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Wednesday, July 12, 2000




A.G. faults
Kamehameha
interim board

Kamehameha Schools' probe
of its outside law firms
is said to undercut a
court-ordered report

Kamehameha hires financial officer

By Rick Daysog
Star-Bulletin

Tapa

The cold war between the attorney general's office and Kamehameha Schools' interim board of trustees is showing no signs of thawing.

In the latest skirmish, the attorney general's office is accusing the estate's interim board of attempting to protect its own interests by undercutting the recent findings of court-appointed special master Robert Richards.

Deputy Attorney General Dorothy Sellers, in court papers filed yesterday, also faulted the interim board's recent hiring of mainland lawyers and trust law experts to investigate the conduct of its outside attorneys as a waste of money.

"(The) interim trustees' sudden desire to 'investigate' is consistent with a desire to protect their own actions by undercutting the Richards report," Sellers said. "The interim trustees do not need a high-priced investigation to decide whether or not to continue the services of any professional firm."

In a May 18 report, Richards charged that several of the estate's outside law firms obstructed the attorney general's investigation of the trust and conducted millions of dollars in legal work that personally benefited former trustees Henry Peters, Richard "Dickie" Wong, Oswald Stender, Gerard Jervis and Lokelani Lindsey.

Richards also recommended that the probate court order the Cades Schutte Fleming & Wright firm to disgorge more than half of the $1.3 million that it billed the trust between August 1998 and May 1999.

The Richards report prompted the estate to suspend several of its outside law firms and enlist Yale law professor John Langbein and the firms of Morgan, Lewis & Bockius L.L.P. and Washington, D.C.-based Miller & Chevalier to review the firms' conduct.

Sellers said the estate's investigation is not independent since Langbein and the Miller & Chevalier firm were cited by Richards for conducting significant legal work that personally benefited the former trustees.

She also argued that the current interim board's internal investigation may be self-serving since the interim trustees could be liable for surcharges for work conducted by the Cades firm. Until the firm's suspension in May, the interim board had relied on Cades for significant legal work.

"If the former trustees are liable for surcharge for payments to Cades to hinder the attorney general, why would the interim trustees not be similarly liable for payments to Cades to perform the same services?" Sellers said.

A trust spokesman could not be reached for immediate comment.

The dispute is the latest legal posturing between the attorney general's office and the estate's interim board. The attorney general's office recently accused the interim board of withholding trust information vital to its attempts to recover tens of millions of dollars from the former trustees.

The estate, meanwhile, has charged that the attorney general's office is insensitive to the needs of native Hawaiians.



Kamehameha
Schools hires
financial officer

The accountant will oversee
the budget and investments

By Rick Daysog
Star-Bulletin

Tapa

The Kamehameha Schools announced today that it has hired accountant Eric Yeaman as its first chief financial officer.

The $6 billion charitable trust said Yeaman, a senior manager in the accounting firm of Arthur Andersen L.L.P. and a director of the estate's internal audit office, will oversee budget functions, short-term investments, tax issues and financial planning.

Hamilton McCubbin, chief executive officer, said Yeaman will strengthen the trust's management team as it expands its educational programs.

"Mr. Yeaman's extensive knowledge of the Kamehameha financial and accounting system ... his proven integrity and sterling reputation as a leader and financial officer and his consultative management style make him the perfect fit with our 'go forward' plans for the future of Kamehameha Schools," McCubbin said.

Yeaman's appointment fills the last vacancy on the executive management team. The trust, which has been under court order to implement a CEO-based system of management, recently named local real estate executive Wendell Brooks as chief investment officer and attorney Colleen Wong as chief legal officer.

Retired Brig. Gen. Dwight Kealoha is serving as the trust's acting chief operating officer, filling in for former general counsel Nathan Aipa. Aipa took a paid leave of absence in May after the trust initiated an internal investigation into trust's outside law firms and accountants.

Yeaman, who assumes his new post Monday, was part of the Arthur Andersen team that conducted a court-mandated financial and management audit of the Kamehameha Schools that led to major reforms of the trust's operations.

The 336-page audit found that the estate under former trustees Henry Peters, Richard "Dickie" Wong, Oswald Stender, Gerard Jervis and Lokelani Lindsey generated subpar investment returns and withheld more than $300 million of trust income from its primary mission of educating native Hawaiian children.

Yeaman is a University of Hawaii graduate and is a certified public accountant. At the estate, he will oversee a staff of about 50 employees.



Bishop Estate Archive
Kamehameha Schools



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