Monday, August 18, 1997

Trustees, justices’
replies unconvincing

THE chairman of the Board of Trustees of the Bishop Estate and the five justices of the Hawaii Supreme Court have responded to the remarkable attack on their behavior in the "Broken Trust" article published in the Star-Bulletin on Aug. 9. The article accused the trustees of mismanaging the estate's endowment, accepting excessive commissions and disrupting the operations of the Kamehameha Schools. It accused the justices of appointing trustees on a political basis and urged them to cease appointing the trustees.

Board chairman Richard S.H. Wong complains that "some critics...have gone into the gutter, making baseless and unprovable charges, sometimes resting on clearly incorrect assertions and second-hand sources with an ax to grind." The justices called the "Broken Trust" article a "factually inaccurate, distorted, irresponsible opinion piece" that tried "to erode public confidence in our integrity and professional competence."

Unfortunately for the respondents, their excuses look like feeble attempts to deflect criticism by the authors of that article, among whom are two retired judges -- one federal, one state -- the former principal of the Kamehameha School for Girls, the chairman of the Liliuokalani Trust and a University of Hawaii law professor who specializes in trusts. All are highly respected members of the community, four of Hawaiian blood. They are not known for making irresponsible charges. They said they were motivated by concern for the Kamehameha Schools, and we believe them.

Although some of the specific allegations in the article may be challenged, it is beyond dispute that some of the trustees' investment decisions are at a minimum highly questionable and may be grounds for charges that they have violated their fiduciary responsibilities. The fact that Governor Cayetano has ordered his attorney general to investigate the allegations is in itself evidence that they must be taken seriously.

Wong devotes much of his response to a recitation of the accomplishments of the trustees in making improvements to the Kamehameha Schools. This self-serving account fails to address the fact that alumni and parents of students are outraged by the trustees' recent practices in administering the schools, to the extent that they staged an unprecedented protest demonstration in May. Clearly the people who are most concerned with the Kamehameha Schools are far from satisfied with the trustees' policies and their heavy-handed practices.

The justices defend their decision to reject all of the selections of a panel they appointed in 1994 to screen candidates for trustee. They complain that the panel ignored their suggestion that it engage a national "head-hunting" firm and that it advertise the position. They deny that they rejected the list because then-Governor Waihee's name was not on it, saying "none of us could envision selecting him." Yet they wound up choosing Gerard Jervis, a known friend and associate of Waihee and not obviously better qualified than the panel's choices.

Neither response persuades us to alter our conclusions that:

All of the trustees except Oswald Stender have forfeited the trust of the Hawaiian community and should resign.

The justices should henceforth refuse to appoint the trustees because they have let the trusteeships become a reward for services to the political establishment and because of the conflict of interest involving cases brought before the court.

Security Council

THE United Nations Security Council essentially reflects the world at the close of World War II, with the victors holding the veto power. Meanwhile the United Nations has grown from 51 to 185 members. The New York Times reports that Bill Richardson, the U.S. representative at the U.N., proposes to expand the Security Council by adding five permanent members to the existing five -- the U.S., Russia, France, Britain and China. (There are also 10 members elected by the General Assembly for two-year terms.) The new permanent members would be Germany, Japan and three from the developing world -- presumably one each from Asia, Africa and Latin America.

After half a century, the Security Council needs to be updated. Richardson's plan is a promising approach.

Pacific island swindles

OFFICIALS of several Pacific island governments have been victimized by smooth-talking swindlers, a United Nations agency reports. The South Pacific office of the Economic and Social Commission for Asia and the Pacific says white-collar crime and fraud have reached epidemic proportions.

Here in Hawaii we're supposed to be more sophisticated. But it was only a few years ago that a fellow named Ronald Rewald fleeced a number of people who should have known better.

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