Rob Parsons

Corporate Alien Invaders

Who's really controlling Maui's destiny?

by Rob Parsons

August 9, 2007

I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic destroyed.
-Abraham Lincoln

There was a time when corporations played a minor part in our business affairs, but now they play the chief part, and most men are the servants of corporations.
-Woodrow Wilson

It wasn't long after Captain Cook arrived that island values began to shift to those of the white visitors. In addition to Christian proselytizing, these new arrivals saw the chance to profit from Hawaiian natural resources.

Forging a business deal with Kamehameha I, sandalwood traders began to change the social structure of the islands from a production-for-use economy to a production-for-profit economy. Kamehameha I ordered his sub-chiefs and their commoners into the hills to collect the coveted sandalwood, which they exchanged for boats, guns and other white men's goods.

But the deal exacted a terrible toll, devastating the sandalwood forests and many of the native workers, who suffered from hard labor in the cold, damp conditions, as well as the scourge of white men's diseases. By 1829, well before the Great Mahele introduced the foreign idea of private land ownership, the sandalwood trade ended just two decades after it began.

Nearly two centuries later, corporate profiteers see Maui as a prestigious asset in their company portfolios. Slow growth advocates may target their dissatisfaction upon the local spokespersons for proposed projects, but the decisions for Maui's future are usually made in corporate boardrooms far from our shores.

Indeed, one of more than 120 testifiers at recent Land Use Committee hearings on Wailea 670 rezoning targeted investors Lehman Brothers and Cargill as "the new alien invasive species." Lehman Brothers, with $503 billion in assets and $47 billion in revenue last year, ranked #47 on the Fortune 500 list of America's top companies.

In 2003, Lehman Brothers was one of 10 firms that entered into a settlement with the U.S. Securities and Exchange Commission (SEC), and various other securities regulators, regarding undue influence by their investment banking divisions. The legal settlement included structural reforms and financial penalties of $80 million-a mere 0.17 percent of what the company took in last year.

Agri-business giant Cargill is the second largest private corporation in the world. It's been criticized for deforestation of the Amazon, as well as human rights violations regarding child labor in Mali and the Ivory Coast.

Morgan Stanley, the new Makena Resort financier-along with Dowling Company-ranked #20, with revenues of $76 billion in 2006.

What's wrong with big corporations controlling large land holdings is that their monetary interests may be vastly different from our own, in terms of the intangible "quality of life" that makes Maui both an attractive place to live and a desirable place to invest.

Focus Green Lecture Series speaker James Howard Kunstler, in his book The Long Emergency, describes corporate control well. "By 'corporation,' I mean a group enterprise given the legal status of a 'person,' with 'rights,' but in fact devoid of any human qualities of ethics, humility, mercy, duty, or loyalty that would constrain those rights," he wrote. Paraphrasing Wendell Berry, he went on to say that, "a corporation essentially, is a pile of money to which a number of persons have sold their moral allegiance? with the single purpose of becoming a bigger pile of money."

One of the most obvious corporate impacts on Maui is the closing of "Mom and Pop" stores with the recent infusion of "Big Box" stores. In just the past ten years, we have said "aloha" to the likes of Peggy and Johnny's, Suda Store and Shishido Manju. This is in no small part the result of garish corporate outlets along the Dairy Road commercial corridor on the outskirts of Kahului. There, we've seen the establishment of several mega-corporate stores, including: Wal-Mart (Fortune 500 #1); Home Depot (#17); Costco (#32); Kmart (part of Sears portfolio, #38); Lowe's (#45); McDonald's (#103); Old Navy (#149); Office Max (#280); and Starbucks (#310).

The employment formula is a familiar one, with management positions going to workers imported from the mainland, with lower-paying stock and retail positions remaining for local workers. Maui shoppers benefit from bigger selections and lower prices, but dollars spent travel off-island into corporate coffers.

On Kaua'i, the County Council recently passed a measure directed at proliferation of big-box stores, limiting their size. The council on the Big Island is considering a similar measure targeting "superstores," defined as outlets with 90,000 square feet or more.

This January, Maui Council Chair Riki Hokama introduced a draft ordinance nearly identical to the Big Island's pending legislation. Hokama cited the superstores' "tremendous adverse community impacts, including traffic congestion, increased demand on government infrastructure, negative environmental consequences, and harmful, often fatal impacts on small businesses."

On its shorelines, Maui's resort destination properties have been undergoing a transformation as well. Several properties are converting from hotel to timeshare or luxury accommodations.

Marriott International, with 2,700 properties in 67 countries, converted its Ka'anapali hotel to the Maui Marriott Ocean Club. It's in the process of demolishing the Wailea Beach Marriott Resort & Spa into a pricier St. Regis "hotel," though all units will be sold as condos, starting at $1.5 million. Marriott ranks #203 on the Fortune 500 list.

Starwood (#381) owns the Sheraton Maui, Westin Maui Resort & Spa and the Westin Ka'anapali Ocean Resort Villas. The Kapalua Bay Hotel was recently razed, making way for the luxury Residences at Kapalua, which include "fractional ownership"-timeshare in monthly increments.

Next door, the Ritz-Carlton Kapalua (recently purchased by GenCom), is going through a similar transformation, effectively putting 700 hotel workers on the unemployment lines while the site is under construction.

Timeshares require less service industry employees than a regular hotel, and may also bring in guests who spend less per capita, though that is disputed. Council members recognized this inequity, and responded by establishing a property tax rate higher than any other classification-$14 per thousand of assessed property value.

Local plantation/resort entity Maui Land & Pineapple, Inc. has undergone numerous changes since Steve Case of AOL/TimeWarner purchased a $39.2 million controlling interest in 1999. Case bought out retirement packages of most of the company's top leaders, and brought in David Cole, his long-time associate, as CEO. Cole has initiated a number of major changes, from Upcountry land sales to the proposed Pulelehua subdivision and the closing of the Kahului pineapple cannery.

Simultaneously, Cole has exerted his influence in other areas. He now sits on the board of directors of The Nature Conservancy, Hawaiian Electric Company, Hawai'i Superferry and Hawai'i Bioenergy LLC.

The case of Hawai'i Superferry is a clear example of corporate powers overwhelming community efforts for fair and legal reviews of the project's impacts. Take major investor John F. Lehman (not part of Lehman Brothers). His profile includes being a 9/11 Commissioner, signatory to the neoconservative Project for the New American Century and former Reagan Administration Navy Secretary. According to the J.F. Lehman & Co. website, "J.F. Lehman has completed the acquisition of 14 companies in 11 investments with an aggregate value of $1.4 billion."

Norwegian Cruise Lines (NCL) has quickly muscled their way into crowded Kahului Harbor, accounting for six days in port. Aided by a foreign-flag exemption orchestrated by Democratic U.S. Senator Daniel Inouye, NCL-which began inter-island Hawai'i cruises in 2004-obtained a tremendous advantage over other cruise ships, which must stop at a foreign port of call during their excursions.

Miami-based NCL is owned by Star Cruises of Singapore and Malaysia and is the third largest cruise company in the world. But they recently announced that they would move one of their three Hawai'i liners to Europe next summer, citing high operating and labor costs.

Then there's health food store giant Whole Foods Market, which late next year will take over Star Market in the Maui Mall. What will be their impact on independently owned health food stores like Mana Foods, Alive &Well and Hawaiian Moons? Will they go the way of other recently deposed local stores?

Like it or not, we live in a society in which huge corporations exert enormous influence upon our daily lives. Only by recognizing that fact may we understand the motives of those who shape Maui's future, and do what's necessary to protect our quality of life and sense of place.