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Wednesday, April 4, 2001



EXCLUSIVE


Kamehameha’s
struggle with political
ties continues

The trust's new point person
in the state Legislature was a
key person in its past
political machinery

A rocky three years for
Kamehameha Schools


Rick Daysog
Star-Bulletin

ALIKA THOMPSON is part of the new face at Kamehameha Schools. But in many ways, he is a part of the old school.

Earlier this year, the 66-year-old Aiea resident became the first employee in the history of the 117-year-old charitable trust to register with the state Ethics Commission as a lobbyist.

The move spoke volumes about the estate's new policy of openness.

Secrets of the Trust It also underscored a major achievement by the trust's new management: the dismantling of the former trustees' political machinery.

With the recent appointment of permanent trustees and last year's hiring of Hamilton McCubbin as the estate's chief executive officer, the trust has embarked on a soul-searching reorganization to exorcise the three-year controversy that brought the trust to the brink of disaster.

The politicians are off the payroll, the nonbid contracts to the former trustees' cronies have been terminated, and the favoritism in the schools has been eliminated.

"I guess the thinking here is different these days," Thompson told the Star-Bulletin. "They probably thought that politics is what caused a lot of problems in the past. I guess that's why they decided to be much more open."

Still, the choice of Thompson as the estate's point person in the state Legislature has raised some eyebrows and provides hints that the trust continues to struggle with the legacy of the former trustees' political machinery.

A professional lobbyist since 1965, the low-key Thompson is part of the old-school ethos that has long dominated Hawaii's political system.

Thompson -- who once listed more than a third of the state Legislature as his friends in an interview with state investigators -- is a former local precinct chairman and has served as a delegate to the Hawaii Democratic Party Convention several times.

Like many longtime employees who played key roles in the reorganized trust, Thompson was an integral part in the machinery that served former trustees Henry Peters, Richard "Dickie" Wong, Lokelani Lindsey, Oswald Stender and Gerard Jervis.

AS A SPECIAL-PROJECTS OFFICER, Thompson was a key member of the Kamehameha Schools' Government Relations Division, which the state Attorney General's Office recently characterized as a "government manipulation operation."

That division, headed by now-deceased manager Namlyn Snow and former state Sen. Milton Holt, helped funnel tens of thousands of dollars to the campaign coffers of isle legislators, drafted legislation and floor speeches for key state lawmakers and entertained dozens of Hawaii lawmakers at local restaurants, according to the Attorney General's Office.

Thompson said he was unaware of the conduct of his co-workers at the time and that his former supervisor Snow never asked him to try to kill or pass a bill that affected the trust's interests.

However, in 1999, Thompson told state investigators from the Attorney General's Office under oath that he often helped the campaigns of dozens of state legislators by giving each $50 political donations or by conducting sign waving for them. But Thompson said the efforts were made as an individual and not as a trust employee.

Thompson denied that he lobbied lawmakers, but he told the Star-Bulletin that some of his past activities in the Legislature fell into a "gray area" in the state lobbying law.

State law defines lobbying as "communicating directly or through an agent" with a government official to influence legislative, administrative actions or a ballot issue. Lobbyists must register with the Ethics Commission if they spend more than five hours lobbying in a month or spend more than $750 on lobbying in a year.

According to records of the estate's Visa card expenditures, compiled by the Attorney General's Office, Thompson regularly entertained lawmakers at local restaurants. Between June 1992 and November 1997, Thompson bought more than 400 meals for state lawmakers and legislative staffers, costing the trust more than $10,000, according to the Attorney General's Office.

Thompson's Visa card billings listed 65 restaurant meetings with former House Speaker Joe Souki which cost more than $970. Most of those meetings were over lunch at Yong Sing Restaurant downtown or breakfast at the now-closed Columbia Inn.

SOUKI TOLD THE STAR-BULLETIN last year that he met Thompson on a few occasions, but questioned whether there were 65 meetings. He also said the meetings were largely social and did not involve trust business.

Thompson's Visa billing statements show that he spent nearly $600 for 18 meals with City Councilwoman Rene Mansho between 1992 and 1997. Mansho said she met Thompson on a couple of occasions, but said that most of the meetings listed by Thompson were with her staffers. None of the meetings with Souki, Mansho or other lawmakers were listed as lobbying expenses by the estate with the state Ethics Commission. The lawmakers' gift disclosure statements with the state agency also make no mention of the meals.

Thompson said he never discussed trust business with the lawmakers, saying the restaurant meetings were largely social. He added the trust has taken away his credit card. When asked why he spent so much trust money entertaining legislators, Thompson acknowledged that those meetings benefited the estate from a public-relations standpoint.

The eventual payoff was that trust employees did not have to officially lobby lawmakers since the two sides were so familiar with each others' positions, Thompson added.

"I don't know if you call this lobbying, but if you and I are friends ... it's almost like I don't need to ask you to vote for my stuff already," Thompson told state investigators.

"It was like, uh -- what would you say? -- understood. That if you're my friend that you gonna, you know, do it. I don't have to ask you."

One of Thompson's closest friends in the Legislature is House Assistant Sergeant-at-Arms Frank Arakaki. A detailed listing of the trust's Visa card charges also shows that between 1993 and 1997, Thompson spent more than $900 for 18 meals for staffers in the House sergeant-at-arms' office.

None of the charges were listed in the lobbying reports or in the state employees' gift disclosures.

Thompson -- who first met Arakaki more than 20 years ago -- told the Star-Bulletin that the charges were largely to pay for staffers who were working overnight to meet critical legislative deadlines. Staffers -- many who print and deliver the 1,000 bills that the trust monitors each year -- often asked lobbyists for the big local companies to help them out during tight deadlines.

Arakaki, meanwhile, said he did not list meals for sergeant-at-arms staffers on disclosures with the state Ethics Commission since he was not the one receiving the free meals.

"I would imagine it would be a benefit to anybody to have a friendly relationship with legislators or staff," Thompson told state investigators.

THESE DAYS, TRUST EMPLOYEES have strict guidelines when it comes to dealing with legislation and elected officials, said Marsha Bolson, the estate's communications manager.

Workers must document all correspondence with lawmakers and administration officials, and many must take part in a training program on compliance with state, federal and city lobbying laws, she said.

The estate's Government Relations Division, which monitors between 1,000 and 1,500 bills a year, has been scaled back to two employees and is subject to periodic reviews from a panel of top executives including McCubbin.

The trust, formerly known as Bishop Estate, also is considering outsourcing some of its state government relations work to an outside lobbying firm, in the same way it outsourced its lobbying efforts in Washington, D.C.

The changes have been so pronounced that one isle lobbyist questioned whether the estate had gone too far.

"For the most part, (the trust is) headed in the right direction," added Randy Roth, University of Hawaii law professor and co-author of the 1997 Star-Bulletin article "Broken Trust," which prompted the state to open its investigation of the estate. "While it's a good idea to lessen the ties to the political world, I don't think it makes sense to sever them completely."



Bishop Estate Archive
Kamehameha Schools


A rocky three years for
Kamehameha Schools

See: Bishop Estate Archive for links to these stories

May 15, 1997: More than 300 Kamehameha Schools alumni, parents and supporters march in protest of the former trustees' management of the Kamehameha Schools. Marchers protest the trustees' micromanagement of the Kapalama Heights campus and want the duties of popular school President Michael Chun restored.

Secrets of the Trust Aug. 9, 1997: Five prominent community leaders -- U.S. District Judge Samuel King, former Kamehameha Schools for Girls Principal Gladys Brandt, Monsignor Charles Kekumano, retired state Appellate Judge Walter Heen and University of Hawaii law professor Randall Roth -- publish "Broken Trust" in the Honolulu Star-Bulletin. The article alleges mismanagement of trust assets and conflicts of interests by trustees and criticizes the state Supreme Court's role in selecting trustees.

Aug. 12, 1997: In response to charges raised in "Broken Trust," Gov. Ben Cayetano orders Attorney General Margery Bronster to open an investigation into the trustees.

Oct. 10, 1997: Trustee Gerard Jervis joins trustee Oswald Stender to allege that trustees Lokelani Lindsey, Richard "Dickie" Wong and Henry Peters kept them out of the information loop.

Nov. 17, 1997: Court-appointed master Colbert Matsumoto files a scathing 120-page report, saying the board incurred $264.1 million in losses and loss reserves and improperly divided trustees' duties under a lead-trustee system of governance.

Dec. 5, 1997: State judge unseals court-appointed fact-finder Patrick Yim's report on the Kamehameha Schools controversy. The report alleges that Lindsey managed "by intimidation" and fostered an environment of favoritism. The report also said that trustees manipulated admissions at the elementary school.

Dec. 21, 1997: State Supreme Court announces that it will not select trustees, ending a century-old practice.

Dec. 29, 1997: Jervis and Stender sue for Lindsey's removal, saying she breached her fiduciary duties and is unfit to serve.

March 13, 1998: Kamehameha Schools faculty votes to form a union.

Aug. 7, 1998: Master Colbert Matsumoto files his consolidated review for estate 1994-1996 fiscal years. The report says that trustees generated subpar investment returns and accumulated $350 million in income that should have been spent on the schools.

Sept. 10, 1998: Bronster sues for the permanent removal of trustees Peters, Wong, Lindsey and Jervis, saying they took part in a widespread pattern of self-dealing and mismanagement. Bronster alleges Wong and Peters took part in a kickback scheme on a trust Hawaii Kai land deal.

Nov. 25, 1998: An Oahu grand jury indicts Peters for theft, saying he received a $192,000 kickback.

Jan. 8, 1999: The Internal Revenue Service delivers the preliminary findings of its exhaustive, four-year audit of the trust.

March 11, 1999: Jervis overdoses on sleeping pills and is rushed to a hospital. The overdose occurs a week after a trust employee committed suicide when she and Jervis were caught by security guards having sex in the bathroom of a Waikiki hotel.

April 12, 1999: An Oahu grand jury indicts Wong for theft stemming from an alleged kickback scheme involving a Kamehameha Schools land deal in Hawaii Kai.

April 27, 1999: The IRS threatens to revoke the trust's tax-exempt status unless all five of the trust's board members resign or are permanently removed.

April 28, 1999: By a 14-11 margin, the state Senate rejects Bronster's confirmation as attorney general, in a highly criticized vote. Trustee Wong later admits under oath that he met two months before with four state senators to discuss Bronster's reappointment.

May 6, 1999: Circuit Judge Bambi Weil removes Lindsey from the trust, saying she misused trust assets, intimidated staffers and mismanaged the estate's educational programs.

May 7, 1999: Probate Judge Kevin Chang temporarily removes all five trustees and replaces them with an interim board that includes retired Honolulu police Chief Francis Keala, former Iolani School Headmaster David Coon, retired Adm. Robert Kihune, American Savings Bank executive Constance Lau and attorney Ronald Libkuman.

June 17, 1999: Circuit Judge Michael Town throws out criminal charges against Wong, saying the state investigators relied on tainted testimony. Wong is later indicted for perjury, but those charges are again thrown out by Town.

July 2, 1999: Judge Town throws out charges against Peters, saying state investigators relied on tainted testimony. Peters is re-indicted on Aug. 4, but those charges are again thrown out by Town.

Dec. 13, 1999: Peters resigns permanently from the trust, making him the final member of the board to either step down or be removed from the trust.

Jan. 6, 2000: Interim board names Hamilton McCubbin, a 1959 Kamehameha Schools graduate, as the first chief executive officer in the trust's 115-year history.

Sept. 15, 2000: Probate Judge Kevin Chang approves a $25 million settlement agreement between the Attorney General's Office and ex-trustees Peters, Wong, Stender, Jervis and Lindsey. The settlement ends a lengthy court battle with the trust's former board members that began with the state's 1998 suit to remove and surcharge the former board members.

Nov. 3, 2000: Probate Judge Chang appoints attorney Douglas Ing, former Hemmeter Development Corp. executive Diane Plotts, Hawaiian navigator Nainoa Thompson and interim trustees Kihune and Lau as permanent trustees of the estate.



Bishop Estate Archive
Kamehameha Schools



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