Tuesday, December 14, 1999

Star-Bulletin file photo
Henry Peters in Judge Michael Town's courtroom.

Last trustee
standing, Henry
Peters resigns

A trial to permanently remove
him as a trustee of the Bishop
Estate would have begun today

Another removal trial for Lindsey

By Rick Daysog


He was the last one standing, the longest serving member of the Bishop Estate's scandal-plagued former board of trustees, the uncrowned king of a $6 billion financial empire that recently flirted with financial disaster due to the alleged misconduct of its former trustees.

After rejecting calls to step down for more than a year, Henry Haalilio Peters permanently resigned as a $1 million-a-year trustee of the Bishop Estate yesterday, avoiding a one-month trial over his permanent removal which was scheduled to get under way this morning.

The 58-year-old former state House speaker, who was temporarily removed from the trust in May, submitted his permanent resignation in a two-page letter to the estate's court-appointed interim board of trustees and Probate Judges Colleen Hirai and Kevin Chang.

Peters' permanent resignation is effective immediately. Judge Hirai accepted Peters' resignation during a brief hearing this morning, saying "it is in the best interest of the estate."

"I think we're fully on the road to healing now," said Roy Benham, president of the Kamehameha Schools Alumni Association's 1,500-member Oahu region. "I think the good days are ahead."

A trustee since 1984, Peters is the last remaining member of the 115-year-old Bishop Estate's ex-board who has not been removed permanently by court order or resigned voluntarily.

Former estate chairman Richard "Dickie" Wong stepped down on Dec. 3, while fellow trustees Oswald Stender and Gerard Jervis resigned earlier this year.

Circuit Judge Eden Elizabeth Hifo, formerly known as Bambi Weil, removed Lokelani Lindsey from the trust on May 7.


Established in 1884, the Bishop Estate is a charitable trust founded by Princess Bernice Pauahi Bishop to educate children of native Hawaiian ancestry.

For the past 21/2 years, the trust has been rocked by allegations of trustee mismanagement and self-dealing which hit a crisis point last April when the Internal Revenue Service threatened to revoke the estate's tax-exempt status back to 1990 unless all of the former board members voluntarily stepped down or were removed permanently.

According to recent trust estimates, loss of the tax-exempt status would have cost the estate more than $900 million and would have harmed the future operations of the trust and the estate-run Kamehameha Schools.

"This changes the face of the trust for the better," said Deputy Attorney General Hugh Jones. "He's been found in violation of court orders and he violated the will. The only thing he could have done is resign."

Peters could not be reached for comment last night but had scheduled a news conference for later this morning. In court today, Peters' attorney, Renee Yuen, said the resignation has been difficult on Peters. She declined further comment.


In his resignation letter, Peters said he is stepping down voluntarily. He also denied wrongdoing and fault on his part.

In many ways, Peters was the dominant voice in the Bishop Estate board room during the recent turmoil. While Wong may have been the trust's chairman, Peters headed a financial portfolio that spanned three continents and included big stakes in blue-chip companies like Goldman Sachs Group and Saks Fifth Avenue.

Peters wrote that he was proud of his tenure at the estate, saying he and fellow past trustees were responsible for the "unprecedented growth and success" of the estate, which will assure the future of the Kamehameha Schools.

Peters attributed the controversy surrounding the estate and the Kamehameha Schools to political enemies within the Kamehameha Schools community and the state and federal governments, who wanted to see the Bishop Estate managed according to their vision.

Peters said he feared that the trust would become "a bureaucratic entity" subject to the whims of the dominant political party or those of a state judge.

"My fear is that this will surely defeat the Princess's intention that the trust be perpetual and self-sustaining," he wrote. "I will continue to be loyal to the will and do my best to see that these fears are not realized."

Jones, meanwhile, said that Peters' resignation is not conditioned on the settlement of the various civil and criminal actions that the former trustee continues to face.

The state is seeking tens of million of dollars in surcharges and damages arising from its two-year investigation into allegations of trustee mismanagement and breaches of fiduciary duties. The surcharge trial is set for next September.


Separately, an Oahu grand jury indicted Peters in August for theft for his role in an alleged kickback scheme involving Bishop Estate land. Peters has pleaded not guilty to the theft charge and has filed motions to dismiss the indictment, saying prosecutors engaged in misconduct and relied on tainted grand jury testimony.

Circuit Judge Michael Town is expected to rule on the dismissal motions on Friday.

"There's no deal," Jones said.

Members of the Kamehameha Schools community welcomed Peters' resignation, saying it's in the best interest of the trust.

Leroy Akamine -- president of the 3,000-member Na Pua a Ke Ali'i Pauahi, which marched to protest the former trustees' 1997 efforts to fire popular school President Michael Chun -- said the estate's interim board has made great strides toward reforming the estate.

The estate's interim board -- retired Adm. Robert Kihune, American Savings Bank executive Constance Lau, attorney Ronald Libkuman, former Iolani School headmaster David Coon and retired Honolulu Police Chief Francis Keala -- are in the process of implementing a strategic planning process at the trust, establishing a new method of selecting future trustees and hiring a chief executive officer to take over much of the former board's duties.

"We need to move forward to the new century with a commitment and dedication that the legacy of Pauahi is protected in perpetuity," Akamine said. "We need to make sure that we take care of the legacy and preserve it for our children."

Henry Peters at a glance:

Age: 58
Appointed as a Bishop Estate trustee: 1984
Past experience: Former state House Speaker (1981-1987)
1998 salary: $1,037,012
Education: Bachelor's degree, Brigham Young University <


Another removal trial
set for Lindsey

By Rick Daysog


Already removed for a host of breaches of trust stemming from her management of the Kamehameha Schools, former Bishop Estate trustee Lokelani Lindsey will have to face a new trial over her permanent removal from the Bishop Estate this week.

Probate Judge Colleen Hirai scheduled Lindsey's trial to begin on Thursday after fellow trustee Henry Peters resigned from the estate late yesterday afternoon.

The Bishop Estate's court-appointed interim board of trustees sued for the permanent removal of Lindsey and Peters on the grounds that they jeopardized the estate's tax-exempt status by taking excessive compensation, mismanaging trust assets and by neglecting the estate's core educational mission.

Probate Judge Kevin Chang initially ordered the trial to take place after the completion of Henry Peters' permanent removal trial.

Peters resignation placed Lindsey's case on the front-burner.

Lindsey's lawyers had previously argued she should not have to face a new removal trial since she was already ousted from the trust.

Lindsey previously was removed on May 6 by Circuit Judge Eden Elizabeth Hifo, formerly known as Bambi Weil, who found that Lindsey mismanaged the trust-run Kamehameha Schools. But the interim board included Lindsey in its suit because she is appealing Hifo's decision.

However, attorneys for the estate's court-appointed interim board of trustees said that Judge Hifo removed Lindsey on issues that are separate from those raised in their suit.

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