The report that started it all

Bronster could
trigger changes

If the attorney general decides that
changes in trustee selection are needed,
the Supreme Court has the power
to make them, says the chief justice

By Ian Y. Lind

Changes in the way Bishop Estate trustees are appointed could be adopted voluntarily by the members of the Hawaii Supreme Court if warranted by an attorney general's investigation, Chief Justice Ronald Moon said yesterday.

Moon declined to speculate on the outcome of the probe or on what findings, if any, might prompt members of the court to change the century-old process.

Justice Ronald Moon

Under the terms of the will of Princess Bernice Pauahi Bishop, which established the Bishop Estate, trustees are appointed by the members of the Supreme Court acting as individuals. The process has been criticized as arbitrary, overly political and lacking public accountability.

Moon said, however, justices have the power to set new criteria and procedures for the appointment process, and he left open the possibility that state Attorney General Margery Bronster's findings could trigger some changes without the need for further legal action.

"It would be left to the individual justices to discuss and then collectively institute such conditions," Moon said. "If (the investigation) convinces us that certain conditions should be imposed, then certainly we would consider them."

Reforms suggested in recent weeks include limited terms for trustees, new and much lower caps on trustees' pay and disclosure of required qualifications and criteria for selection.

Certain changes, such as new limits on trustees' pay, fall outside the appointment authority held by the justices and would require the Legislature to amend the probate code, Moon said.

University of Hawaii law Professor Randall Roth said the Supreme Court needs to get completely out of the selection process as quickly as possible. If that happens, a new process would normally be determined by the Probate Court.

Margery Bronster

Gov. Ben Cayetano's decision to start an investigation is highly significant, Roth said, because of the attorney general's unique authority.

"Legal action has to start at the Probate Court, and has to be brought by somebody who is legally empowered to bring a lawsuit against a charitable trust," Roth said. "In Hawaii, the only party with unquestioned authority is the attorney general's office."

Roth said the attorney general should challenge actions by the trustees that were self-serving and appear to have violated their legal duties to the estate and its beneficiaries.

Roth said the most obvious case involves the hiring of the Washington, D.C.-based law firm that employs former Gov. John Waihee to lobby for repeal of a new tax law that allows the IRS to penalize individual trustees who illegally benefit from charitable assets.

"Previously, if the IRS were to determine that trustees received unreasonably high compensation, all they could do is pull the organization's tax-exempt status," Roth said. "Now they've got the ability to come in and require the excess amount be repaid, along with a penalty."

These so-called "intermediate sanctions" are a disadvantage to individual trustees, but are a major advantage for the estate, Roth said. Spending millions of the estate's dollars to lobby for repeal of this provision appears to be "a very serious breach of the trustees' fiduciary duty," he said.

Roth worries that a shortage of funds could eventually limit the state's ability to pursue a lawsuit against the estate.

"If Margery (Bronster) has the resources, I think she'll do it and I'm confident that the state would win. And I'm hoping the people of the state generally, and members of the Hawaiian community in particular, are going to make clear to elected officials and Cayetano in particular that the resources have to be found."

Beadie Kanahele Dawson, attorney for the group of Kamehameha students, parents and alumni known as Na Pua a Ke Ali'i Pauahi, cautioned that the investigation's timing is critical.

"We have young lives that are very much being affected. I don't think we can sit back and wait," Dawson said. "I find it impossible to believe that these students will have another whole year of stress, worry and fear.

"We can't afford to let these kids suffer while we investigate up the ying yang and study the situation endlessly," she said. "They need to have a learning environment where healthy exchange of views is possible, where the learning climate is at its best. This is an expediency the attorney general needs to take into consideration."

Margery Bronster

Position: Attorney general
Age: 39
Place of birth: New York City
Years in Hawaii: Nine
Previous experience: Partner, Carlsmith Ball Wichman Murray Case & Ichiki, Honolulu; associate, Shearman & Sterling, New York; specialized in commercial litigation, international business and securities law.
Education: Columbia University School of Law, law degree, 1982; Brown University, bachelor's degree with majors in history and Chinese language and literature, 1979
Personal: Married, with a 7-1/2-year-old daughter
Quote: "I believe that the public trust can be regained by honestly and fairly investigating and pursuing matters involving allegations of public corruption, cronyism and other wrongdoing." -- from her Senate confirmation hearing, 1995

Bishop Estate facing inquiry

Change could be simple

Peters: No one scrutinized more

Alumni group welcomes probe

Waihee disputes allegations

Roth: Fuse is lit...

Capitol View by Richard Borreca

The Report that Started It All

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