Honolulu Lite

by Charles Memminger

Friday, February 19, 1999

Right answer to
trustees a decade late

CIRCUIT Judge Kevin Chang demonstrated how easy it is to find ethical, highly qualified people to serve as Bishop Estate trustees and at the same time exposed the current method of trustee selection as nothing more than a way to dish out political plums to generally unqualified insiders.

Chang appointed five community figures to act as trustees in dealing with the Internal Revenue Service because the current trustees have obvious personal financial conflicts.

What a panel Chang has rounded up. They are: Constance Lau, treasurer of Hawaiian Elec-tric Industries Inc.; Francis Keala, former police chief; Ronald Libkuman, a respected attorney; Robert K.U. Kihune, retired Navy admiral; and David Coon, former head of Iolani School.

The appointment is devastating, not just because it shows how seriously close the charitable trust has come to squandering its cherished tax-exempt status, but because it shows that the political machine that has manipulated trustee appointments for so many years really cared more about political power than the long-term welfare of the estate and its beneficiaries.

I'm sure I'm not the only one whose reaction to Chang's heavy-weight appointments was: why weren't these people made real trustees long ago? They are all non-politicians with strong backgrounds in industry, education, asset management and discipline. If these five people had been Bishop Estate trustees for the past 10 years, would the estate be in the sorry shape it is in now? No way.

And it just makes the situation Bishop Estate finds itself in today all the sadder. This didn't have to happen. If it were not for the actions of the current trustees, there never would've been a massive IRS investigation, state criminal investigation, or a revolt on campus by student, faculty and parents.

BUT the stage was set when the trustees made themselves unaccountable to the beneficiaries and state let them get away with it. Once the annual probate court review became a hollow joke and the state attorney general stopped being the 'legal parent' of the trust as required by law, the trustees were free to do whatever they wanted. That apparently included picking up bar tabs for former state Sen. Milton Holt, arranging campaign debt payoffs for certain politicians and piggy-backing personally on estate investments.

Things would have to get very bad before they could get better. And they did. Finally, a handful of community leaders stepped forward to expose the trustees' shenanigans in the now famous 'Broken Trust' report. Gov. Ben Cayetano unleashed Attorney General Margerie Bronster to pursue a wide-ranging investigation. And the IRS finally realized that maybe everything was not hunky-dory at Bishop Estate.

Who knows how it will end? To the credit of trustees Oswald Stender and Gerard Jervis, they have carried on the fight for reform from the inside, just about assuring that they eventually will lose their jobs. They were the ones who urged Judge Chang to appoint a temporary panel to handle the IRS inquiry. And they voluntarily recused themselves from the matter.

Then Chang this week made his appointment of temporary trustees for the IRS matter, community leaders willing to work, not for the millions of dollars Bishop Estate appointees usually lavish upon themselves, but for an hourly wage. And by doing so, these five individuals remind us that there is a better future for Bishop Estate and the Kamehameha Schools. There are highly qualified local people who are willing to put aside their personal financial longings in order to serve with dignity on an extremely important mission. Why couldn't it have happened long ago?

Bishop Estate Archive

Charles Memminger, winner of
National Society of Newspaper Columnists
awards in 1994 and 1992, writes "Honolulu Lite"
Monday, Wednesday and Friday.
Write to him at the Honolulu Star-Bulletin,
P.O. Box 3080, Honolulu, 96802

or send E-mail to charley@nomayo.com or

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