Tuesday, December 21, 1999

Bishop board
focusing on

It hopes to name a new
CEO by next month

By Rick Daysog


In a radical departure from the previous board, Bishop Estate's interim trustees are looking to expand the trust's educational programs and place its investments on a more stable growth track.

And by next month, the trust hopes to have named a new chief executive officer, who will take over from the trustees the daily operations of the $6 billion estate.

Retired Adm. Robert Kihune, chairman of the estate's court-appointed interim board, said expansion plans include a new 300-acre, K-12 campus in Keaau on the Big Island.

The school, which is expected to open in 2001, could serve as many as 2,000 students a year. Currently, the trust's temporary Big Island campus educates about 150 students annually.

Kihune said the trust also is considering restoring many of the outreach programs eliminated by the estate's previous board of trustees. Since taking office in May, the new board has restored outreach programs for expecting parents, preschool programs for 3-year-old children and reading classes for 5-year-olds, Kihune said.

The previous board was heavily criticized by the local and Hawaiian communities for shutting down the outreach programs.

"We have not been sitting here just twiddling our thumbs. We have been working on the governance structure, we have been working on strategic plans and we have, in fact, been trying to make sound decisions on our education plan," Kihune said.

Kihune and his fellow board members -- former Honolulu police Chief Francis Keala, American Savings Bank executive Constance Lau, attorney Ronald Libkuman and former Iolani School headmaster David Coon -- met with reporters yesterday to outline their vision of the Kamehameha Schools in the next millennium.

The meeting came after former trustee Lokelani Lindsey permanently resigned from the estate on Friday.

The interim board had sued for the permanent removal of Lindsey and fellow trustees Richard "Dickie" Wong and Henry Peters after the Internal Revenue Service threatened to revoke the estate's tax exempt status if the former board members were not removed permanently from the trust. Wong and Peters stepped down earlier this month.

Kihune said the estate is close to finalizing an agreement with the IRS which would preserve the trust's tax-exempt status.

The so-called closing agreement, which requires probate court approval for a spending policy for the Kamehameha Schools, calls for the nonprofit portion of the estate to pay $9 million to settle its tax liabilities.

Kihune disclosed that the trust is in the process of negotiating the tax bill for the estate's for-profit subsidiaries. The IRS initially demanded that the estate pay $165 million but Kihune said the interim board hopes to negotiate that number down significantly.

"I don't know what the number is going to be," Kihune said. "I hope that we can get it down to the lowest level possible."

Lau, meanwhile, outlined a plan to diversify the trust's investment portfolio and rely on asset managers who will look toward more stable, income-oriented investments. Previous board members were criticized sharply for making investments that had a potential for high reward but carried high risk, and were not readily convertible into cash.

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