Tuesday, April 6, 1999

Bishop Estate well off,
says asset manager

By Rick Daysog


The Bishop Estate's operating income hit $250 million during its 1998 fiscal year, indicating the trust is well-off financially, according to the estate's asset manager.

The results are about even with the $260 million operating income that the estate enjoyed in the previous year ending June 30, 1997, according to Randall Chang, general manager for the estate's asset management group.

"Today, the assets are performing well," Chang said yesterday. "What all of this leads me to believe is that KS/BE is well-managed."

Chang's comments came in the week-old trial before Probate Judge Colleen Hirai over the interim removal suit against Bishop Estate trustees Richard "Dickie" Wong and Henry Peters.

The Attorney General's Office is seeking the trustees' ouster, alleging that they mismanaged trust assets, jeopardized the estate's tax-exempt status and accumulated some $350 million that should have been spent on the estate-run Kamehameha Schools.

The operating income figures are not the final numbers, however, they provide a strong gauge of the trust's operations during a tumultuous year in which the charitable estate came under intense scrutiny not only from the Attorney General's Office but from its own court-appointed master and the Internal Revenue Service, which is conducting an exhaustive audit of the trust.

More definitive financial figures for the estate - including the trust's net income, revenues and what the estate paid its trustees and key employees in 1998 - will be made public later this year in the estate's annual filings with the Internal Revenue Service.

Yesterday, Chang, who became the estate's asset manager last year, said he believed that the trust was well-diversified and was highly liquid. He cited the estate's successful investment in Goldman Sachs Group L.P. and high credit ratings by independent agencies like Standard & Poors and Moody's Investors Service.

Since investing $500 million in Goldman Sachs in 1992, the trust has earned more than $600 million in dividends, Chang said. The trust also stands to triple the value of its holdings when the Wall Street investment banking firm goes public in as early as May, he said.

Chang's testimony was greeted with skepticism by the Attorney General's Office.

Under cross-examination by Deputy Attorney General Dan Morris, Chang said he had no reason to question court-appointed master Colbert Matsumoto's assessment that the trust generate a minus 1 percent rate of return on investment during its 1994 through 1996 fiscal years.

The estate's minus 1 percent return has been a major foundation in criticism of the board.

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