Follow the money — if you can.
Less than two weeks after Hawaii Electric Light Co. selected Ormat Technologies to build the Big Island’s next geothermal power plant, the Office of Hawaiian Affairs is declining to answer questions regarding its investment in a company that submitted a competing bid, claiming that information is confidential.
The OHA Board of Trustees voted in April 2013 to invest $1.25 million, with an upfront contribution of $600,000, in the Huena Power Consortium, according to Innovations Development Group, the Native Hawaiian-owned company that formed the geothermal hui and made the funding request.
But the vote was conducted in a closed-door meeting known as an executive session, sources at OHA confirmed, meaning there is no public record of the actual decision.
Citing attorney-client privilege and the matter being discussed behind closed doors, OHA officials repeatedly declined to answer questions regarding the status of the investment or, for that matter, even officially acknowledge a vote took place.
“Officially, OHA cannot comment on information subject to the attorney-client privilege and discussed in executive session,” said Jeremy Kama Hopkins, spokesman for board Chairman Robert Lindsey, in an email to the Tribune-Herald. “Unfortunately, I cannot say more at this time.”
Lindsey, who represents Hawaii Island, couldn’t be reached for comment.
With OHA officials declining to answer questions, it remains unclear how much actually was invested and if there are any funds that might be returned to the state agency. The Tribune-Herald has submitted a records request for those details.
Additionally, the vote to approve the investment could have been illegal since it took place behind closed doors.
According to a state Office of Information Practices manual, decisions can only be made in executive session if it would “defeat the purpose of the executive meeting, such as by revealing the matter for which confidentiality may be needed.”
The state’s “sunshine law” allows government boards to enter executive sessions for a handful of reasons, and is most commonly used to discuss sensitive matters with legal counsel.
But boards are expected to make their decisions before the public.
“They should only be in executive session so long as they need to be,” said Carlotta Amerino, OIP staff attorney. “We encourage them to always vote in public meetings if they can.”
Votes determined to have occurred in violation of the sunshine law can be overturned, though that has to be done through the courts. Legal actions also must be filed within 90 days of a vote taking place, Amerino said.
In exchange for the investment, OHA would have received a share of the geothermal project’s revenue that could exceed 20 percent, Patricia Talbert, an IDG legal adviser, told the Tribune-Herald in 2013.
OHA already receives 20 percent of the state’s geothermal royalties, but the investment was the first time it teamed up with a geothermal company, a move that was criticized by some Native Hawaiian cultural practitioners who see drilling into a volcano as an insult to Pele, a Hawaiian deity.
Hanalei “Hank” Fergerstrom, a cultural practitioner who spoke against the deal at the April 18, 2013, meeting, said he sees the investment as a slap in the face.
“My concern was: Is Pele no longer sacred?” the Kurtistown resident told the Tribune-Herald.
Fergerstrom said he also saw the investment as risky and wasn’t surprised that HELCO didn’t select Huena, which was one of six bidders.
“I sure would like to know what happened to that ($1.25 million),” he added.
A majority of Hawaiians testifying at the meeting in Honolulu favored the deal, meeting minutes show. Most were IDG representatives who said it was time for kanaka maoli to take the lead on geothermal development, rather than sitting on the sidelines.
“That was the very paradigm we were trying to change,” said Mililani Trask, an IDG consultant and former anti-geothermal activist.
“Our model is to help native people develop their own resource in conjunction with the private sector and government.”
Trask was an OHA trustee for one term in the late 1990s. She ran unsuccessfully for the board again last year.
IDG Director Patricia Brandt previously worked as the OHA board chairman’s chief of staff, according to her bio on the company’s website.
Not all of the nine OHA trustees were present for the closed-door vote.
Trustee Oswald Stender, who left the board in November after serving 14 years, said he was against the deal but wasn’t allowed to participate in the discussion after IDG complained to the state Ethics Commission.
He said the issue was that he previously worked with IDG to help them secure investors for their New Zealand geothermal projects. Stender said IDG claimed that created a conflict of interest.
“It was kind of a stupid complaint,” he said. “The only reason was to keep me out of the loop because I opposed it.”
Trask said no official complaint was made but acknowledged that the company did contact the commission. She said the issue was that he wanted to help IDG find other investors.
“He wanted us to make a proposal to private parties, but did not want us to include OHA,” she said. “When this issue came up, the question was raised: Can he ethically be involved if we proceed to work with OHA?”
Trask said the commission conducted its own investigation and requested that Stender recuse himself.
Trustee Haunani Apoliona also was absent during the discussion. She couldn’t be reached for comment.
While acknowledging Stender’s opposition to OHA investing in geothermal, Trask denied that the move to keep him from the discussion was self-serving or that IDG would have done anything different if he took a more supportive position.
“I think the only reason we raised the complaint initially was we had a private sector adviser … who was also an elected official,” she said.
Stender said he helped IDG connect with private investors for their bid, but that was “way before” the issue came before the board. He said he no longer was working with the company when OHA considered the investment.
Stender, who was CEO of Campbell Estates when it attempted its own controversial geothermal project in Puna in the 1980s, said he saw the investment as a big mistake.
“It’s like drilling for oil,” he said. “It’s high risk. High reward, but high risk.
“… I don’t think OHA is the trust that should be doing that kind of thing.”
Meanwhile, Trustee Carmen Hulu Lindsey of Maui, who received a $5,000 campaign contribution from IDG in 2012, remained part of the discussions. Trask said she already had cleared her participation with the Ethics Commission.
She isn’t the only trustee to have received contributions from IDG or Huena Power.
Campaign finance records show that Huena made $1,000 contributions to the campaigns of trustees Rowena Akana, Peter Apo and John Waihee IV last year. Each were on the board when it approved the investment.
Huena recently made another funding request to OHA.
On Feb. 24, the board’s Asset and Resource Management Committee voted in favor of providing another $188,000 for pending expenses related to Huena’s geothermal bid.
That same day, HELCO announced it selected Ormat, which owns Puna Geothermal Venture, the state’s only existing geothermal plant, to provide the next 25 megawatts of geothermal power. The project requires the approval of the state Public Utilities Commission.
Hopkins said in an email that the full board has 30 days to schedule the funding request for consideration.
“Let me just add that the item is not on the agenda of (the) full board’s next meeting scheduled for March 12,” he said. “We have nothing further to add at this time.”
Email Tom Callis at tcallis@hawaiitribune-herald.com.