Trustees face state inquiry

Allegations of conflict of interest
prompt Cayetano to order an inquiry

By Mike Yuen

Spurred by concerns raised by four native Hawaiian leaders, Gov. Ben Cayetano has given Attorney General Margery Bronster one week to make a preliminary inquiry into the Bishop Estate to determine whether there is a need for a wider investigation.

Cayetano's directive comes as allegations of conflicts of interest, political deals, mismanagement of Kamehameha Schools and the estate's financial assets are casting a shadow over the $10 billion charitable trust that's mandated to educate native Hawaiian children.

The estate is also the largest private landowner in the state.

Bishop Estate Trustees

Bishop Estate trustees: Left to right, Richard Wong,
Henry Peters, Lokelani Lindsey, Oswald Stender and Gerard Jervis.

The governor acted three days after concerns were raised about the estate in a lengthy opinion piece published in the Star-Bulletin by Senior U.S. District Judge Samuel King, Monsignor Charles Kekumano, retired state Appellate Judge Walter Heen and former Kamehameha School for Girls Principal Gladys Brandt -- the four Hawaiian leaders mentioned by Cayetano -- and by University of Hawaii law Professor Randall Roth.

"It is not my choice as governor to interfere with a private trust," Cayetano said. But the trust is so big and it affects so many people -- both Hawaiian and non-Hawaiian -- that the examination by Bronster is warranted, he said.

His primary concern, Cayetano added, is the selection process for the five trustees and the appearance of politics in the selection "Whether it is real or a perception, it does hurt the trust. It certainly doesn't do the image of the Bishop Estate any good," Cayetano said.

Cayetano also wants to look at estate financial transactions in which trustees also made personal investments -- "self-dealing" -- in which they may have tried to benefit, too.

Cayetano also said he believes the annual compensation for estate trustees, now about $843,000 annually, is too high.

“I just hope that the leaders
of this community don't succumb to the
hysteria that's out there”

—Trustee Henry Peters

Trustee Henry Peters played down the controversy, telling the Star-Bulletin that trustees "have survived disagreements and criticisms" before and that the issues raised by the article are "nothing new."

House Hawaiian Affairs Chairman Ed Case (D, Manoa) applauded Cayetano for ordering the investigation. "The governor is being prudent," Case said. "We all -- Hawaiian and non-Hawaiian -- have an interest in a well-functioning Bishop Estate and Kamehameha Schools especially.

"I don't believe that the state government should micromanage the affairs of the Bishop Estate. But I do believe the state has an interest in being assured that those affairs are being conducted well because they have much impact on what the Bishop Estate does for the native Hawaiian community. And the affairs of the estate are intertwined with the state's efforts on behalf of native Hawaiians."

Like Cayetano, Case is concerned that having Hawaii Supreme Court justices select the trustees of "a large and powerful private entity" raises troubling political questions. "To me, it is not a Hawaiian issue," Case asserted. "I would be just as concerned if the Supreme Court appointed trustees of the Campbell Estate."

The report that started it all

Senate Hawaiian Affairs Co-Chairman Randy Iwase (D, Mililani) did not have an immediate reaction to the administration's inquiry.

But he said he is interested in learning what Bronster's recommendations might be.

Bronster said her investigation will go further than the regular reviews her office conducts of the probate court master's annual reports on the Bishop Estate.

As attorney general, she has the authority to examine whether any charitable trust is fulfilling its purpose. She can also can ask the Probate Court "to take action in appropriate circumstances," Bronster said.

In Saturday's article, the five authors argue that in at least 18 instances in the past 13 years, the justices have been called upon to decide cases involving Bishop Estate trustees they have selected.

They also allege that political dealing in which former Gov. John Waihee was supposedly involved has influenced the selection of trustees.

"I know what kind of pressures they must be under to come forward to make these kinds of allegations," Cayetano said.

"Those of us who understand the internal politics of the Hawaiian community -- the Hawaiian community is very reluctant to criticize its own -- know it was hard to ask the state to come in."

Cayetano added, "We did not conduct an investigation of the Bishop Estate prior to these people coming out because there was no indication that the estate needed an investigation."

The justices have the authority to make changes that would remove them from making the appointments of estate trustees, Cayetano said. But, he added, the problem then becomes who does it. If it is the governor, legislators or even the private sector, there will still be cries of political influence-peddling, he predicted.

Bishop Estate facing inquiry

Change could be simple

Peters: No one scrutinized more

Alumni group welcomes probe

Waihee disputes allegations

Roth: Fuse is lit...

Capitol View by Richard Borreca

The Report that Started It All

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Community]
[Info] [Letter to Editor] [Stylebook] [Feedback]

© 1997 Honolulu Star-Bulletin