Former Governor's Plans to Sue Oil Giants Unwarranted

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Former Gov. Ben Cayetano’s recitation of the facts of the state’s very thorough investigation of the charges against ChevronTexaco is very flawed (”’The Honolulu Advertiser,”’ Nov. 30, 2004). He argues that a lawsuit should have been filed based solely on the claims of two Mainland professors.

However, as required by Hawaii law, the state’s own tax department examined these allegations and concluded that there was no basis to support a lawsuit. Winston & Strawn, a law firm hired by Gov. Cayetano’s own administration, conducted a separate investigation and analysis. It concluded that there was no evidence that ChevronTexaco committed fraud in this case. The two Mainland professors as well as state legislative committees described Winston & Strawn as highly qualified to handle this case.

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But Gov. Cayetano’s factual recitation does illustrate one major flaw in his thesis. The state’s outside counsel took the case on a contingency fee agreement. That means the law firm, not the state, paid for the law firm’s investigation and that the firm would be paid only if the state won.

Taxpayers and consumers should bear in mind that by recommending against filing a lawsuit, the law firm gave up any hope of recovering a large potential fee from a successful lawsuit. Had there been money to be made because there were grounds for a suit, surely its own self-interest (if nothing else) would have led it to recommend suing. Its investigation saved taxpayers millions that may otherwise have been spent on an unsuccessful legal challenge.

Gov. Cayetano got it wrong when he stated that ChevronTexaco executives were not under oath and therefore ChevronTexaco was not to be believed. In fact, Winston & Strawn obtained sworn testimony from key executives, and that testimony was corroborated by internal documents. ChevronTexaco replied to every request we made. It complied with every documentary demand. It spent significant resources meeting every deadline. The investigators made a complete report of its cooperation, which is also a part of the record. ChevronTexaco, or any taxpayer for that matter, is subject to civil and criminal penalties to the extent any submissions are false or misleading.

The investigation found no case for the state against ChevronTexaco. Contrary to Gov. Cayetano’s suggestion, the “crime fraud” documents were considered along with all other evidence. Winston & Strawn found no basis upon which the state could anticipate vindication by a court. It recommended no further action. After a most thoroughgoing review, the state agreed with the law firm’s findings, conclusions and recommendations.

Despite one year of wide publicity of the professors’ allegations, including stories in The New York Times, why is it that not one single state brought suit against ChevronTexaco based on the professors’ theories? I believe it is because such a suit would fail.

Gov. Cayetano also suggests that a confidentiality agreement with ChevronTexaco means the public will never know “the truth.”

The confidentiality agreement covered information that was already strictly confidential under the law — ChevronTexaco’s tax returns. The agreement merely allowed the state to share information with key administration personnel and Winston & Strawn.

Our state remains vigilant in demanding compliance with our tax laws. If we find the facts necessary for a successful tax fraud prosecution, we will bring one. By the same token, our taxpayers are not well-served to find us charging off to court to tilt at the windmills created by political rhetoric.

”’Richard T. Bissen Jr. is the first deputy attorney general for the state of Hawaii.”’

”’HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to”’ mailto:Malia@HawaiiReporter.com

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