View Point

By Henry H. Peters

Saturday, August 28, 1999

Pauahi’s will
must stand

IN his Aug. 13 "View Point" column, Robert Midkiff simply reiterated the "(Oswald) Stender Plan." In essence, Midkiff said that Bishop Estate must be converted to a nonprofit corporation similar to major educational institutions in America.

Yet to do so would break the wishes of Ke Alii Pauahi Bishop. In her will, Pauahi decided that a trust was appropriate.

Midkiff used Harvard, Yale and Stanford universities, and Punahou and Iolani locally, as examples to follow. However, these mainland campuses and Punahou existed during Pauahi's lifetime and that of her husband, Charles R. Bishop, but she did not use them as an example of what she wanted for her own trust.

Bishop Estate is unlike any of those institutions. It is a Hawaiian land trust founded by one person. It does not seek donations from alumni, as is the case with Harvard, Yale, Stanford, Punahou and Iolani.

Furthermore, a voluntary board lends itself best to the sale of land and investments in stocks and bonds.

In fact, our founder did not want the lands to be sold but retained. Mr. Bishop commented on the land ownership issue a number of times:

Bullet "The estate cannot have any better security than the real estate it owns."
Bullet "My own feeling is strongly against selling real estate of the estate or doing anything that shall reduce the capital of the estate. Of course, there may be a good reason sometimes for selling a small piece or making an exchange, but the policy of the trust should be against disposal of land."
Bullet "The best security for the estate, and the support and perpetuity of the schools, is in the real estate, even if it pays but a modest return."

Midkiff supports the concept of a voluntary board of 30 or more people, yet the Bishops were very clear: "For most things to be managed, I do not believe in a large board for the responsibility is so divided that it is likely to lead to neglect or to be left to one or two members. It seems to me that five trustees...are enough."

No other educational institution has landholdings and investments like Bishop Estate. Pauahi did not want the control of her estate to be placed in one person or with a chief executive officer. She provided for safety by having five trustees and a majority that must agree.

Pauahi could have called for a "corporation" structure, a "partnership" or a "foundation," but she did not. Most of the corporations that existed in 1884 are gone or are under foreign control today, whereas Pauahi's estate has prospered by keeping true to her will.

Midkiff gives examples of successful mainland institutions, but none of them are Hawaiian land trusts. If we change Pauahi's will with this modernization, where do we stop?

Midkiff also suggests that Kamehameha Schools/Bishop Estate convert to a "foundation" and pay out 5 percent of its assets yearly. Again, it is a suggestion that sounds good but, in reality, could destroy the long-term viability of the estate and the schools.

Well-meaning individuals suggested similar changes for the once great alii trust, the Lunalilo Estate. The recommendations were seen as an "improvement" and "modernization" of the will. But history has proved them wrong. Once comparable to Bishop Estate, it is now near bankruptcy.

All decisions regarding Bishop Estate should be made within the context of Ke Alii Pauahi's will. She had a vision. She had a dream. And she created Kamehameha Schools/-Bishop Estate with her own properties.

No one -- including Midkiff, Stender or Governor Cayetano -- has the right to change Pauahi's will.

Before we rush into radical change, as suggested in the "Stender Plan," we should stop and discuss it. I am sure that we will agree to support Pauahi's will, and to keep it as written.

Henry H. Peters is seeking
reinstatement as a Bishop Estate trustee.

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