Conflict over golf
club was close call
for Bishop Estate

Members who were once
teed off have 'kissed and made up'
with Bishop Estate

By Pete Pichaske
Phillips News Service

Saturday, August 30, 1997

WASHINGTON -- Of all the financial dealings the Bishop Estate has been involved in during the past several years, perhaps none is more intriguing than the Robert Trent Jones Golf Club in northern Virginia.

The exclusive 5-year-old club, perhaps the poshest golf facility in the Washington area, was meant to be a safe, secure, classy investment for the Hawaiian trust, the major developer behind it.

And it might yet turn out to be just that.

But the deal threatened to blow up in the trustees' faces last year when two club members filed a lawsuit accusing the estate, and particularly trustee Henry Peters, of fraud, breach of duty and conflict of interest.

Additional lawsuits were threatened, there was talk of bankruptcy filings, and angry members, who included some of Washington's most influential business and political leaders, were incensed over the way Bishop Estate was handling the situation.

The lawsuit was dropped earlier this year when both sides agreed to restructure the terms of the club's transfer to club members, the transaction at the heart of the lawsuit.

Under the new deal, members got a more favorable, long-term lease on the club with an option to buy. They also obtained protections for a portion of the property that many had feared might be developed with townhomes, as well as more say in how the club is run.

Bishop Estate, for its part, retained ownership, through a subsidiary, of a world-class golf club and an investment that no longer seems about to turn sour.

And both sides, who 12 months ago were condemning each other and warning of dire ramifications, now insist that all is well.

"Everything's worked out," said Washington attorney and club member Thomas Esslinger, who last year wrote Bishop Estate officials that they were headed for a "very public, very nasty court fight."

"They restructured everything to everyone's satisfaction," he added. "Everything's great."

"Everyone's kissed and made up," said Ed MacMahon, a northern Virginia attorney and club member.

"It's nothing more than a golf club now."

"It's been resolved rather amicably," said Peters in an interview this week with the Star-Bulletin.

"What we do have is a subsidiary that has ownership of the land under the golf club," he added. "The members have control. They have signed a long-term lease with our subsidiary, and it's an investment that is poised to give us good return."

Things weren't always so rosy.

The Robert Trent Jones Golf Club, located on the shores of Lake Manassas about an hour's drive south of Washington, has a reputation as one of the area's toniest golf clubs. Initiation fees are $50,000-$60,000, and its 400 members include such luminaries as former President George Bush, former Vice President Dan Quayle, Supreme Court Justice Sandra Day O'Connor and former Urban League director and presidential pal Vernon Jordan.

The Bishop Estate has been involved from the start.

Along with various partners, including course designer Robert Trent Jones, the trust purchased the lakeside property 11 years ago and developed it as a world-class golf course, which in the past has been host to the prestigious Presidents Cup golf tournament.

But financial troubles began in 1994, and the following year, club trustees agreed to buy the golf course and property for $33 million.

The seller was a company in which a Bishop Estate subsidiary is a partner.

The sale was engineered in part by Peters, who was a trustee of both the club and, of course, Bishop Estate.

In March, club members Robert Basham and Benjamin Stone sued Peters and others involved in the sale.

They alleged, among other things, that the price tag was far too big, members were given no details of the sale beforehand, and Peters, as a trustee of both the club and the Bishop Estate, had "an irreconcilable conflict of interest" and should not have been involved in the transaction.

The dispute appeared ready to escalate last summer, as members talked of bankruptcy and more lawsuits, and the Bishop Estate issued a statement warning that the suit "can have a seriously detrimental effect on the same golf club the plaintiffs contend they are trying to protect."

But attorneys and members say no other suits were filed, and in January, after lengthy negotiations between the two sides, the suit was quietly dropped.

Everyone involved appears eager now to put the unseemly headlines and accusations behind them and reluctant to discuss the incident or details of the settlement.

"You have to be patient with Bishop Estate ... but it all worked out fine," said Basham, the lawsuit's plaintiff and president of the Outback Steakhouse Inc. chain of restaurants. "The club is doing very well now, and members seem happy."

Thomas Patton, Basham's attorney, said the restructured deal eased the debt burden on members and included a negotiated price tag that is "more favorable to the club members, more realistic."

"We've got a long-term lease/

purchase agreement priced more favorably to the club," Patton added.

Peters, like others, did not discuss specifics of the settlement but said he was optimistic the golf club ultimately would prove to be a good investment for the Bishop Estate.

"For the long run, I expect to do exceedingly well there," he said.

Peters said the conflict-of-interest charges leveled at him were part of the "aspersions flying all over the room" that come with lawsuits, and noted that the charges disappeared when the suit was dismissed.

His attorney here, William Causey, said there was no conflict because Peters recused himself from taking part in the 1995 transaction as a Bishop trustee, instead acting on behalf of the club.

Yim needs more time

He may take another 45 days
to interview witnesses before
writing his final report

By Debra Barayuga

A fact-finder appointed by the courts to conduct an inquiry into the controversy surrounding Kamehameha Schools may take an additional 45 days before concluding interviews with witnesses.

"Any judgment rendered at this time would be premature, unwise and unfair," said retired Judge Patrick K.S.L. Yim in his first report to the court, filed yesterday.

He assured the court that he is proceeding "as expeditiously as possible," and recommended another progress report be submitted to the court by Oct. 31. The report did not indicate when the final report would be completed.

Yim appears to be proceeding with great thoroughness and care, said Elisa Yadao, Bishop Estate spokeswoman. "We continue to have great confidence in the work that Judge Yim is doing and are very hopeful at the end of this process there'll be some clear direction to resolve these issues in a positive and constructive fashion."

Critics of Bishop Estate, however, were disappointed by the report's contents, saying Yim needs to be more proactive.

"We just don't feel he's put out enough of an effort to get out there and investigate," said Beadie Dawson, attorney for Na Pua a Ke Alii Pauahi, a group of nearly 2,000 Kamehameha students, parents and alumni. "He can't just sit there and wait for people to come to him -- I don't believe that's what the court intended."

Yim appears to be very involved in conducting his regular mediation schedule and is putting only a "part-time effort" into the fact-finding, she said.

According to his report, Yim has conducted 60 interviews since July 22 and has scheduled about 30 more. He is also meeting with witnesses on the neighbor islands. Yim also has learned of others who have not yet come forward who may need to be contacted.

He also is going over about 900 questionnaires received that were sent to all Kamehameha Schools administrators, teachers, employees, parents and students. He indicated he may need to conduct follow-up interviews with those respondents.

The court, in appointing Yim as fact-finder, gave him authority to retain the services and expertise of professionals as needed.

So far, Yim has only hired people from his firm Dispute Prevention & Resolution Inc. -- specializing in alternative dispute resolution -- and they apparently are not investigators, Dawson said.

Yim hired the firm's president and executive director, Keith Hunter, to supervise the fact-finding process and Kelly Bryant, case manager, as his executive assistant. He indicated in the report that he was expecting to retain the services of independent professionals and experts.

Besides the questionnaire, Yim has urged individuals with information relevant to the controversy to come forward in an Aug. 17 newspaper ad and a July 18 letter to members of the Kamehameha Schools ohana.

Toni Lee, president of Na Pua, said members are concerned about how long the investigation is taking and are anxious to see results.

Yim in eye of
Bishop hurricane

Judge Yim's relation by marriage to
Bishop trustee Henry Peters raises questions
of bias, but all agree he's qualified for the task

By Jim Witty

RETIRED Judge Patrick Yim, whose status report on his fact-finding probe into Bishop Estate trustees' management of Kamehameha Schools was released yesterday, is described as a talented jurist, an experienced arbitrator, a straight shooter.

But his disclosure to the court last June that he's related to Bishop Estate trustee Henry Peters through marriage raised critics' eyebrows and a question of propriety.

Yim voluntarily disclosed that he is a nephew of Peters' stepmother, Bernice, before Circuit Judge Colleen Hirai appointed him as sole investigator to gather information on the board's conduct.

"His disclosure indicated that he had very extensive workings and knowledge with the trustees, which is understandable," said Beadie Dawson, attorney for Na Pua a Ke Alii Pauahi, an organization of Kamehameha Schools students, parents and alumni. "But more importantly, he was the nephew (of Peters' stepmother). We said as much as we feel he's well qualified to do the job, we think that these biases prevent him from producing a report with credibility. He is burdened by the appearance of bias."

Trustees disagree.

"We don't view it as a conflict," said Bishop Estate spokeswoman Elisa Yadao. "It's more important to judge by conduct and reputation, and certainly Judge Yim has a fine reputation."

At the time, Na Pua pressed the court to appoint a panel of experts to serve alongside Yim "to balance out any real or perceived bias," Dawson said.

Hirai didn't agree and appointed Yim the sole fact-finder.

But Hirai did go along with Na Pua in opening the process to public scrutiny. Bishop Estate trustees, who had initially asked the court to appoint a fact-finder, wanted the report released only to the trustees and their counsel.

Neither Yim nor Hirai could be reached for comment.

Despite Na Pua's misgivings, members have encouraged people with information to give it to Yim, who is compelled to maintain their confidentiality.

"It would be pointless for us to sit in the background and say he's biased," said Dawson. "Hey fellas, we're probably never going to have another fact-finder for another 100 years. So go. We'll look at his report and worry about that later. But let's help him."

Yim's probe was sparked by charges that trustees were micromanaging school affairs, usurping the authority of school President Michael Chun and had caused "ruptured human relations" on campus. Dawson also said people have come forward about alleged threats, coercion and censorship, issues she believes transcend whether trustees micromanaged or not.

Yim's probe is independent of an investigation being conducted by the state attorney general into allegations of mismanagement by Bishop Estate trustees, but could be used to supplement the broader inquiry.

Yim's $250-per-hour fee is being paid by Bishop Estate.

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