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Editorials
Tuesday, February 15, 2000
Ex-trustees should
provide restitutionSTATE attorneys may have difficulty in recouping for Kamehameha Schools what they consider to have been losses from risky investments after the former Bishop Estate's year of record revenues. A more likely source of restitution is the amount of estate funds spent by ousted trustees in their attempt to retain their positions. Those expenses obviously should be borne by the former trustees and not the estate.The issue: The state is seeking millions of dollars in restitution for Kamehameha Schools from former trustees.
That is not to say that all the ousted trustees were blameless in creating the financial problems that contributed to their resignations under pressure. Fiduciary standards allegedly were violated in making imprudent investments with the estate's assets.
That resulted in $5 million paid to law firms and accounting firms in defense of the trust in a massive Internal Revenue Service audit. Former trustees also were accused of rewarding their friends with lucrative contracts with the estate.
The accounting firm of PriceWaterhouseCoopers L.L.P. billed the Kamehameha Schools $1.2 million last year for work involving the IRS audit. The law firm of Cades Schutte Fleming & Wright billed the estate $1.8 million last year for IRS audit-related legal work.
Those funds were prudently spent to preserve the estate's nonprofit tax status, although it could be argued that the trustees created the situation that brought on the IRS audit and thus necessitated the legal and accounting work.
The $830,194 spent by the estate in the 1998 fiscal year and $863,873 the following year to lawyer William McCorriston should be contested by the state.
McCorriston claimed to provide legal representation for the estate, but he was mainly the attorney for trustees Richard "Dickie" Wong, Henry Peters and Lokelani Lindsey before they resigned from the board.
Estate funds should not have been used for that purpose. The three former trustees should be required to compensate the estate for those expenditures.
Attorney General Earl Anzai is expected to engage in a six-month proceeding aimed at recovering funds that the former trustees invested in violation of accepted standards and for their personal legal representation. He says that could total as much as $200 million. The former trustees are insured for up to $75 million.
At the very least, the estate should recover the legal fees paid to McCorriston.
Bishop Estate Archive
Faster actions needed
on criminal checksATTENTION has been drawn to the need for faster action on criminal background checks for employees in the A+ program. State Sen. Marshall Ige charged that an A+ program at a Windward Oahu school had hired a person with a conviction for robbery after releasing another employee who had a criminal record. In view of the fact that the persons involved deal with children, this is a matter for real concern.
Ige, who represents Kaneohe and Kailua, pointed out that staff members of the after-school program are allowed to work while their backgrounds are being investigated for criminal records.
Rules of the Department of Education require employees who work in close proximity with children to undergo fingerprinting in order to conduct checks of criminal records. Applicants are also required to provide sworn statements indicating whether they had been convicted of a crime. Individuals who are employed by companies with contracts with the state are subject to the same requirements.
Ige asked if it was important to conduct criminal checks for A+ applicants, why wasn't it important to wait for the results. The problem is that administrators have to fill vacancies immediately, while it can take months to get results on federal checks from the FBI.
After Ige's remarks on the Senate floor, it was disclosed that both of the persons he mentioned, who had been employed at Ahuimanu Elementary School's A+ program, had been dismissed -- one the day he spoke.
Raymond Sanborn, president of Kamaaina Kids, which operates the school's A+ program, reported the firings. He also said background checks of other A+ employees at the school were re-done with the Hawaii Criminal Justice Data Center and all were cleared.
Schools Superintendent Paul LeMahieu said the DOE is looking into ways to speed up background checks and examining how it deals with the time lag between hiring and obtaining the criminal record report. "We've got to make this happen faster," LeMahieu said.
Just how this can be achieved is yet to be determined. But the parents of children in the A+ program will insist that it be done, as of course it must.
Published by Liberty Newspapers Limited PartnershipRupert E. Phillips, CEO
John M. Flanagan, Editor & Publisher
David Shapiro, Managing Editor
Diane Yukihiro Chang, Senior Editor & Editorial Page Editor
Frank Bridgewater & Michael Rovner, Assistant Managing Editors
A.A. Smyser, Contributing Editor
