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Monday, April 17, 2000

Probe outlines
trust’s politicking

Bullet Kamehameha Schools 'has attempted to
orchestrate the democratic process to its
favor,' says a state report
Bullet Unreported contributions, lobbying
expenses and attempts at shaping
state legislation are alleged

By Rick Daysog


Kamehameha Schools operated a massive political machine that directed tens of thousands of dollars to the campaign coffers of isle legislators, drafted legislation and floor speeches for key state lawmakers, and entertained scores of state and county officials at isle restaurants, an investigation by the state attorney general shows.

In a 20-page report obtained by the Honolulu Star-Bulletin, the attorney general's office said the $6 billion charitable trust maintained an in-house network that may have distributed thousands of campaign fund-raiser tickets from isle politicians to various trust employees, trustees and outside vendors.

The state investigation also found that trust employees between 1992 and 1997 hosted more than 700 meetings with state and city officials at local restaurants at a cost of more than $34,000.

Former state House Speaker Joe Souki (D, Maalaea) was treated to more than 65 meals by estate personnel, while current Speaker Calvin Say (D, Palolo Valley) enjoyed 38 meals at the trust's expense, the report said.

"The organization has attempted to orchestrate the democratic process, from beginning to end, to its favor," Deputy Attorney General Kurt Spohn said in the report.

The questionable political activities, which allegedly occurred under the stewardship of the embattled former board of trustees, could have jeopardized the estate's tax-exempt status. Federal law bars charities from playing any role in a political election and places strict limits on lobbying. State campaign finance laws also bar organizations such as Kamehameha Schools from making unreported contributions.

Last week, criminal investigators with the attorney general's office turned over their report on the trust's political activities to the state Campaign Spending Commission, which will likely hold administrative hearings in the next few months.

Bob Watada, executive director of the Campaign Spending Commission, declined comment, saying he is still reviewing the documents. The attorney general's office had no response.

A spokesman for Kamehameha Schools, formerly known as the Bishop Estate, said the estate's interim board of trustees -- which took over management of the trust last May -- has cooperated with the state's investigation and has dismantled the trust's government relations division. He declined further comment.

Former trustee Henry Peters defended the trust's lobbying, saying its government relations division was set up to keep track of legislation that was potentially harmful to the estate. Peters said the trust has suffered millions of dollars in losses during the years from land condemnations and other arbitrary land-use decisions by lawmakers.

Peters said he was not aware of the particular charges raised in the attorney general's report, but added that there is nothing wrong in taking a legislator out to lunch to discuss trust concerns.

"I expect our people to know who our leaders are and to be able to communicate with them," said Peters, a former state House speaker. Ex-trustee Richard "Dickie" Wong is a former state Senate president.

"If it means taking them out to lunch so they can understand the Kamehameha Schools story, then they should be told" that story, Peters said.

Much of the attorney general's report dealt with previously disclosed allegations that trust employees directed the estate's architecture and engineering firms to pay $18,262.17 of campaign debts owed by state Sen. Marshall Ige, a longtime ally of Peters, and $12,334.44 owed by former state Sen. Milton Holt, a former trust employee.

Holt pleaded guilty to a federal mail fraud charge relating to his campaign debts, and Ige is scheduled to go to trial in September on misdemeanor charges.

However, the attorney general's report also included new details concerning attempts to cozy up to isle legislators. One exhibit provided an itemized list of Visa card expenditures at local restaurants by Holt and fellow trust employees Alika Thompson and Namlyn Snow, who headed the Kamehameha Schools government relations division.

'Those guys are buried'

None of the meetings were listed as lobbying expenses by the trust with the state Ethics Commission, in what could be a violation of state law.

In addition to meals for Souki and Say, the expenditures included:

Bullet 28 breakfast meetings with former Rep. Merwyn Jones.

Bullet 23 meetings with City Councilwoman Rene Mansho.

Bullet 21 meals with former Big Island Rep. Harvey Tajiri.

Bullet 17 meetings with former House Judiciary Chairman Terrance Tom.

Bullet 16 lunch and dinner meetings with state Sen. Bobby Bunda.

Tom and Bunda (D, Wahiawa) said they could not recall such meetings, and Mansho and Say could not be reached for comment.

Jones recalled that he met with Thompson for breakfast at the Columbia Inn during the years, but the former Waianae representative said the meetings were social and that Bishop Estate business was never discussed. Jones said that he and Thompson have been friends since the 1960s and that he was not aware the bills were paid for by Thompson's Kamehameha Schools Visa card.

Tajiri said he met Thompson several times but largely on a social basis. But Tajiri, a former Hilo Democrat who left the Legislature in 1994 and is running for Big Island mayor as a Republican, added that he met with Thompson years ago to urge the trust to build a Big Island campus.

Souki also acknowledged meeting with Thompson for breakfast at the Columbia Inn occasionally. But he disputed the attorney general's report that he met the trust's lobbyists a total of 65 times between 1992 and 1997.

Souki said he could not recall any discussions about trust business during the meetings. Souki -- who was heavily criticized for earning a $132,000 commission on a Kamehameha Schools-related land deal on Maui -- also took issue with the local media for its continued coverage of the estate's former trustees.

"You guys have done enough already," said Souki.

"Those guys are buried. It's all over. They're done. Let them live their lives."

Fund-raising pervasive

The attorney general's report also cited recent testimony about Kamehameha Schools' role in shaping legislation. State investigators said Kamehameha Schools at one time employed 10 legislative teams to cover the estate's interests in the state Capitol. Some of their activities included:

Bullet Drafting bills, amendments and committee reports for lawmakers.

Bullet Writing floor speeches for key legislators.

Bullet Planning, coordinating and implementing demonstrations, rallies and legislative receptions.

Bullet Providing crews for sign-holdings, door-to-door canvassing and coffee hours.

Bullet Paying for supplies and refreshments for special political activities and legislative strategy sessions.

Bullet Networking with private civic clubs and trade organizations that share similar interests in Hawaiian and property rights issues.

Bullet Writing and submitting letters to the editors in Honolulu's daily newspapers.

The fund-raising efforts also were pervasive, according to the attorney general's report. State investigators described one campaign finance scheme in which Snow collected thousands of tickets for a fund-raiser that were sent to trust employees.

Snow, who died in May 1999, would then parcel some of the tickets to trustees and outside contractors for payment, the investigators said. Such forms of bundling of fund-raiser tickets could be viewed as an unreported campaign contribution by the estate, which would be illegal.

One former government affairs worker said she felt pressured by her supervisors to take part in campaign events.

Lurline Diane Naone-Salvador said in a July 1999 deposition that her job required attending legislative hearings and political fund-raisers for Holt and City Council members Mansho and John DeSoto, even when she was sick or had a family event to attend.

Salvador said her husband once slammed a phone down on her boss, Snow, who demanded that Salvador hold signs for a political candidate on the day that Hurricane Iniki hit in 1992.

Neil Hannahs, longtime Bishop Estate land manager, said in a May 1999 deposition that lawmakers and their campaign managers often hit up trust officials when they went to the state Capitol on legislative matters.

"(My) experience is, every time you testify before a committee, inevitably that committee chair puts you in their campaign mailing list," Hannahs said.

"(And) when they have a campaign fund-raiser, they send you a couple of tickets ... or some will send you a book. Some will get aggressive and send you a whole bunch."

'Source of political plums'

Former Attorney General Margery Bronster said the estate's lobbying and campaign efforts go a long way in explaining her controversial confirmation defeat in the state Senate last year. The estate's former trustees remained well connected and continued to exercise their influence in the Capitol even after they left office, she said.

That view is boosted by statements made under oath by former Kamehameha Schools trustee Richard "Dickie" Wong that he and Big Island rancher Larry Mehau met with four freshmen senators to discuss Bronster's confirmation prior to the vote.

"The trustees were selected more on the basis of political connections and political payback than on merit," said Randall Roth, University of Hawaii law professor and co-author of the 1997 "Broken Trust" article which heavily criticized the former trustees of Kamehameha Schools.

"Consequently, it's hardly surprising that they treated Princess Pauahi's legacy like a source of political plums to be doled out to others."

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