A behind-the-scenes look at the bad blood troubling a controversial state contract emerged in a Senate committee hearing Wednesday.

The Hawaii Senate Ways and Means Committee weighed in on the tax department’s embattled $25-million dollar contract with a Montreal-based information technology company, CGI, for the first time since the resignation of Kurt Kawafuchi, the state’s former director of taxation. Kawafuchi has not responded to requests for comment on his decision to leave.

Donna Mercado Kim, the committee’s chair, read from an internal e-mail from the CGI project manager to an unnamed state official calling for the ouster of Kawafuchi.

“The Department is operating under dysfunctional management environment,” the e-mail said. Mercado Kim didn’t give a date for the e-mail, which her staff said is not a public document. “Warring factions are disrupting the project. Kurt is incapable of managing the situation.”

Kim said the e-mail went on and on in this tone.

“Solution to the problem: Take Kurt out of the picture,” the e-mail said. The e-mail was shown to the department’s staff by the person who received it, causing “a lot of disenchantment” and stopping the project, Stanley Shiraki, acting director of taxation, testified.

Today, the contract is the subject of a state audit, called for during the last legislative session by the committee. Since 1999, the state of Hawaii has spent $87.5 million on contracts with CGI. CGI took a lead role in developing computer systems for the tax department. Most recently, the company received $25 million to collect delinquent taxes from 2008 to 2011. The company receives a third of the delinquent taxes collected using its system, up to a cap of $25 million, which has already been hit.

Shiraki, who took over his new role last week, told the committee Wednesday that the contract …

Loading Explosive E-Mail Read in Senate Hearing

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