Selection of
trustees explored

Supreme Court justices
give up the job, opening the
process to new ideas

By Rick Daysog

Future trustees of Kamehameha Schools/Bishop Estate may be selected by a panel of native Hawaiian community leaders and school-related organizations.

That is one of several proposals under discussion following the state Supreme Court's decision, announced Saturday, to end its century-old practice of selecting the trustees.

Toni Lee, president of Na Pua a Ke Ali'i Pauahi, which represents some 2,600 Kamehameha Schools students, parents, alumni and faculty members, believes that Na Pua and other native Hawaiian groups should have a bigger say in trustee selection.

She said Na Pua should serve as a "clearing house" for the trustee selection process, given that it represents the interests of those who benefit from the will of Bernice Pauahi Bishop: students and alumni.

Under this scenario, Na Pua would screen potential candidates and present a list of about six prospects to the wider native Hawaiian community for discussion or confirmation.

"We would like to be in the core of the selection process," Lee said. "We would like to be in the loop."

Na Pua representatives outlined their proposal in an all-day meeting with the Supreme Court justices and native Hawaiian community groups Dec. 13 at Ward Warehouse.

While Na Pua and other native Hawaiian community leaders generally agreed that the justices should continue selecting trustees as spelled out in the will of Bernice Pauahi Bishop, several alternatives have emerged as a result of the meeting:

The Council of Hawaiian Organizations proposed establishing a panel of native Hawaiian groups that could initiate a search process and recommend candidates, said member Winona Rubin. The panel then would turn over their nominees to the state courts, which would approve nominations, said Rubin, who co-authored last month's "Broken Trust II" essay that criticized trustees' management of Kamehameha Schools.

Echoing the council's proposal, four of five Supreme Court justices said they favored creating a committee of native Hawaiian community leaders to define and implement a new trustee selection process. That committee would establish the length of the trustees' terms, set up the selection criteria, evaluate applicants and select a "short list" of candidates, the justices said.

Roy Benham, president of the Kamehameha Alumni Association, Oahu region, said he proposed creating a panel of native Hawaiians and non-Hawaiians that would select trustees.

A native Hawaiian political group, Hui Kalai'aina, suggested using the Office of Hawaiian Affairs as a vehicle for the greater native Hawaiian community to deliver and receive input on the trustees selection process.

The Hawaiian Homestead Council, headed by former OHA Trustee Kamaki Kanahele, was strongly against the Supreme Court's withdrawal from the trustee selection process.

Supreme Court justices have defended their selection of the trustees for years, saying they were acting as individuals and not in their official capacities as state judges. But on Saturday, four of the court's five justices -- Chief Justice Ronald Moon, Steven Levinson, Mario Ramil and Paula Nakayama -- released a three-page statement announcing they would no longer select trustees of the 113-year-old Bishop Estate.

Saying they "agonized" over the issue but that their primary duty is to uphold the integrity of the Judiciary, they transferred the selection process to the probate level of the Circuit Court, which oversees the trust. But they left open the possibility of future judges taking part in the selection process.

"We believe that continuing to exercise the powers of appointment granted by the Princess will further promote a climate of distrust and cynicism and, more particularly, will undermine the trust that people have in the Judiciary," the four justices wrote.

The lone dissenter, Justice Robert Klein, called the move "unwise" and "untimely." He believes it may lead to future changes in the will and "constitutes a major, unprecedented and uncharted leap of blind faith."

"I believe public perception of the judiciary has been adversely affected because our trustee selections have not earned the respect of the community they were chosen to serve, and not because the vast majority of people perceive us to have an ethical dilemma," Klein wrote.

Several native Hawaiian leaders said they agree with Klein's assessment.

William Richardson, a former Hawaii Supreme Court Chief Justice and Bishop Estate trustee, said he was disappointed that the justices were changing the terms of the will and were doing away with more than 100 years of tradition in selecting trustees.

"It's a sad day for Hawaiians," he said yesterday.

Kanahele, of the Hawaiian Homestead Council, said he will urge all trustees to defend the will of Bernice Pauahi Bishop.

While he would not discuss specifics, he suggested trustees would be breaching their fiduciary duties if they didn't act to preserve the will.

The estate, meanwhile, said it was surprised and disappointed by the Supreme Court decision. A spokesman said trustees will review their options.

Critics of the Bishop Estate have long argued that the Supreme Court role in selecting trustees undermined the credibility of both institutions.

The five authors of the original "Broken Trust" article -- University of Hawaii law professor Randall Roth, Senior Federal District Judge Samuel King, Msgr. Charles Kekumano, retired state Appeals Judge Walter Heen and Gladys Brandt, former Principal of Kamehameha Schools for Girls -- alleged that the so-called "web of relationships" between the judiciary and the estate created massive conflicts of interests.

"Broken Trust," published in the Star-Bulletin in August, charged that the administration of former Gov. John Waihee politicized the selection of state judges and that of the Supreme Court's selection of trustees.

Prompted by the "Broken Trust" essay, Gov. Ben Cayetano ordered state Attorney General Margery Bronster to open an investigation into the trust. Among his main concerns, Cayetano said he was worried about the appearance of politics in the trustee selection process.

He could not be reached for comment yesterday but Bronster, citing the recent public outcry, said she believes that "there are problems inherent" with justices picking trustees.

"If I was in a similar situation, I would have come to the same conclusion," Bronster said of the high court's withdrawal.

Heen commended the Supreme Court for stepping down from the selection process, saying the move "creates an opportunity" for native Hawaiians to assert a greater role in selecting trustees. But he said it is ironic that it took the current controversy for them to realize the problem.

He believes that the justices deserve some blame, since they selected many of today's trustees.

Desmond Byrne, longtime Bishop Estate watcher and chair of Common Cause Hawaii, said the justices have put less effort into selecting Bishop Estate trustees than state and county officials have put into appointing the University of Hawaii president, the Honolulu police chief or the superintendent of schools.

"(There) they get consultants, they get criteria, they get all kinds of things. On the other hand, what the justices have been doing is totally amateurish and that's why the estate is in the kinds of trouble it is in today," Byrne said.

"Past and present justices have done a lousy job of selecting trustees."

The justices declined to comment beyond their Saturday statement. Moon did not return telephone calls to his home.

For some, the justices' role in selecting the trustees may expose them to liability.

Under the "negligent-hire" theory, the justices, acting as individuals, could be subject to a lawsuit if a court found that justices selected trustees based on political considerations and the selections hurt the estate or beneficiaries, said Byrne and Roth.

Roth added that he is closely watching recent demands by trustees Oswald Stender and Gerard Jervis for Trustee Lokelani Lindsey to resign.

Both Stender and Jervis argued that Lindsey was "unfit to serve," meaning that the Supreme Court never should have appointed her since she's not qualified, Roth said.

Lindsey said she will not resign and dismissed Stender's and Jervis' charges as groundless.

"Unquestionably, the justices have some personal exposure on a negligent-hire theory if it's determined that one or more of their choices has done damage to the charitable trust," Roth said.

The justices' ruling

What four of the five Supreme Court justices said:

"We believe that continuing to exercise the powers of appointment granted by the Princess will further promote a climate of distrust and cynicism and, more particularly, will undermine the trust that people must have in the Judiciary."

"We do not, however, believe that our decision will alter the major focus of the Princess' will. Her instruction to educate the children remains as clear today as it was when she wrote the document ..."

"Supreme Court justices no longer have original probate jurisdiction, and judges are governed by a code of conduct that recognizes the value of charitable activity but, nevertheless, prohibits judges from engaging in charitable activities that are likely to cause conflicts between private and official acts."

"We believe that a panel or committee of representatives of respected indigenous Hawaiian organizations should be delegated the authority to define and implement the trustee selection process."

"Because the powers of appointment are exercised as individuals, we cannot bind future justices to our decision. Future justices may revisit the issue."

A dissenting view

Justice Robert Klein offered this dissenting view:

As long as there exists a reasonable possibility of fulfilling her intent, we must strive to do so."

"Any voluntary change to Princess Pauahi's will may very well serve as a precedent for further deterioration of the will."

By withdrawing from the process, my fellow justices have removed themselves from an important dialogue with the Hawaiian community just when talks have turned productive."

The Commission on Judicial Conduct "concluded that our involvement in the appointment process was not improper ..."

"I believe public perception of the judiciary has been adversely affected because our trustee selections have not earned the respect of the community they were chosen to serve and not because the vast majority of people perceive us to have an ethical dilemma."

Hilo resident
sues KS/BE trustees

By Rick Daysog

A Hilo resident today filed a class-action suit in federal court against trustees of Kamehameha Schools/Bishop Estate, saying four of the five board members misused and mismanaged trust assets.

Elizabeth Simeona Burgert, a retiree and grandmother of two current Kamehameha Schools students, alleged that trustees Richard Wong, Lokelani Lindsey, Henry Peters and Gerard Jervis "engaged in a course of misconduct that resulted in the dissipation of trust assets and loss of trust income at the expense of the trust and its beneficiaries."

The suit, which seeks damages from the individual trustees but not from the estate's assets, also said the four trustees mismanaged and commingled federal funds slated for native Hawaiian educational and health care programs.

Trustee Oswald Stender also was named in the complaint, but the suit does not seek damages from him.

The estate said it has not had a chance to review the complaint and had no immediate comment.

"This is not an action to take money out of the estate," said Steven Keller, one of Burgert's lawyers. Keller's firm, Burlingame, Calif.-based Cotchett & Pitre, is handling the suit with Maui attorney James Krueger. "It's an action to bring money back into the estate."

Plaintiffs in the suit include local residents Francine Dawson, Belinda Burgert Borangasser and Shirley Kala.

Burgert said she sued out of concern the estate was not spending enough money on educating Hawaiian children and was losing money on speculative investments and litigation.

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