80
THE SENATE                           S.C.R. NO.            
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                     SENATE CONCURRENT
                        RESOLUTION

REQUESTING AN AUDIT OF THE CONTRACTING OF LEGAL SERVICES TO
   REPRESENT THE STATE IN ITS TOBACCO SETTLEMENT AGREEMENT.



 1       WHEREAS, in these times of fiscal austerity, state
 2   government must strive to "do more with less", so it is
 3   critical that those state agencies that provide services to
 4   other state agencies do so in an efficient and expeditious
 5   manner; and
 6   
 7       WHEREAS, in public as well as private organizations, a
 8   basic tenet that holds true in both is that the organization as
 9   a whole is only as efficient as its support functions allow it
10   to be; and
11   
12       WHEREAS, the Department of the Attorney General is a
13   support agency responsible for providing, among other things,
14   legal reviews, legal services to state agencies, investigation
15   and prosecution of crimes against the State and its citizens,
16   and the settlement of claims for and against the State; and
17   
18       WHEREAS, on November 23, 1998, the State of Hawaii, in
19   conjunction with a number of other states, reached a landmark
20   settlement agreement with the tobacco industry in which the
21   State of Hawaii is to receive approximately $1 billion as its
22   share of the master tobacco settlement agreement; and
23   
24       WHEREAS, the Attorney General, as the State's legal
25   representative, recommended that the State of Hawaii be
26   represented by a private law firm in negotiations with the
27   tobacco industry; and
28   
29       WHEREAS, as a private entity, the law firm contracted to
30   represent the State of Hawaii is entitled to compensation for
31   its services; and
32   
33       WHEREAS, it has been estimated that the amount that the
34   private law firm was entitled to for representing the State on
35   a contingency basis was approximately $300 million; and
36   

 
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                                  S.C.R. NO.            
                                                        
                                                        

 
 1       WHEREAS, the private law firm settled on an arbitrated
 2   amount of approximately $98 million, moneys that could
 3   otherwise have been used by the State to fund much needed
 4   programs and services; and
 5   
 6       WHEREAS, as the State's legal representative that has first
 7   hand experience regarding the contents of the settlement
 8   agreement and with one of the largest legal staffs in the
 9   State, the Attorney General should have been able to represent
10   the State in the settlement agreement negotiations as part of
11   its own operations; and
12   
13       WHEREAS, questions have arisen over the need to contract
14   the services of a private law firm to represent the State in
15   the tobacco settlement negotiations; now, therefore,
16   
17       BE IT RESOLVED by the Senate of the Twentieth Legislature
18   of the State of Hawaii, Regular Session of 2000, the House of
19   Representatives concurring, that the Auditor is requested to
20   audit the process by which the settlement between the State and
21   tobacco industry was agreed upon; and
22   
23       BE IT FURTHER RESOLVED that the audit include but not be
24   limited to:
25   
26       (1)  The terms and conditions of the settlement;
27   
28       (2)  How the terms and conditions of the settlement were
29            formulated;
30   
31       (3)  How the process of awarding the contract to an outside
32            counsel for representing the State's interests was
33            executed;
34   
35       (4)  Whether other states that were parties to the master
36            settlement agreement contracted the services of
37            outside counsel, and if so, for what services and the
38            costs of retaining such counsel;
39   
40       (5)  The relationship between how the settlement amount to
41            be paid to the State relates to the sale of tobacco
42            products; and

 
 
 
 
 
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                                  S.C.R. NO.            
                                                        
                                                        

 
 1   
 2       (6)  Whether the proceeds realized by the State are being
 3            properly allocated as mandated by the legislature in
 4            Acts 188 and 304, Session Laws of Hawaii 1999;
 5   
 6   and
 7   
 8       BE IT FURTHER RESOLVED that the Auditor shall submit the
 9   findings and recommendations requested pursuant to this
10   Concurrent Resolution to the Legislature no later than twenty
11   days prior to the convening of the Regular Session of 2001; and
12   
13       BE IT FURTHER RESOLVED that certified copies of this
14   Concurrent Resolution be transmitted to the Auditor, the
15   Governor, the Director of Health, and the Attorney General.
16 
17 
18 
19                         OFFERED BY:  ____________________________