EXCERPTS: CHAPTER 7
In 1994 a new process for selecting
a trustee aroused suspicions.
‘Black and blue panel’ courts trouble
By 1994 Governor John Waihee had appointed all five justices to Hawaii's Supreme Court. In February of that year, trustee Myron Thompson would be 70 years old, the mandatory retirement age that had earlier been set by the state Supreme Court justices. It was no secret that Waihee was looking down the road to the end of his second and final term, which would be later that year. A Bishop Estate trusteeship would be a crowning achievement for the soon-to-be-former governor -- and would bring with it a tenfold increase in his pay.
Excerpts from the book
Yesterday: Trustees of Bishop Estate held power without accountability, a recipe for disaster.
Today: The selection of Bishop Estate trustees by Supreme Court justices showed signs of manipulation.
Tomorrow: Kamehameha Schools alumni, staff and students rose up against trustee Lokelani Lindsey.
Wednesday: Investigating Bishop Estate was like probing the CIA, said a court-appointed master.
Thursday: Attorney General Margery Bronster went head to head with Supreme Court justices over trustee selection.
Friday: Instead of housecleaning, the interim trustees of Bishop Estate "handed the keys to the old guard."
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Normally the justices began their search for a successor well before a scheduled vacancy, but this time they did not. They never explained why. Many people speculated that the justices wanted to appoint Waihee. For justices to appoint to the board of Bishop Estate the man who had personally appointed all of them to the Supreme Court might strike the public as overly political, but then, what did not operate politically in Hawaii? A president of the Senate, Dickie Wong, had made it to the boardroom, as had William Richardson, a chief justice. Henry Peters had kept on being speaker of the House after his appointment to the supposedly nonpolitical trusteeship. All three had appointed people to the Judicial Selection Commission, which played a key role in the selection of the justices. This struck many as a bit too cozy, yet it had happened, and without adverse political consequences to anyone.
Even so, the justices appeared skittish about appointing the governor. Waihee's popularity was at an all-time low. During his two terms as governor, he had managed to turn a large budget surplus into a huge deficit, and, because of a series of procurement and land use scandals, a growing segment of the public perceived his administration as corrupt.
It would assuredly look bad for a sitting governor to be moonlighting as a Bishop Estate trustee. On the other hand, if the selection could be delayed until later in the year, and if his name could be put on a short list by a supposedly independent panel of people who were prominent in the community, then maybe the same result could be achieved: Waihee might be made a Bishop Estate trustee without its provoking the public too much.
Shortly before Thompson's scheduled retirement date, Chief Justice Ronald Moon announced that the justices had decided to appoint a panel of community leaders to assist in filling the vacancy. This would be the first time in the trust's history that anyone other than the justices would have an official role in selecting a Bishop Estate trustee. It would slow down the process, but Thompson would be allowed to serve beyond the end of his term, which would be another first. This approach, as described by Moon, would instill public trust in a process that critics had taken to calling "political."
The justices appointed 11 community leaders to what came to be called the "blue-ribbon panel." Two were former Bishop Estate trustees: (Matsuo) Takabuki and Richardson. Three others were experienced in business: Henry Walker Jr., a former chairman and CEO of Amfac, one of the largest corporations in Hawaii; Robert Pfeiffer, chairman of Alexander & Baldwin, another large Hawaii corporation; and Herbert Cornuelle, chairman of the board at Campbell Estate. There were also Kenneth Mortimer, president of the University of Hawaii; Gary Rodrigues, state director of the United Public Workers, a powerful union; Alvin Shim, an attorney with a long involvement in politics; Melody MacKenzie, a founding member of the Native Hawaiian Bar Association; Monsignor Charles Kekumano, a retired Catholic priest who served on the board of the Queen Liliuokalani Trust; and Gladys Kamakakuokalani Brandt, who had retired as the principal of Kamehameha Schools and was the current chair of the University of Hawaii Board of Regents.
COURTESY OF GARY HOFHEIMER PHOTOGRAPHY
Every justice on Hawaii's Supreme Court in 1994 had been appointed by Gov. John Waihee. Chief Justice Ronald Moon is at center; associate justices are Paula Nakayama, left, Robert Klein, Steven Levinson and Mario Ramil.
Mortimer had been at the University of Hawaii for less than a year. Advisers told him to turn down Moon's invitation because service on the panel would be too political. When Mortimer relayed that message to Moon, the chief justice responded, "That's why you have to serve, Mr. President. We need to have a group that is not enmeshed in local politics and whose integrity is beyond question."
A few days later Mortimer and the other panel members gathered at the Supreme Court building, where Moon assured them that they could determine their own proc- ess; the justices would not interfere. Some of the panel members had doubts. They were concerned that the panel's list would be honored only if it had "the right name" on it. Pfeiffer looked squarely at Moon and asked, "Would the justices select from our list even if there were only one name on it?" For Pfeiffer and at least four others on the panel, getting the right answer to this question was a make-or-break condition of serving. Moon did not hesitate. He said he would rather have a longer list, but, yes, the panel's list would be honored, regardless of the number of names on it.
At its first working session, the group named Brandt chairperson. She suggested a rule: that each name on the panel's list of finalists must have broad support, that a name not be there simply to accommodate a determined minority. She wanted to avoid the horse trading that was known to occur in sessions of the Judicial Selection Commission, where Waihee insiders like Gerard Jervis and Gary Rodrigues were adept at getting "the right name" added to each judicial selection list. A majority of Brandt's panel members agreed to her suggestion.
Brandt set an ambitious schedule for the panel and stuck to it. Within two months, members had received and considered more than a hundred applications. Deliberations went smoothly until Waihee came up for discussion. Richardson, Shim and Rodrigues wanted Waihee's name added to the list of finalists; the others did not. The discussion dragged on and on, even after the panel cast formal votes and Waihee fell well short of the required majority, eight to three. Rodrigues refused to move on. He eventually shouted at the others, ripped up the papers in front of him and threw the shreds across the table. Brandt, now 87 years old, told Rodrigues to behave himself. He responded that he was tired of being treated like a child. "Gary," said Brandt, "when you act like a child, you must expect to be treated like a child." Rodrigues stormed out of the room, reportedly straight to a telephone. According to Henry Walker, within minutes Rodrigues had reached Waihee.
The next day Brandt took the list (which contained the names of five candidates and had been signed by everyone on the panel but Rodrigues) to the Supreme Court building. There were five copies for the justices, each one sealed in a separate envelope. Brandt intended to drop them off and leave, but a secretary asked her to step into a side room, where the justices had gathered. Following a brief exchange of pleasantries Brandt handed them the envelopes, then stood by silently as the justices each took out the list and looked at it. Brandt later recalled, "They didn't say anything; they just looked at the paper. Finally, one of them said, 'Where's his name?'" Brandt responded that the panel had considered adding the governor's name to the list but a motion to do so did not pass. She added that some panel members were of the opinion that there already were enough politicians serving on the board.
Brandt could tell that the justices were not pleased with the list, but she just assumed that in a matter of days the justices would announce which one of the five individuals on the list would be the next Bishop Estate trustee. But days passed without a word from the justices, and then more days.
After a week without uttering a public word, the justices announced that they had decided to postpone the choosing of the new trustee. They said they first would seek an opinion from the Commission on Judicial Conduct, an unofficial group whose members they had chosen. Five months later, that commission announced that the justices were not legally obligated to use a trustee-screening panel. Moon wrote to the blue-ribbon panel: "Based on the advisory opinion and based on our individual consciences, we believe it only fair to reopen the application process."
When Pfeiffer heard what the justices had done, he swore that he would never again serve on a government panel in Hawaii. Others from the blue-ribbon group agreed, telling Brandt that they felt "used and abused." From then on, she referred to the group as the "black and blue" panel.
The justices eventually wrote that although they had "set no parameters on the search and (given) no directions," they had wanted "a list of finalists who were the most eminently qualified individuals." According to the justices, "for reasons known only to the panelists, their list did not include the names of all 'eminently qualified' applicants."
On November 25, 1994, more than nine months after a retirement date that had been known for years, the justices filled the vacancy with someone whose name had not appeared on the blue-ribbon panel's list. In the opinion of Hawaii's five Supreme Court justices, the most "eminently qualified applicant" was none other than Waihee's closest associate, Gerard Jervis.
"Wait and see," said Supreme Court Justice Steven Levinson. "Gerry Jervis will be a great trustee."
Many suspected that Jervis was just a seat warmer who would resign when a politically safe opportunity arose to appoint Waihee, but the trustees encountered bigger troubles before this scenario had any chance to play out.
After leaving office, Waihee joined a Washington, D.C., law firm that the trustees immediately hired to find a way for them to avoid state and federal oversight and to lobby against pending federal legislation that would limit trustee compensation. A few years later, law enforcement personnel searched a secret office safe at (Bishop Estates' headquarters at) Kawaiahao Plaza and found a computer file named "CJ" that contained an astonishing two-page memo from "Nam" to "Speaker." "Nam" was Namlyn Snow, who worked directly for Henry Peters. "Speaker" was Peters. "CJ" was Chief Justice Moon. The memo's subject was "Trustee Selection Process," and it was dated March 21, 1994, immediately after Gladys Brandt had delivered the blue-ribbon panel's list of names to the justices. In this memo, Snow, an employee of a charitable trust, mapped out a plan by which the justices of Hawaii's Supreme Court could steer the trustee nomination process back onto a more congenial track. ...
The steps laid out in the secret memo bore a remarkable similarity to the steps Moon and the other justices took at the time: "In certain aspects, the justices' writings and actions closely match reactions and announcements scripted by Snow," according to a confidential report submitted to the attorney general and Campaign Spending Commission in 2000.
The Snow memo was a smoking gun, but there was even more evidence of behind-the-scenes manipulation. Although verbatim minutes of trustee meetings were never taken, investigators eventually gained access to handwritten notes Lokelani Lindsey had made during these meetings. One such note, dated weeks before the justices formed the blue-ribbon panel, listed the names of Pfeiffer, Cornuelle, Brandt, Shim, Richardson and Takabuki, who were all later named to the panel by Moon. Also among Lindsey's jottings were statements concerning the selection of a new trustee by the justices and the ways in which a screening committee could be used to achieve the desired outcome. Bearing in mind the possibility that the justices already knew who they wanted to pick and that they perceived a need to slow down the selection process, Lindsey wrote: "If they already made up their minds ... the screening committee will be an excellent way to go." Then she added: "Only mechanism to allow the delay to occur is the committee."
Lindsey's handwritten notes and Snow's secret memo raised serious concerns about the justices' independence and increased the chances that someone would sue them for breaching the fiduciary duties they accepted when they agreed to select trustees. Individuals cannot be forced to select trustees, but anyone who accepts such a power is required to use it to further the trust's charitable mission, not for personal gain or political payback. This legal exposure gave the justices strong personal incentives not to cooperate with any investigation of Bishop Estate trustees. In fact, the justices' personal interests would be best served if any such investigation could be shut down prematurely and the records sealed, incentives that were to play out strongly in events to come.