Editorials
Thursday, April 30, 1998

Legislature should
curb trustees’ pay

SOME of the strongest criticism of the Bishop Estate trustees has been directed at the huge annual commissions they have accepted, which in recent years have exceeded $800,000. Ironically, this is largely the result of legislation forcing the estate to sell leasehold houselots to homeowners, legislation that the trustees fought all the way to the U.S. Supreme Court but which dramatically increased the estate's income. Under current law, the trustees are entitled to as much as 2 percent of all estate income.

With compensation for the trustees so high, the jobs became political plums used to reward faithful supporters of the Democratic machine. This situation led to the abuses culminating in the public attacks on the trustees over the past year and the launching of an investigation by the state attorney general.

The Legislature is now considering measures to limit trustee pay. The House backed away from dealing directly with the issue and approved the creation of a task force to study compensation. The Senate supported a plan to use Internal Revenue Service guidelines to determine what would be reasonable.

Now members of Na Pua a Ke Alii (a group of Kamehameha Schools parents of students, alumni and faculty), the authors of the "Broken Trust" article critical of the trustees that was published in the Star-Bulletin, and Attorney General Margery Bronster have proposed that the trustees of the Bishop Estate and other charitable trusts receive no more than the state chief justice, who is currently paid $94,780 a year. Bronster said Governor Cayetano supports the proposal. Included in the plan is a provision for a trustee to seek higher compensation if a valid reason is offered. The Senate accepted this.

The merit of the proposal is that it sets a specific reference point -- the chief justice's salary -- to determine trustee compensation, rather than a vague reference to reasonableness. Most people probably would consider $94,000 reasonable for trustees of a charitable trust. We certainly do.

Bishop Estate Archive

Marcos withdraws

IMELDA Marcos' bid for the presidency of the Philippines was never credible and her explanation of the withdrawal of her candidacy was similarly hard to take seriously. The widow of the dictator Ferdinand Marcos said she was quitting to protest injustices inflicted on her and it was useless to run in an election that would be marred by cheating and violence.

But opinion polls showed her still trailing badly with the election two weeks away. The speculation in Manila is that she is negotiating with the leading candidates to trade her support for a pledge to keep her out of prison. She could be sentenced to a 12-year prison term on a graft conviction that is under appeal. She faces dozens of other charges stemming from the Marcos era.

Analysts think Mrs. Marcos might control up to 3 percent of the vote, which could be decisive in a close race. In the 1992 election, she received about 10 percent and might have affected the outcome. The front-runner in the current race, Vice President Joseph Estrada, was a supporter of the Marcos regime.

Mrs. Marcos also has offered to give hundreds of millions of dollars to victims of the Marcos regime while continuing to deny that the Marcos fortune, rumored to be in the billions, was stolen or that any crimes were committed by the regime. However, the ultimate disposition of that money, much of which was hidden abroad, remains murky.

Imelda Marcos continues to perform on the stage of Philippine politics but her role is alternately comic and pathetic. The main question now is whether the next president will pursue the charges against her for the crimes of the Marcos era.

Tax-collecting abuses

HORROR stories about unwarranted strong-arm tactics and other improprieties by the Internal Revenue Service have prompted a review of the agency's criminal investigation division. The review should not allow past abuses to go unpunished. It should include recommendations for disciplinary action, including criminal prosecution, for past misconduct by federal tax collectors and investigators as well as methods to restructure the agency to stop abuses.

Taxpayers have a right to be infuriated by Senate Finance Committee testimony that verified the most negative stereotypes of the IRS. Senators were told about one IRS manager for undercover programs who was allowed to make good on his theft of more than 20 government-owned Mercedes-Benzes, BMWs and other vehicles with a $20,000 settlement and two years' probation. An IRS manager accused of sexual harassment was made the agency's national director for equal employment opportunity and diversity until new allegations of sexual harassment arose; he still works for the IRS.

Taxpayers should be most irate about the menacing behavior of some IRS officials -- the agent who threatened to audit the returns of a state trooper who stopped him for drunk driving, an agent in Los Angeles who wrote a letter warning "you and your clients are next," or the agents who stormed a law-abiding Texas oil company shouting, "IRS! This business is under criminal investigation! Remove your hands from the keyboard and back away from the computers. And remember, we are armed!"

Yvonne DesJardins, chief of the agency's employee and labor relations section, testified that whistle blowers have had their careers destroyed and corrupt agents were promoted or allowed to retire while their offenses were covered up.

President Clinton has appointed former FBI and CIA Director William Webster to complete by the end of this year a review of the IRS' criminal investigation division's standards for enforcing laws, its relationship with senior managers, management practices and its effect on taxpayers' rights. A thorough overhaul of the agency may be needed to end these abuses.

---

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor