Trustees investigate
Holt’s use of credit

Jervis and Stender say they were
shut out of Bishop Estate affairs

By Rick Daysog
Star-Bulletin

Bishop Estate trustees Gerard Jervis and Oswald Stender are investigating reports that estate employee Milton Holt ran up about $21,000 in charges on Bishop Estate credit cards at local hostess bars, restaurants and Las Vegas casinos.

Jervis, speaking through his attorney Ronald Sakamoto, said the expenditures are another instance where he and Stender were kept in the dark on some of the estate's affairs.

Jervis said he learned of Holt's transactions last week after they were disclosed by the state attorney general and reported by the media.

Jervis said the credit card charges underscore the need to appoint an administrator ad litem to cope with the attorney general's investigation into allegations of financial mismanagement and breaches of fiduciary duties by trustees of the $10 billion estate.

"The appointment will alleviate concerns that information is being withheld," Jervis said.

Last week, the attorney general's office filed documents showing that Holt, a former state senator and past assistant athletic director at Kamehameha Schools, used Bishop Estate credit cards to obtain cash advances at Las Vegas casinos and to charge thousands of dollars at local hostess bars between 1992 and 1997.

Holt, now a special projects manager at the estate, could not be reached for comment.

Bishop Estate trustee Lokelani Lindsey said Holt has repaid the estate for the charges. She declined further comment, saying it was a personnel matter.

The disclosure of Holt's spending comes as estate trustees are at odds over the disclosure of trust information. Jervis and Stender have filed court papers alleging that trustees Lindsey, Henry Peters and Richard Wong held back information from them and made decisions without consulting them. Wong, chairman of the board of trustees, has denied the allegation.

Critics of the Bishop Estate, meanwhile, believe Holt's credit card expenses may illustrate a lack of accountability at the estate. Randall Roth, local trust law expert and co-author of the "Broken Trust" article that prompted the state investigation, said the charges may indicate a lack of internal controls.

Although he said he was not aware of the particulars of Holt's situation, Roth believes that it's not the type of activity that's condoned by most private employers, let alone nonprofit charitable organizations.

"Milton Holt's use of a Bishop Estate credit card in Las Vegas casinos and local strip joints seems to symbolize an absence of accountability and a public-be-damned attitude," Roth said.

Toni Lee, president of Na Pua a Ke Ali'i Pauahi Inc., which has criticized trustees' management of Kamehameha Schools, said the disclosure of Holt's credit card expenses was "very embarrassing for the Kamehameha ohana."

"One doesn't go to Las Vegas and put it on the princess' (tab)," Lee said. "If this has been condoned by the Bishop Estate, how many more of these are out there?"

In a related matter, attorneys for Bishop Estate yesterday appealed Circuit Judge Kevin Chang's ruling ordering the estate to hand over IRS records sought by the attorney general's office.

The IRS has been conducting an audit of the estate and the records, known as information document requests, which would show if trustees got personal benefits or other payments at the expense of the estate, the state has argued.

The estate, which also sought a suspension of Chang's order, has said the IRS documents are private. Chang's order provided that the IRS documents be provided to the state under confidentiality.

The appeal was approved 3-2 by the estate's board. A hearing is scheduled for Friday.

Meanwhile, Colbert Matsumoto, court-appointed master of the Bishop Estate, said he has hired the Arthur Andersen accounting firm to conduct the financial and management audit of the estate's operations. The firm was chosen over two other large accounting companies.

Arthur Andersen's expenses will be paid by the estate and the firm will review the trust's operations, including its internal auditing controls, and will complete its report prior to the July 10 due-date of Matsumoto's final report.

Matsumoto and the estate have been at odds over his analysis of the estate's finances. In November, Matsumoto said that the estate faced losses and loss reserves of $264.1 million during its fiscal year ended June 30, 1994.

The estate, however, said its investment portfolio was financially sound and had outperformed the nation's stock and bond markets.

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