Since April 1989, Thomas B. Hayward has been under contract to the state of Hawai’i to “assist in the establishment of a commercial launch facility on the Island of Hawai’i and promotion of space-related areas leading to significantly enhanced employment opportunities….”
Recently, the state and Lockheed exchanged letters that indicate a mild interest in a spaceport plan on Lockheed’s part. The Lockheed letter identifies Hayward as playing a role in engineering this exchange.
Environment Hawai’i has learned that at the same time Hayward was negotiating with Lockheed on the state’s behalf, he was also a consultant to Lockheed. In addition, Willis Hawkins, a member of the Hawai’i Space Development Authority advisory board, is identified by the Office of Space Industry as a “senior advisor” to the Lockheed Corporation.
No Conflicts
The bills that Hayward submits to the state for reimbursement were the tip-off of his possible associations with Lockheed and several other firms.
On several of those bills, Hayward is identified as “consultant to the president” of Lockheed. Hayward was asked about this connection in a telephone interview. He acknowledged that Lockheed was a client of his. However, he said, he worked with a division.
Lockheed “aircraft, aerospace”, he said “has nothing to do with the spaceport. “Even if it did,” he said, “there would be no conflict.”
Hayward bristled at all questions concerning his clients. “I’m going to stop this whole trend” of questions, he said. “I’m not in the business of identifying my clients. You’re inferring that I have a conflict of interest.”
Other corporations or institutions identified on his bills include the Center for Strategic and International Studies (a conservative think tank in Washington), United Technologies, Morrison-Knudsen, General Dynamics, and the Military Affairs Council of the Hawai’i Chamber of Commerce.
When asked about the CSIS, Hayward said he had “lots of involvement” with that institution, which he identified as a “high-class think tank.” He would not answer questions about his ties to other corporate clients.
He acknowledged representing the Military Affairs Council of the Hawai’i Chamber of Commerce, but said that this work “is 100 percent pro bono.” In fact, Hayward seems at time to not see a distinction between the state and the Chamber of Commerce. In his invoice memorandum 147 (dated August 5, 1992), Hayward requests reimbursement for his expenses incurred during July in trips to Washington and California “on behalf of the Hawai’i Space Development Authority and the Military Affairs Committee of the Hawai’i Chamber of Commerce.” (The bill amount of these expenses – $1,436.39 – was approved for payment by Ken Munechika, director of the Office of Space Industry, without comment.)
At State Expense
Hayward, who retired from the Navy in 1982, at the rank of admiral, was named the state’s “space czar” in 1989. He was selected among several people whose names had been recommended to the state following a search by Korn/Ferry International, a firm specializing in the trade known as “head-hunting.” The idea that the state needed someone to coordinate space-related enterprises had been put forward by the business-dominated Hawai’i Space Facility Committee, appointed by Governor Waihe’e in 1987.
OSI Director Munechika has naught but praise for Hayward. “We’re lucky to have him,” Munechika said in a recent telephone interview. “I think the state has gotten quite a bit of return for his services. I’m totally impressed. We meet every day when he’s in town, and he calls daily when he’s traveling. He has a tremendous reputation in the worldwide space community.”
The state may be getting a good deal in Hayward.
Hayward, on the other hand, is certainly getting a good deal from the state. From April 1 1989 to March 31, 1993, his contract with the state, supplemented five times, called for the state to pay him a base fee of $486,041.60, to reimburse him up to $140,000 for entertainment expenses incurred on the state’s behalf, and over and above this to pick up the tab for his costs of travel while on state business. With the exception of the deletion of tip expenses on rare occasions and a denial of his attempt to get the state to pay for a $200 dictaphone, the state has paid all of the 170 or so invoices that Hayward has submitted.
The director of the Office of Space Industry said the state was intending to renew Hayward’s contract for another year at his current rate of pay, which is slightly more than $5,000 per month, although this is for a “reduced level of effort” by Hayward. Until January 1993, Hayward had been receiving $10,416.16 per month, but budgetary problems forced a cutback. According to people in DBEDT’s contracts office, the extension of Haywards contract probably would not be ready for public inspection until mid-July.
Expensive Tastes
Hayward has not been shy about using his expense account. The ink was barely dry on the contract when Hayward decided to throw a party at his Wai’alae ‘Iki house. About 50 people attended the June 25, 1989, event, which Hayward described in his invoice to the state as a reception for the Hawai’i Space Development Authority’s advisory board. For food, liquor, and soda, Hayward billed the state about $350. He paid three “parking boys” a total of $85, a caterer $30, and three waitresses a total of $158.50. All totaled, the state paid Hayward $704.47 for the party.
Two days later, Hayward and the advisory board members were dining once more at taxpayer expense. Dinner for seven, at the Outrigger Club, cost $275.94.
The most lavish state-paid dinner or at least the costliest – that turned up in Environment Hawai’i‘s review of the invoices submitted by Hayward since 1989 was taken on October 12, 1989. At a dinner in Tokyo for executives of Nissho Iwai, a large Japanese corporation (and contractor to the state for certain spaceport-related tasks), Hayward and four other people racked up charges of $728.74.
In the name of advancing state investment in space-related activities, the state reimbursed Hayward $324.23 for a lunch he hosted at the Plaza Club whose purpose, Hayward stated, was to provide a “briefing of SEALAR business plan and technology to various Hawai’i and mainland parties.” SEALAR, Inc. the name stands for Sea Launch and Recovery is a private company incorporated in Virginia. The parties whom Hayward invited to the lunch are not further identified. According to Munechika, SEALAR was thinking of setting up operations at Port Allen, Kaua’i, as well as off the Big Island. The company proposes launching rockets from floating “dry-dock” type facilities, Munechika said; by recovering some components of the launch vehicles, it hopes to reduce launch costs. Hayward himself, in a telephone interview, said SEALAR could bring space-related jobs to Hawai’i; as such, any effort expended on SEALAR’s part was consistent with his duties on behalf of the state.
Hayward’s favorite watering holes in Honolulu include the Pacific Club, Heidi’s Bistro, and Keo’s Thai Cuisine. In December 1989, for example, Hayward treated “leading executives of McDonnell Douglas, Space Systems Division” to dinner at Keo’s, with taxpayers picking up the $292.66 tab. In November 1990, he was charging the state $251.16 for dinner at the Pacific Club for himself and “senior representatives from Mitsubishi Heavy Industries, Hamilton Standard of United Technologies and Orbital Sciences Corporation.” In November 1992, he was back at Keo’s, treating the National Space Council to dinner and charging the state $227.29.
In Washington, Hayward has charged a number of his meals to the account of Paul Coleman at the Cosmos Club; when Coleman receives the invoice, he forwards it to Hayward, who in turn sends it on to DBEDT for reimbursement. Between January 30, 1990 and February 1, 1990, Hayward’s charges at the Cosmos Club totaled $605.06 (for two dinners).
Post-prior Approvals
Hayward frequently combines the business he does for the state with that which he undertakes for his other clients.1 The language in his contract anticipates this sort of piggy-backing, so long as the trips are approved in advance. “It is understood,” the contract states, “that portions of each trip may involve the performance of services by CONSULTANT concurrently with CONSULTANT’s clients other than the state of Hawai’i. All expenses related to such other accounts will be subtracted prior to presenting actual expenses to the state of Hawai’i.”
While the contract is clear about prior approval being needed, Haywards memos requesting such approvals frequently seem to be submitted late. The approval, by the director of DBEDT, is on such occasions given after Hayward is in the air or, at times, after he’s returned to Honolulu.
In October 1989, for example, Hayward traveled to Japan, to Los Angeles, and to Washington, departing on the eighth of the month. His memo requesting advance approval for “incidental expenses” and for some travel and lodging was dated October 2, 1989, but was not received at the DBED director’s office until the 10th two days after Hayward’s travel commenced. Roger Ulveling, then DBED director, approved the trip memo, indicating the date of his approval as October 8.
Haywards basis for determining what share of expenses Hawai’i should bear is not always clear. On a 10-day trip to Korea and Japan last year, for example, Hayward billed the state for his stay at the Shilla Hotel on September 14 ($196.43) and the use of a hotel meeting room ($14.29) three days later. It seems apparent from the hotel bills that the bulk of his expenses were related to activities on behalf of Litton Industries.
On occasion, Hayward will indicate the state’s “pro-rata” share of his expenses. His invoice for a trip taking him from Honolulu to Seattle and Los Angeles in December 1991, for example, showed that OSI’s share of his $1,777.80 airfare came to precisely $73.80. The state’s share of his other expenses was far greater, however. It reimbursed him meals, lodging and rental car expenses for two days out of the six days he was traveling.
Nothing too Small
Hayward’s invoices show meticulous attention to detail. When he is traveling, almost every expense he incurs is billed to one or another client. While in Tokyo in June of 1990, for instance, Hayward paid ten cents for a local phone call. This he billed to the state – along with a bill for lodging of $736.12 for four nights ($184.03 per night) and a “special dinner” for “Dr. Nishimura” of $107.55.
Not all his expenses are lavish. Frequently Hayward seeks reimbursement for lunches at McDonald’s or breakfasts at the International House of Pancakes.
Hayward is not required by his contract to disclose his other clients to the state. On the receipts attached to his invoices, however, Hayward himself identifies his clients by two or three-initial codes marked alongside itemized hotel bills.
Litton Industries or Litton Data Systems appears frequently on Hayward’s bills. Hayward told Environment Hawai`i that he sits on Litton’s board of directors.
No Questions Asked
On July 25, 1988, the Wall Street Journal reported that the U.S. Justice Department, from 1985 to 1987, investigated Hayward “for supplying allegedly privileged information to defense contractors who hired him as a consultant after he retired” from the Navy. No charges were brought as a result of the investigation. “The case was closed,” the Journal reported, “largely because prosecutors didn’t find any evidence of improper payments to the Navy’s Pacific Fleet officers who supplied Adm. Hayward with information.”
Hayward did not agree to be interviewed by the Wall Street Journal for that article. His lawyer, Merlin Staring, did acknowledge to the newspaper that “when Adm. Hayward obtained information from U.S. government or other sources about prospective foreign military contracts, ‘he would routinely pass on that information’ to U.S contractors. ‘There genuinely was a patriotic element to this,’ Mr. Staring asserted.”
When Munechika was asked whether he was aware of this investigation, he said he had never heard of it. Moreover, the very fact a reporter would bring this up was “tragic,” he said. Hayward was “innocent until proven guilty,” he said; the fact that he rose to such a high position in the Navy was, he added, proof enough that the man was beyond reproach.
‘Too Complicated’
One of the initiatives spearheaded by Hayward has been something called the Japan-U.S. Cooperation in Space project. The state regularly reimburses Hayward his secretarial expenses for work on this project. In addition, it has helped sponsor various meetings and workshops of this project.
A “Summary of Space-Related Activities” prepared by the Office of Space Industry in 1990 states that this project has “identified a series of potential programs in satellite communications and space R&D which could be pursued as joint ventures.” Among other things, this project is proposing to build a facility to house a research center at the Hilo Research and Technology Park, mauka of the University of Hawai’i campus.
While the state has been picking up most of the expenses associated with this project, the project itself appears to have been made an undertaking of the conservative Center for Strategic and International Studies.
According to documentation provided with OSI’s request to the Department of Accounting and General Services for permission to sponsor a 1992 workshop of the project (estimated expense: $12,260), “the Japan-U.S. Cooperation in Space organization has been established under the aegis of the U.S.-Japan Leadership Council, an amalgam of top leaders in both countries.” An information sheet accompanying the request further identifies the council as having been established in 1990 by the Center for Strategic and International Studies.
When Hayward was asked about this connection, he said it was “much too complicated to explain” the U.S.-Japan Cooperation in Space program over the telephone. “I just had a meeting with White House people last week” in this regard, he said. The reception was “very positive,” he added.
Other Expenses
Hayward’s billings to DBEDT cover more than meals, lodging, travel, and his monthly fee. Among other charges have been three payments, from Hayward’s expense account, totaling $7,000 to a former NASA administrator, Burton Edelson. In 1991, Hayward received the approval of then OSI Director George Mead to enter into a contract with Edelson, under which Edelson agreed to look “for every possible opportunity which … fits into the context of small satellite launch possibilities from the proposed Hawai’i launch facility.” For his services, Edelson is to be paid $500 per day – but no more than $2,000 in any one month.
John Jefferies, former director of the University of Hawai’i Institute for Astronomy and a member of the Hawai’i Space Development Authority board, also has been paid from Hayward’s expense account. Jefferies’ payment, totaling $2,000, was for a seven-page double-spaced report on two NASA program that might employ small-payload launches.
1 Until 1982, Hayward had a consulting business, called Tomas B. Hayward Associates, Inc. The corporation was dissolved February 18, 1992, although Hayward continues his consulting work as a sole proprietorship. The state’s contract was originally with his consulting firm and not with Hayward at all. That put the state in the odd position of having as its “space czar” an “it” as opposed to a “who.” In any case, Hayward’s contract was modified in September 1990 so that it is now a personal services contract with Hayward as opposed to a consultant contract with his company.
Volume 4, Number 1 July 1993
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