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Thursday, September 21, 2000

$20.1 million Kamehameha tab to be paid by insurance

The deal settles all claims
against estate's ex-trustees

By Rick Daysog

The Kamehameha Schools' insurance company will pay $20.1 million to settle all claims raised by the Attorney General's Office in its two-year effort to surcharge the estate's former trustees.

In a 36-page settlement plan filed in state probate court today, the estate's insurer, Federal Insurance Co., also agreed to pay $1.3 million to the Attorney General's Office to cover costs it incurred in its surcharge suit.

All five former trustees -- Henry Peters, Richard "Dickie" Wong, Oswald Stender, Gerard Jervis and Lokelani Lindsey -- will not have to pay any out-of-pocket costs to settle the state's lawsuit and up to $4 million of their legal bills will be covered by the deal.

The settlement requires approval from the probate court, which has set a hearing for Sept. 29.

The agreement represents a major milestone in the three-year controversy surrounding the Kamehameha Schools and ends the state's two-year effort to remove and surcharge the ex-board members.

Attorneys for the estate and the Attorney General's Office were not available for immediate comment but planned to discuss the agreement at a news conference.

In its surcharge suit, the state alleged that the former board members took excessive compensation, mismanaged the trust-run Kamehameha Schools and incurred more than $200 million in investment losses.

All five resigned permanently last year after the Internal Revenue Service threatened to revoke the estate's tax-exempt status. A trial before Circuit Judge Eden Elizabeth Hifo was scheduled to begin this week but was canceled after the settlement was reached on Friday.

The deal is a product of weeks of painstaking negotiations between the state, the former trustees, the current interim board of trustees, court-appointed discovery master Clyde Matsui and the court-appointed mediators, David Fairbanks and Jim Duffy.

Bishop Estate Archive
Kamehameha Schools

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