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Saturday, June 24, 2000

Trust lawyer
state motives

Kamehameha records fight
provokes charges that the
attorney generals's bosses 'are
not unlike' some ousted trustees

By Rick Daysog


A lawyer for the Kamehameha Schools has accused the attorney general's office of seeking to micromanage the estate's affairs and questioned whether the state was sympathetic to the needs of native Hawaiians.

Trust lawyer Douglas Ing also criticized the attorney general's office yesterday for failing to take action when former trustee Oswald Stender raised concerns about his fellow ex-board members back in 1992.

"They claim to come here on behalf of the beneficiaries. But look at them. Do they understand what Kamehameha means to people of Hawaiian ancestry?" Ing said.

"The attorney general reports to elected politicians.... These (politicians) are people who are not unlike some of the former trustees. They know how to use money and power."

The attorney general's office strongly objected to Ing's comments, saying they were wrong on the merits and were entirely inappropriate for the judicial process and for a spokesman of the interim trustees.

The flare-up underscores months of behind-the-scenes tensions between the attorney general's office and the interim trustees of the $6 billion charitable estate. It erupted yesterday during a probate court hearing on a request for court guidance on whether the attorney general's office is entitled to opinions by the trust's outside lawyers who deal with the overall administration of the estate.

Probate Judge Kevin Chang ruled largely in favor of the interim board, saying the attorney general is entitled to legal opinions relating to the trustees' fiduciary duties but is not entitled to all legal opinions paid for by the trust.

The attorney general's office has argued that the records are necessary to pursue its suit for multimillion-dollar surcharges against former trustees Stender, Henry Peters, Richard "Dickie" Wong, Lokelani Lindsey and Gerard Jervis.

The state's suit, which is scheduled for trial in September, has alleged that the former board members took excessive compensation, mismanaged educational programs for native Hawaiians and incurred more than $200 million in investment losses during their tenures.

The state also has argued that the current interim board dragged its feet on the state's requests for the legal opinions and other documents, delaying trial preparation by a year.

Such records could help curb potential abuses by former and future trustees, said Deputy Attorney General Hugh Jones.

"Sunshine is one of the restraints to an empire that stretches from Wall Street to China," Jones said.

The interim trustees, meanwhile, said they are cooperating with the attorney general's investigation but complained that the state's requests for information are too broad and include privileged documents that could affect litigation unrelated to the three-year controversy.

They said the trust could be harmed if they were forced to hand over outside legal opinions on matters such as tax disputes, water rights and land use to the attorney general's office -- issues in which the state holds an adverse position.

Ing noted that trust has instituted substantial reforms since the resignation last year of all five former trustees. The changes include the hiring of a chief executive officer, the implementation of a strategic planning process and the adoption of a new spending policy that emphasizes more money toward educational programs.

"The pendulum has swung far enough," Ing said.

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