Thursday, November 5, 1998

Judge orders new
hearing on bid to
oust trustees

The attorneys had asked
for a hearing so the Bishop Estate
trustees could have their say

By Rick Daysog


Attorney General Margery Bronster's request to temporarily remove Bishop Estate's five trustees will get another hearing where trustees can present their sides.

Probate Judge Colleen Hirai yesterday ordered an evidentiary hearing on Bronster's motion for removal. It will be limited to information covered in the highly critical review of the trust's operations for its 1994-1996 fiscal years by the estate's special master, Colbert Matsumoto.

Hirai said attorneys will not be able to conduct discovery proceedings for the hearing.

Last Friday, she had heard arguments from Bronster and the trustees' attorney on Bronster's removal motion, but made no ruling.

While Hirai did not set a date for the new hearing, she has scheduled a Nov. 13 status conference with Bronster's office and trustees' lawyers.

If all sides can't agree on a date, the judge said she would set the trial date.

In a related matter, Hirai indicated that she is taking a close look at an Oct. 16 request by trustees Oswald Stender and Gerard Jervis to appoint an administrator ad litem.

Hirai yesterday asked Matsumoto for his recommendations on Jervis' and Stender's request, which alleged that trustees have a conflict of interest in addressing Bronster's removal petitions and a pending audit of the trust by the Internal Revenue Service.

A previous petition for an appointment of an administrator ad litem was denied by Hirai earlier this year.

Hirai's request came after Matsumoto on Monday said trustees may have a conflict of interest in addressing the IRS probe and called for the appointment of a panel of three administrators to monitor and respond to the audit.

Matsumoto's motion was supported by Stender and Jervis.

On the issue of the trustees' interim removal, Bronster argued in September that board members took excessive compensation, jeopardized the charitable organization's tax-exempt status and denied educational benefits to thousands of native Hawaiians.

Bronster -- based on information in Matsumoto's masters report -- also criticized trustees for accumulating $350 million in estate income that should have been spent on the estate-run Kamehameha Schools. The apparent withholding violated previous court orders, as well as the will of the estate's founder, Bernice Pauahi Bishop, she argued.

Bronster is also seeking permanent removal of at least three trustees, but that petition won't likely go to trial until next year.

Yesterday, a spokeswoman for Bronster said the attorney general was encouraged that the judge has not ruled out the state's interim removal request, noting that Hirai's decision reflects "an abundance of caution."

But the attorney general's office also had questions about the effect of any potential delays on the students of Kamehameha Schools.

An estate attorney also agreed with Hirai's decision, saying trustees want to refute the allegations.

William McCorriston, a Bishop Estate lawyer, said the trust is well-run and is enjoying its best-ever financial health. He has disagreed with Bronster's and Matsumoto's characterization of the accumulated income issue, saying trustees were being prudent by retaining income for expansion.

McCorriston added that interim removal of a trustee is extremely rare and requires the petitioner to show that there is an extraordinary harm to the trust.

"I think the trustees all want the opportunity to state their case," he said.

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