EXCLUSIVE: Scandal over millions in Navy contract money

A civilian procurement official for the Navy is facing criminal charges for allegedly steering federal work to government contractors that hired his wife.

Federal prosecutors have charged 56-year-old William Nesmith of Ewa Beach with two counts of conflict of financial interest involving the awards of more than $15 million in naval contracts.

Criminal charges against government contracting officials for conflicts of interests are rare but watchdog groups say that problem is pervasive in Hawaii.

"Unfortunately, we live in a culture in which there is a huge amount of conflict of interest in which people are not watching out for the taxpayer. They're watching out for themselves and their friends," said Kelii Akina, CEO of the Grassroot Institute of Hawaii.

"That's one of the reasons prices are so high, costs are so high in contracting because of the level of conflict of interests that takes place."

Nesmith was the port operations program manager at Pearl Harbor, a job he's held between 2003 and 2012. In that post, he was responsible for logistics and other support for visiting and homeported ships.

Federal prosecutors allege that he influenced the award of two contracts -- one for $11.4 million and another for $3.9 million -- to build oil containment booms for handling oil spills in the ocean. The firms then hired his wife's firm Maritime Innovations LLC.

Lynn Panagakos, Nesmith's attorney, said the conflict is a technical one that didn't cost the Navy more money. She said Nesmith himself designed the oil boom devices.

Hawaii News Now has learned both sides are working on a plea deal. The conflict charges are punishable by up to five years in jail and a $250,000 fine.

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