Find company to take over from Sandwich Isles

Sandwich Isles Communications, which provides phone and Internet service on Hawaiian homelands, is trying desperately to delay the inevitable.

But perhaps it’s nearing the end of its road, unable to shed the taint of corruption after founder Albert Hee was convicted of tax fraud and skimming $4 million from Sandwich Isles’ parent company.

The latest blow came on Wednesday, when the state Public Utilities Commission (PUC) once again decided against recertifying Sandwich Isles as an “eligible telecommunications carrier” (ETC), a designation needed so that it can position itself to have federal subsidies flow into its coffers. It was the right decision, given the ongoing investigations by the Federal Communications Commission into the company’s finances.

Even before Wednesday’s denial, Sandwich Isles, in an unusual and dubious move, was asking the Hawaiian Homes Commission to certify it as an eligible telecommunications carrier. Trouble is, the Hawaiian Homes Commission seemingly has no authority to issue that certification.

The Hawaiian Homes Commission instead should begin crafting a sound backup plan to usher in a smooth transition to another telecommunications provider so there are no interruptions in service for its 3,000 customers living on Hawaiian homelands. It is unlikely that Sandwich Isles’ situation will change anytime soon.

Sandwich Isles’ request to the Hawaiian Homes Commission is an obvious attempt to circumvent the authority of the PUC. However, it is not in the public’s best interest that Sandwich Isles be recertified — by the PUC or any other entity.

The future looks dim for the company, and it’s self-imposed.

Hee was sentenced in January to 46 months in prison on tax fraud charges; the FCC in June suspended the company’s $1.4 million a month in federal taxpayer subsidies; it lost its state ETC certification; and the FCC audit that was supposed to wrap up in December is still ongoing.

The Hawaiian Homes Commission rightly signaled that it doesn’t want to get caught in the company’s downward spiral. Now, it must proactively search for a reputable company to replace Sandwich Isles.

Sandwich Isles has the insurmountable task of distancing itself from Hee, who was convicted of seven counts of tax fraud after federal prosecutors accused him of skimming $4 million from parent company Waimana Enterprises. Federal prosecutors said Hee used that money for personal expenses, including his children’s tuition, massages and rent and living expenses for his family.

The fallout has been messy. While Sandwich Isles says it has cooperated with the FCC audit, it has yet to turn over its financials to the Hawaiian Homes Commission. Saying it needs assurances that those documents would remain confidential, Sandwich Isles has resisted sharing that information, further eroding the company’s credibility.

Perhaps the sentiment would be different if Sandwich Isles had not received more than $242 million from the FCC’s Universal Service Fund since 2003. The fund is paid for through fees tacked on to people’s phone bills and distributed to companies that operate in rural or remote areas.

In 2013, the FCC slashed the company’s subsidy after officials concluded that some of the company’s expenses were “grossly excessive and unreasonable.”

The only priority should be, and should have always been, the 3,000 customers on Hawaiian homelands who need reliable phone and Internet service. Sandwich Isles, at long last, needs to recognize this — and the Hawaiian Homes Commission must move to enlist a telecommunications company that benefits its customers, not its tax-cheating founder.