich Isles won’t be recertified to receive federal subsidies come January, are telecom services for the rural DHHL residents it is supposed to be helping. It’s unclear how much money actually went into building the data network over the years; to date, the company’s network is still only 10 percent complete on Oahu; 20 percent complete on Hawaii island; 60 percent complete on Maui and 95 percent complete on Kauai.

The questionable spending of Hee and his companies underscores the need for tighter oversight of how federal subsidies are distributed and spent. Sandwich Isles has funneled substantial amounts of public funds into personal spending and politicians’ campaigns instead of their intended purpose — to provide phone and Internet service to Native Hawaiians.