Special Edition - Saturday, August 9, 1997
Five prominent leaders of the native Hawaiian and legal communities today called on the state attorney general to investigate Bishop Estate trustees' management of Kamehameha Schools and the estate's financial assets.
If the trustees are found to have failed their fiduciary duty, the attorney general should sue to have them removed from office, they wrote in a commentary in today's Star-Bulletin.
The writers are Gladys Brandt, former principal of Kamehameha School for Girls and chairwoman of the University of Hawaii's Board of Regents; Walter Heen, retired state appeals court judge and a former state legislator and city councilman; Msgr. Charles Kekumano, chairman of the Queen Liliuokalani Estate and a retired Catholic priest; Samuel P. King, senior U.S. District Court judge; and Randall Roth, University of Hawaii law professor specializing in wills, trusts and taxes.
Attorney General Margery Bronster declined to comment until she can review the issues the critics raised. "I'll take a look and determine whether or not it's the appropriate use of resources," she said.
Selection of Bishop Estate trustees by Supreme Court justices and failure to hold trustees accountable after their appointments undermine the credibility of the estate and the Judiciary, said Brandt, Heen, Kekumano, King and Roth.
"The time has come to say 'no more,'" they said. "The web of relationships between the Judiciary and our beloved Kamehameha Schools/Bishop Estate has pushed two great institutions to an absolute critical point."
Brandt, Heen, Kekumano, King and Roth made these recommendations to ensure accountability from Bishop Estate trustees:
What they want
The state attorney general and Supreme Court justices should authorize a blue-ribbon panel of community leaders to develop written criteria and procedures to select future Bishop Estate trustees.
Limit the terms of trustees of charitable trusts.
The Legislature should replace the current statutory scheme for determining trustee compensation with a statute that provides for more reasonable compensation.
The Legislature should appoint and fund an independent watchdog to monitor the performance of all charitable trusts in Hawaii.
Bishop Estate trustees should draft and distribute a long-term strategic educational and financial plan with input from beneficiaries.
Kamehameha Schools/Bishop Estate spokeswoman Elisa Yadao, on behalf of the five Bishop Estate trustees, said the writers' claims cut to the very heart of their organization.
"Questions raised regarding the issue of accountability disregard the high degree of scrutiny under which this organization is placed," she said.
State Supreme Court justices could not be reached for comment.
In fact box: Bishop Estate is probably the most highly scrutinized organization in Hawaii, Yadao said.
The estate already undergoes a thorough and comprehensive annual review by an independent court master whose findings are open to the public. The estate's tax returns are released for public review. And the state attorney general has oversight over the trust, she said.
The call for accountability comes while an independent investigation is under way by court-appointed fact-finder Patrick Yim into allegations that trustees are micromanaging Kamehameha Schools. Yim is expected to provide the court with a report Aug. 29.
"The trustees would much rather be charged with working too hard and caring too much about the education of Hawaiian children, than with abdicating the responsibilities given to them under the will of Bernice Pauahi Bishop," Yadao said.
Frustration has built to a point where hundreds of Kamehameha Schools supporters staged a walk to Bishop Estate headquarters in May, requesting their concerns be heard.
Students, parents and alumni recently banded together to form Na Pua a Ke Ali'i Pauahi, and for the first time in the estate's 113-year history, are challenging trustees to hold themselves accountable for managing the schools and the estate's assets.
The school faculty also have spoken out anonymously after trustees repeatedly refused to meet with them to address their concerns.
"It's not our quest to remove the trustees," said Beadie Kanahele Dawson, attorney for Na Pua. "Our primary objective is to find quick and effective resolutions for the problems that are substantiated by the fact finder."
Only if a breach of fiduciary duty is found, "we will ask for the trustee or trustees removal," Dawson said.
Commissions paid to each of the trustees -- $843,000 to more than $900,000 per year for the past three years -- have detracted from the issue of whether they are capable and qualified to carry out the trust's provisions, said Brandt, Heen, Kekumano, King and Roth. "We think the more important issue is the credentials of the specific individuals who are being paid these large sums of money."
They praised the work of trustee Oswald Stender, but said trustees Richard S. H. Wong, Henry Peters, Gerard Jervis and Lokelani Lindsey "simply don't measure up to the job."
The estate's fiscal dealings show the failure of trustees to understand their fiduciary duty and act in the best interest of estate beneficiaries, the writers said. As examples, they said:
Trustees personally invested $2 million in a Texas methane gas deal in which the estate also invested $85 million. The deal can only hope for a recovery of $20 million, according to the estate's Texas lawyer, who called the investment a "disaster."
Trustee Peters negotiated for the other party in a multimillion-dollar golf course deal involving the Bishop Estate.
The writers also criticized an attempt to get former Gov. John Waihee appointed a Bishop Estate trustee and the estate's hiring of Yukio Takemoto, Waihee's former budget director. Takemoto left the state amid questions about investments of the $5 billion state Employees' Retirement System and a $52 million airport consulting contract that did not go out for competitive bids.
Isle leaders urge state probe
The complete article
Clay Jones Editorial Cartoon
Letter to the Editor
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