Thursday, April 9, 1998

Stender searches for
deals involving Lindsey,
estate vendors

In court papers, the fellow
Bishop Estate trustee asks for the
financial records of an Arizona company

By Rick Daysog


Bishop Estate trustee Oswald Stender is asking an Arizona company that did more than $3 million in business with Kamehameha Schools if it offered free mainland trips to fellow trustee Lokelani Lindsey.

Stender, in court papers yesterday, requested financial and expense records from Education Management Group Inc., which provides Kamehameha Schools with live video educational programs.

The filing is part of a petition by Stender and trustee Gerard Jervis seeking Lindsey's removal. They claimed Lindsey breached her fiduciary duties and was unfit to serve on the board of the charitable trust.

Stender's attorneys recently filed similar court papers seeking information from Xerox Corp., another major estate vendor.

Michael Green, an attorney for Lindsey, said Stender's request for EMG documents will turn up "absolutely zero."

Green said he did not know if Lindsey traveled at EMG's expense, but said he saw nothing wrong if EMG had covered expenses so Lindsey could examine services benefiting Kamehameha Schools.

Green said Lindsey unfairly has been made the scapegoat in the Bishop Estate controversy. As in many of the trust's affairs, all five trustees approved EMG's business with the estate, he said.

Green said he soon plans to file subpoenas seeking information about allegations of self-dealing by Stender and others involved in estate matters.

"These people in glass houses shouldn't be throwing big stones," Green said.

"They should wait before they speak."

Stender and Jervis' removal petition comes as the state attorney general is investigating allegations of financial mismanagement and breaches of fiduciary duties by individual trustees.

Retired Judge Patrick Yim, hired by the estate last year to investigate the controversy at Kamehameha Schools, questioned the high cost of EMG's programs in his August report.

Yim said the estate bought nearly $3.4 million in hardware and software from EMG and spends another $284,000 a year in leasing costs.

Arizona-based EMG, a division of media giant Viacom Inc., provides educational programs via satellite for Kamehameha Schools, one of its 4,000 client schools nationwide.

Bill limiting trustee pay
advances in Legislature

The Senate Ways and Means and
the Judiciary committees both approve
the measure unanimously

By Rick Daysog


Two key state Senate committees today passed an amended House measure calling for limits on compensation paid to trustees of the Bishop Estate and other nonprofit charitable trusts.

Legislature '98 The Senate Ways and Means and Judiciary committees unanimously approved the measure, which sets the annual compensation of charitable-trust board members at "reasonable" levels.

Those levels would be set by a probate judge.

Critics of Bishop Estate have argued that the state should limit trustees' pay, saying excessive compensation is a major factor in the ongoing controversy surrounding the estate.

In written testimony, Attorney General Margery Bronster said excessive compensation can become a trustee's primary motivation for service, rather than the interests of beneficiaries of the trust.

Bronster -- who is investigating allegations of financial mismanagement and breaches of fiduciary duty by individual Bishop Estate trustees -- said a lot of the money that should be spent on beneficiaries ends up going to trustees.

Under current law, trustees of charities are entitled to up to 2 percent of all income above $205,000. For its 1996 fiscal year, the estate paid each of its five trustees about $840,000 in commissions.

Bishop Estate trustee Henry Peters noted that the commissions of trustees are performance-based. Unlike many other endowments, Bishop Estate trustees actively manage the estate's investment portfolio, and their pay is based on the results of those investments.

"It seems clear that to determine what is fair requires an understanding of the complex compensation and legal issues involved, to be conducted in an environment free from the emotionally charged, politically motivated and media-hyped climate which currently exists," Peters said in written testimony.

The Senate's amended bill is likely headed for a House-Senate conference.

Attorney general blasts
Bishop Estate’s ads

Star-Bulletin staff


State Attorney General Margery Bronster takes exception to a Bishop Estate newspaper ad that said her office seeks information on current or prospective Kamehameha Schools students who applied from Jan. 1, 1996, to Jan. 1, 1998.

The ad said this could mean documents that include test scores, letters of recommendation, family income information, marital status of parents and other data.

Bronster denied her office is interested in personal or financial information about any family.

"The focus of this investigation is, and has always been, solely upon determining allegations of wrongdoing by individual trustees," Bronster said.

The ad said those who object to such information being turned over to Bronster should contact the estate.

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