Wednesday, July 21, 1999

Grand jury hears
two testify about alleged
Bishop kickbacks

Cayetano: No vendetta

By Rick Daysog


Despite a federal court challenge by Bishop Estate trustee Henry Peters, an Oahu grand jury today went ahead with its investigation into an alleged kickback scheme involving estate land.

The secret panel today heard testimony from Bishop Estate land manager Paul Cathcart and Nathan Aipa, the estate's acting chief operating officer.

Peters was subpoenaed to testify today but declined to appear.

Yesterday, Peters went to federal court to block the grand jury's investigation, saying the attorney general's office, which is directing the grand jury, is seeking an improper criminal indictment.

A hearing on Peters' federal court complaint, which seeks a temporary restraining order against the state for seeking to indict him, has not been scheduled.

"While no system is perfect, the state's present case against me is abusing and manipulating the process," Peters said yesterday.

A spokeswoman for the attorney general's office declined comment.

Last November, an Oahu grand jury indicted Peters on a theft charge stemming from an alleged kickback scheme involving Bishop Estate land.

But the indictment was dismissed earlier this month by Circuit Judge Michael Town, who said the proceedings were tainted by the testimony of Richard Frunzi, a former attorney of Peters' co-defendant, Jeffrey Stone. Frunzi is serving a jail sentence for federal money laundering charges.

Peters, who was temporarily ousted from his $1 million-a-year post in May, will be the target of a permanent removal suit by the interim Bishop trustees.

The Internal Revenue Service has threatened to revoke the estate's tax-exempt status if the former board members are not removed on a permanent basis.

Governor insists there’s
no vendetta against Peters

Star-Bulletin staff


Gov. Ben Cayetano has brushed aside the claim by ousted Bishop Estate trustee Henry Peters that he is the victim of a political vendetta pushed by Cayetano and the state Democratic Party "machine."

Both Cayetano and Peters, a former House speaker, are Democrats.

"I feel very badly that Henry Peters is in the position he is in," Cayetano said yesterday. "Henry Peters finds himself in the position he's in because of his own actions -- not because of the actions of anyone else. He'll have his day in court."

Cayetano insisted there is "no vendetta against Henry Peters."

Peters, who also accused state investigators of conducting a "witch hunt," is the target of an Oahu grand jury inquiry into an alleged kickback scheme involving Bishop Estate land. Peters said yesterday he will not appear before the panel -- it was to meet today -- because it is on a "fishing expedition."

Peters and two others were subpoenaed to appear before the grand jury. The subpoenas were issued less than a month after state Circuit Judge Michael Town threw out criminal indictments against the trio.

Peters also claimed that Cayetano is trying to get "his supporters in the Judiciary" to undermine his right to a fair trial.

"Henry and I have been friends for a very, very long time," Cayetano said. "I guess the parting of the ways of our friendship came when the investigation started (in 1997), but I had to do my job."

He had to ask the attorney general's office to investigate the Bishop Estate's trustees because the facts warranted an inquiry, Cayetano said.

Bishop Estate Archive

E-mail to City Desk

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

© 1999 Honolulu Star-Bulletin