Thursday, June 18, 1998

Developer Dowling
subpoenaed by

The attorney general
wants the records involving the
land sale to Bishop Estate, for
which Souki received a fee

By Rick Daysog


State Attorney General Margery Bronster has subpoenaed Maui developer Everett Dowling for records involving the sale of a 100-acre parcel to the Bishop Estate.

Bronster subpoenaed the records in her investigation into allegations of financial mismanagement and breaches of fiduciary duties by trustees of the multibillion-dollar estate.

Dowling paid state House Speaker Joseph Souki $132,000 in consulting fees in the $5.3 million Maui land deal, prompting Bronster to question whether the transaction served the best interests of the estate's beneficiaries.

Dowling yesterday confirmed the subpoena but declined to elaborate. But in letters to Honolulu daily newspapers, Dowling said he has always conducted his business in an honorable way, and defended Souki as a respected real estate broker.

A spokeswoman at the state attorney general's office would not confirm or deny the subpoena, citing department policy. A Bishop Estate spokesman was not available for comment.

The subpoena is one of more than 100 issued by the attorney general's office in its investigation of the estate, now in its 10th month. State investigators have said they could issue as many as 200 subpoenas by the time the investigation is completed.

Critics of the Bishop Estate have cited the fees paid to Souki as a conflict of interest.

Earlier this year, Souki (D, Maalaea) opposed a controversial bill to limit compensation paid to trustees of the Bishop Estate and other nonprofit charitable trusts in Hawaii.

After failing on an initial vote, public pressure prompted the House to pass the plan.

Souki had no comment yesterday. But previously, he has denied any wrongdoing.

Souki served as a consultant to Dowling's Kulamalu Limited Partnership, which sold the 100-acre property in Pukalani to the estate in December 1996.

The estate is building its permanent Maui campus at the site.

The project is scheduled for completion late next year.

State orders Bishop Estate
to fix stream diversion
on Big Island

By Rod Thompson


HONOKAA, Hawaii -- Angered by Bishop Estate's attempt to avoid responsibility for an illegal Big Island stream diversion and an irrigation project needed to fix the problem, the state Commission on Water Resource Management has ordered the estate to cooperate or face fines.

The commission yesterday voted 4-0 to find Bishop responsible for correcting the unpermitted diversion of Hakalaoa Stream into another stream, drying up Hakalaoa Falls into Waipio Valley.

The commission backed off from fining Bishop Estate several hundred thousand dollars, but left open the possibility of a fine.

It ordered the estate to restore the falls in late 1999, and urged the estate to cooperate financially on an overhaul of the Lower Hamakua Ditch, which runs below the falls.

The former Hamakua Sugar Co. created the illegal diversion in 1989 to prevent damage to a makeshift repair in the ditch.

The commission determined that Bishop Estate bought the problem when it bought the company's land in 1994.

Bishop Estate official Robert Lindsey failed to convince the commission that the state Department of Agriculture should be responsible for corrective action, including the proposed $9.6 million federal and state overhaul of the 88-year-old waterway.

"We're finding that you want to shuffle all responsibility to the state of Hawaii," said Commissioner Herbert "Monty" Richards.

Although part of the 24-mile-long system of ditches, tunnels, and flumes crosses Bishop Estate land before delivering water to state agricultural land, Lindsey said Bishop doesn't need the ditch water.

"Our position has always been that we don't need the ditch," Lindsey said.

That amazed commission officials, who had been trying since 1995 to get the estate to reveal its plans.

"You didn't disclose plans since 1995," said Richards.

"We're supposed to make decisions in the dark."

The commission ordered Bishop Estate to disclose its plans fully by Aug. 1.

When Commissioner Lawrence Miike asked if the estate was giving up claims on the ditch water forever, Lindsey said individual lessees might ask for water later.

In public testimony, farmer Zachary Gibson said Bishop Estate gets a percentage of revenues from its land leases.

Bishop Estate lawyer Bill Yuen said the estate isn't in the irrigation business.

"Don't tell me (spending money on the ditch) is a bad investment," Miike told Yuen.

State agriculture official Paul Matsuo said that at the end of a proposed 35-year lease of the ditch by Bishop to the state, the state would have to "remove" the ditch or hand ownership to Bishop Estate.

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