Wednesday, September 9, 1998


The state could file a request
to remove several or all five
Bishop Estate trustees within days

By Rick Daysog


Attorney General Margery Bronster will seek the removal of several Bishop Estate trustees, and will likely call for the appointment of interim trustees or a receiver to take over operations of the multibillion-dollar estate.

The state is drafting a petition seeking the temporary removal of all or several of the five trustees, and could file the petition in state probate court within days, sources familiar with the attorney general's investigation said.

The state also may seek the permanent removal of several trustees.

The proposed removal petition comes more than a year after Bronster launched her investigation into allegations that Bishop Estate trustees mismanaged trust assets, breached their fiduciary duties and manipulated the Kamehameha Schools student admission process.

Bronster declined comment last night, and an estate spokesman could not be reached for immediate response. One Bishop Estate trustee, Henry Peters, yesterday denounced Bronster's investigation as politically motivated and damaging to the affairs of the estate and the estate-run Kamehameha Schools.

Sources said that the state may give a road map of its legal strategy in its response to court-appointed estate master Colbert Matsumoto's critical review of trust operations for the 1994-1996 fiscal years. The attorney general's and estate's responses to the master's report were due today.

Matsumoto and independent auditor Arthur Andersen, in reports filed in probate court last month, criticized the estate's investment returns as subpar and faulted its management system for creating a "perceived leadership vacuum."

Deputy Attorney General Kevin Wakayama, who has represented the state's interests in probate court, declined comment this morning. But in the past, Wakayama has said that the latest master's report lays out operational problems that call for dramatic changes at the estate.

Under trustee removal proceedings, the state would ask the probate court to appoint interim trustees who could serve as substitutes. The state also could seek the appointment of a receiver that would manage the daily operations of the estate.

Local trust-law expert Randall Roth -- a vocal critic of the Bishop Estate's trustees - said it is no surprise that Bronster is seeking the removal of trustees given the serious charges raised by Matsumoto's report.

"If the trustees haven't figured it out now, they're going to figure out soon that their days are numbered," said Roth, co-author of the "Broken Trust" article that prompted Gov. Ben Cayetano to order Bronster's investigation.

Today's disclosure comes after trustee Peters filed court papers seeking to disqualify Bronster as a legal guardian, or parens patriae, of the trust.

In a harshly worded, 14-page petition filed in state Circuit Court yesterday, Peters alleged that Bronster's role as parens patriae is in conflict with her role as head of the investigation of Bishop Estate trustees.

According to Peters, Bronster stretched out the investigation to coincide with this year's election season to boost the campaign efforts of Cayetano and divert public attention from the state's economic woes.

The drawn-out investigation has disrupted the lives of students, their family members and staffers at the Kapalama Heights campus, he said.

Peters' petition was filed on his own behalf and not by the majority of the estate's board. One trustee, Oswald Stender, strongly opposed Peter's petition, saying it would result in no one representing the interests of beneficiaries.

A hearing on Peters' petition is scheduled for Oct. 23.

Bronster yesterday said that Peters is resorting to personal attacks to distract the public from serious issues involving the estate.

She said it is the estate and not her office that is responsible for prolonging the investigation. By filing numerous and repetitive appeals and court motions, Bishop Estate's own lawyers have sought to delay the state's inquiry, the state has argued.

"Had they responded in a timely way to everything, this thing would have been done long before there was an election on the horizon," Bronster said.

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