Rail bond deal has financial ties to HART chair, but ethics body finds no wrongdoing

HONOLULU, Hawaii (HawaiiNewsNow) - Ethics watchdogs are raising questions about a rail bond deal involving the firm of the rail authority’s board chairman.

Honolulu Authority for Rapid Transportation board Chairman Toby Martyn is also a vice president and Honolulu general manager for Stifel Financial Corp.

In January 2020, he voted with the majority of HART’s board to approve more than $292 million in rail bonds to pay for construction on the financially troubled project.

Hawaii News Now has learned that his firm is one of eight investment companies selected to sell those bonds mostly to Wall Street institutional investors , meaning the rail chairman financially benefited from the sale of rail bonds.

“This is very specific, a board member voting on something involving his company is wrong,” said Ian Lind, Common Cause Hawaii board member and longtime investigative reporter.

Lind said city law bars any city official from voting on matters that they have a financial interest in.

Neither the city nor Martyn’s firm would tell Hawaii News Now how much in fees the firm received from the sale of the rail bonds. But experts say the fees for the amount of bonds Stifel sold are usually in the range of tens of thousands of dollars.

Martyn declined comment, but in a filing with the City Ethics Commission — five months after the vote — he said, “As the chair of HART’s board ... it is my understanding that I have no authority to directly affect Stifel regarding any bond issuance.”

Stifel argued the bonds were issued by the city and that the rail board had no role in picking who sold the bonds.

“Mr. Martyn’s participation in the HART board was in no way a conflict of interest … Stifel nonetheless disclosed Mr. Martyn’s role to the city and the senior managing underwriter for the bonds,” said company spokesman Neil Shapiro.

The city Ethics Commission agreed, saying it found no conflict in Martyn’s vote.

But Hawaii News Now political analyst Colin Moore said the Ethics Commission was incorrect.

“I don’t understand how they came up with that ruling. There’s no justification that I saw provided in the documentation,” he said.

“I think there is absolutely a conflict here. As chairman of HART, he is indirectly involved in these decision and his firm is benefiting from bond sales.”

The city Ethics Commission had no immediate comment.