Hawaii’s World

By A.A. Smyser

Tuesday, August 25, 1998

Roth: Schools should
get $500 million

UNIVERSITY of Hawaii law professor Randall W. Roth's support of Linda Lingle tells me he is sure state government action to clean up Bishop Estate management will continues if she is elected governor.

With some personal wrench, it takes him away from his role as the non-partisan and unpaid producer/host of "Price of Paradise" Sunday morning radio shows to elevate the level of dialogue on key community issues.

Roth was one of five authors of "Broken Trust," the treatise the Star-Bulletin published just over a year ago that brought Bishop Estate management shenanigans out into the open. It aroused the public as never before. Interestingly, a co-author, Walter Heen, has become state Democratic Party chairman, backing Governor Cayetano's re-election.

Roth did a solo radio show on the Bishop Estate on Aug. 9, one year after the "Broken Trust" article. If Bishop Estate trustees were listening, they should be struck by fear, particularly now that Linda Lingle seems commited to be as tough as Cayetano if she gets the chance. Roth suggests their delaying tactics may only bring higher surcharges against their personal wealth.

Roth thinks they could be assessed for the estate's legal costs -- $1 million a year just to the McCorriston firm, and rising -- if the Hawaii court overseeing the Bishop trust decides their tactics have not been in the best interest of the beneficiaries.

He also thinks they could be assessed personally for the $1 million spent to lobby Congress (unsuccessfully) against the Intermediate Sanctions Law that benefits the estate but could make them liable individually.

And who knows what the IRS might do with the law as a club if it finds any of the trustees have acted against the best interest of the trust? The law's intention is to give IRS the chance to penalize trustees individually rather than take reprisal against a trust as an entity. To do the latter could cost the Kamehameha Schools/Bishop Estate its tax exempt status.

At the UH Law School, Roth teaches trust law. He knows his stuff and has been asked to lecture to mainland groups. He has been the closest possible observer of developments in the state attorney general's investigation and the sweepingly critical findings and recommendations of the master appointed by the Circuit Court to review KS/BE's 1994-96 operations.

Roth reads the master's report and the defensive comments from the three-person trustee majority to mean KS/BE should be spending closer to $500 million a year on its schools for Hawaiian children than the $100 million it has been spending -- a point I'll explain.

The master does not suggest it, but Roth personally thinks some of the wrong calls made by the trustees could go beyond bumbling and mediocrity into an area where criminal sanctions could be invoked.

He says the court could act on its own to implement recommendations by the master but probably will wait until Attorney General Margery Bronster submits the state's recommendations.

TRUSTEES will be removed, he is sure, maybe all five, though he thinks trustee Oswald Stender, an early critic, is in a class apart. Civil assessments will be made against them, he is sure, but not necessarily at a flat rate across the board.

And one day KS/BE may move toward a management system closer to that of the giant foundations at Harvard and Yale with a single CEO reporting to a policy-setting board and a goal to pay out to its schools 5 percent of the value of its assets each year. KS/BE equals them in size and Roth calls it possibly the most important single entity in Hawaii.

If KS/BE's assets are really $10 billion, as seems likely, that would indicate that, after operating expenses, a $500 million-a-year payout to the schools would be reasonable -- a five-fold increase from the present level of expenditure!

A.A. Smyser is the contributing editor
and former editor of the the Star-Bulletin
His column runs Tuesday and Thursday.

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
[Stylebook] [Feedback]

© 1998 Honolulu Star-Bulletin