ON Tuesday I described how the beneficiaries of the Estate of James Campbell have chosen trustees with strong business success records. This contrasts with the tendency of our state Supreme Court justices to turn to politicians to run the even-bigger Kamehameha Schools/Bishop Estate, one of the biggest trusts in America. How Campbell,
Bishop estates differCampbell trustees focus on generating income for Campbell's beneficiaries and enhancing the overall value of the trust.
KS/BE trustees are charged to do the same, plus spend their income wisely for the education of Hawaiian children.
One politician on the KS/BE board seems reasonable. A board majority of politicians smells of a spoils system.
It is the evidence of a fully developed spoils system that is under attack by the five authors of "Broken Trust" who seek reform of KS/BE.
This Fabulous Five of four Hawaiian leaders plus a University of Hawaii law professor specializing in estate law pulled together pieces of evidence to support their contention. They show questionable linkages among the Judicial Selection Commission, former Gov. John Waihee, who nominated all five present members of the Supreme Court, these justices who named three of the five present trustees and challengeable operations of the estate itself.
A community-wide sense that the critics are on the right track explains the power of "Broken Trust." To me the night-and-day contrast with Campbell Estate operations reinforces it.
Why would the justices pass over such a strong finalist as Warren Luke, president and CEO of Hawaii National Bank, a director of the San Francisco Federal Reserve Bank, a director of the Wo International Center at Punahou and an overseer of the Harvard Groduate School of Business Administration, to choose a pal of former Governor Waihee?
There is no magic formula as to how best to manage KS/BE. But American Law Institute standards call on estate trustees nationwide to be prudent investors, loyal to their trust above all else, and suggest failure to delegate authority can be a major shortcoming.
Trustee Oswald Stender in 1993 wrote a fanciful vision of how KS/BE might be on its 150th anniversary in 2034. He saw its wealth immensely expanded, its educational outreach so successful that "Hawaiians are the most well-educated, culturally rich, socially responsible and successful people in the world today."
He saw the present five trustees expanded to a blue ribbon international panel to set policy and paid by monthly meetings attended.
Under their oversight, KS/BE would have a much broader educational program than now and other separate operating groups for (1) asset management, (2) development of for-profit income sources and (3) private charitable fund-raising to achieve educational goals and broader Hawaiian community goals not permissible under strict Internal Revenue Service guidelines for tax-exempt income.
THIS got a very chilly reception from his fellow board members. It very well might have been shown to have numerous flaws. But the goal of reaching out to the best possible talent to achieve the best possible results for the Hawaiian people is valid.
Such a goal is unlikely to be attained if the estate is kept under spoils system management, in which trustees who lack broad private management qualifications for their jobs try to justify high pay by micro-managing their operations.
Bishop Estate Archive