Small Business News
May 2005 | Online Edition
Legislators Continue to Meddle in the Free Market
By Malia Zimmerman, HawaiiReporter
Sen. Brian Kanno, D-Kapolei, is not the first Hawaii lawmaker to meddle in the business of local businesses. But his most recent attempt highlights what has become a major problem for local entrepreneurs who want government to “get out of the way” so they can operate a viable business.
Kanno is now under fire in the media for trying to manipulate Norwegian Cruises into rehiring and paying damages to former employee and convicted child sex offender Leon Rouse, fired last year from the cruise line for sexual harassment.
Kanno went so far as to recruit seven state Democrat lawmakers into helping him force the issue. Sens. Carol Fukunaga, Roz Baker, Suzanne Chun Oakland, Brian Taniguchi, and Reps. Ken Hiraki and Roy Takumi and Rep. Eric Hamakawa, signed a letter August 24, claiming Rouse, hired by Norwegian after being imprisoned in the Philippines in 1998 for sexually assaulting a 14-year-old boy, was fired without justification. As if they were his personal union representatives or attorneys, these lawmakers, on the taxpayer’s dollar, sought compensation for Rouse’s travel expenses and termination.
When Kanno and the other lawmakers didn’t get their way — and Norwegian would not recant — they used their legislative powers to force the issue. Resolutions seeking to bully Norwegian executives were introduced by Kanno and others insisting the company detail its corporate sexual harassment policies. They also asked the state Department of Taxation whether the cruise line, like hotels in the state, should pay the state’s hotel room tax.
Granted, Rouse appealed to lawmakers in Wisconsin, where he was a political activist for gay rights, and in Hawaii, where he had relocated to continue his campaign. But Kanno went beyond any normal help he could have given a constituent, not only fighting to get Rouse’s old job back, but he helped him secure a new job — this time at the state Capitol as the office manager for state Rep. Rida Cabanilla. (He resigned from this position last week after his sex crime was made public). Baker, a Senate Democrat from Maui, helped him get his job with Norwegian initially by recommending him for the cabin steward position.
Business owners say the case of Rouse vs. Norwegian Cruise lines is just one of the many examples of lawmakers meddling in local business at the expense of the customers, business owners and the free market.
In 2004, CB Bankshares brazenly used prominent politicians on their payroll to slow the hostile takeover attempt by Central Pacific Bank — House Speaker Calvin Say, D-Kalihi, was at the time a compensated City Bank trustee, and Senate Ways and Means Chair Brian Taniguchi, D-Manoa, was a City Bank attorney. Although they denied it, these powerful Democrat lawmakers and their allies used their clout to forward legislation that helps CB Bankshares directors and hurts all of Hawaii’s publicly traded corporations. Companion bills SB 2435 and HB 2552 eliminated any obligation of the board to call a special meeting of shareholders to vote on a proposed acquisition of controlling interests in Hawaii public corporation. Then state Department of Commerce and Consumer Affairs, whose Securities Commissioner Ryan Ushijima testified in opposition, saying the legislation only allowed for one takeover proposal to be entertained within any given 36-month period. “This interferes with what generally happens in the market because many takeover bids often involve the subsequent offering of higher prices to get enough shareholders to buy in,” Ushijima said. “The law deprives the opportunity for shareholders to consider these subsequent bids and represents a dramatic governmental intervention in otherwise commonplace corporate takeover proceedings.” The bills did not pass, and the takeover of City Bank by Central Pacific Bank did go through, with the bank converting its branches just weeks ago.
In 2004 and 2005, lawmakers in the House passed legislation aimed specifically at helping C&K and its owner Clyde Aikau, gain an exclusive non-bid 10-year contract at the beach in front of the Hilton Hawaiian Village. The legislation, which is still alive in the Senate and is expected to pass the Senate today, specifically aims to preserve the “Hawaiian beach boy tradition,” by allowing Aikau to retain control of the concession he’s operated for more than 30 years on state land. The legislation is key to Aikau, who initially won the state bid for the Hilton contract, but was disqualified after the state learned C & K owes a substantial sum to the city – now up to $171,000. The company vacated the city stand, located in front of the Duke Kahanumoku statue, on April 7, 2005.
During this current legislative session, union workers from Local 5 who are employed at the Turtle Bay Hilton have asked lawmakers to step in and help them negotiate their contract, even though that is officially the union’s job.
Hawaii’s substitute teachers also have asked lawmakers’ help in negotiating better pay.
In 2002, Outrigger Enterprises used the Honolulu City Council, then Honolulu Mayor Jeremy Harris and state lawmakers to attempt to force a condemnation of property.
Sisters Jackie Johnson and Bronwen Welch did not want to sell their property to Outrigger for its superblock project, but were willing to lease the land to the hotel chain. In the end, Outrigger won permission from the government to condemn the property with the city’s lead, but did not move forward on after substantial negative media attention on the issue.
There are many more examples of lawmakers trying to control and manipulate the free market and business over the protest of local business owners.
The majority of the lawmakers in Hawaii just haven’t yet learned government isn’t supposed to control and micromanage business, and that attempting to do so, will only backfire on business owners, consumers and on the lawmakers themselves.
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