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Tuesday, September 26, 2000

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OHA board to
review investment
portfolio contract

Former OHA trustees'
pleas to retain the old portfolio
manager go unheeded

Emotions strong at new
board's first meeting

By Pat Omandam

Less than three weeks after they resigned, four former trustees returned to the Office of Hawaiian Affairs board table to urge their interim successors to support an extension of OHA's contract with its investment portfolio manager, Morgan Stanley Dean Witter.

Haunani Apoliona, Mililani Trask, A. Frenchy DeSoto and Louis Hao testified that the new board should support the one-year contract extension recommended by 7 of 9 former trustees on Sept. 7, the day before all nine resigned under the threat of legal action by the state to remove them from office.

The $234,000-per-year contract expires on Oct. 15. The former trustees said Morgan Stanley Dean Witter has done an excellent job so far and deserves another year managing OHA's $375 million investment portfolio.

The former trustees pointed out that OHA has saved $491,984 in fees because of the way the current contract is structured.

By Ronen Zilberman, Star-Bulletin
Charles Ota, the first non-Hawaiian OHA trustee, and Gladys
Brandt listen as several former trustees argue in favor of
keeping the same investment portfolio manager. Despite the
ex-trustees' efforts, the newly-formed board decided to
review the bids of about 25 potential new brokers.

"I do not think most trustees, interim or otherwise, would intentionally risk exposing themselves or the trust to the absence of professional investment consultant oversight," Apoliona said.

"Changing investment consultants at this time is not indicated," Trask said.

Nevertheless, a motion to extend the contract failed by a 3-6 vote yesterday. Dissenting trustees -- Gladys Brandt, Clayton Hee, Hannah Springer, Dante Carpenter, Ilei Beniamina, and Charles Ota -- said they have a fiduciary responsibility to review all potential money managers -- no matter their short stay in office.

About 25 parties have responded to a request for bids for money managers sent out by OHA the same week trustees resigned en masse.

Beniamina said she wants to evaluate all potential brokers and said interim board members would be a rubber stamp if they didn't do their jobs.

Gladys Brandt said while the performance of Morgan Stanley may be hard to beat, she needs to know exactly what's at stake when she casts her vote.

A review of potential money managers is also the most prudent thing to do, Ota said.

Trustees Collette Machado, Nani Brandt and Nalani Olds voted to extend the Morgan Stanley contract.

Hee advised that the board should do what is best for the portfolio, which is to seek the best and brightest asset manager.

OHA administrator Randy Ogata said the bid period for potential money managers will close on Oct. 9 and he expects to make recommendations to the board on Oct. 12.

Meanwhile, the interim board unanimously approved a spending policy yesterday that has been under discussion this year. The policy requires OHA not to spend more than 5 percent annually from its ceded-land trust fund.

Hee said the 5 percent spending policy is based on advice from trust experts who said the average rate of return for a perpetual trust over the past 100 years has been about 6 percent.

Hee said OHA's budget and finance committee -- from which he has removed himself as a member -- must decide what changes are needed to ensure OHA does not spend beyond the 5 percent guideline.

For example, the agency's $20 million second mortgage program for downpayment and home repairs for homesteaders is nearly exhausted after OHA a few years ago lowered the interest rate to 3 percent.

Hee said trustees have to decide whether to invest another $20 million into the fund, split the cost with the state Department of Hawaiian Home Lands, raise the interest rates or do away with the program.

Emotions strong at new
board’s first meeting

By Pat Omandam

The first working meeting of the interim board of the Office of Hawaiian Affairs began with two people walking out during the opening pule, or prayer.

It reached its emotional peak when one Hawaiian activist refused to leave the board table. Another said there may be spiritual repercussions for having a non-Hawaiian sit on the OHA board.

Richard Kinney and Hawaiian spiritual leader A'o Pohakuku Rodenhurst complained to the interim board about the appointment of Trustee Charles Ota, who is not Hawaiian.

Rodenhurst, leader of the Spiritual Nation of Ku, said she's spiritually offended by Gov. Ben Cayetano's action to appoint all nine trustees and likened the action to slavery of the Hawaiian people.

Kinney, who has renounced his American citizenship and declared himself a Hawaiian sovereign, forced a lengthy board recess following his testimony .yesterday, after he said he would have to be arrested before he would leave the table.

Kinney said he was insulted by Ota's recent public comments that he "feels" Hawaiian and by Ota's candidacy for election to his appointed seat. Kinney accused Ota of planning to use the Japanese-American voting block to sway the upcoming OHA elections in favor of non-Hawaiian candidates.

"That is an act of war," said Kinney, who said if Ota had any sense of justice or righteousness he would resign his position.

There are 97 candidates for OHA in November, of which about 7 or 8 are non-Hawaiian. Recent court rulings now allow non-Hawaiians to vote in and run for the OHA board.

Kinney's comments and refusal to leave the table prompted Chairman Clayton Hee to call a recess. During the break, Ota said he realized there would be vocal opposition to his appointment but said recent rulings by the U.S. Supreme Court and the U.S. District Court opened up OHA to non-Hawaiian trustees, and he feels he should carry out his appointment.

Ota said there's been enough discussion over the past 20 years about what OHA should be doing and believes his past experience as a Maui County Council member and University of Hawaii regent can help.

Ota, a veteran of the 442nd Regimental Combat Team who won a Purple Heart and Combat Badge award during World War II, said he's not troubled by the opposition to his appointment.

"I went through tougher battles," Ota said. "So I feel kind of cool."

Kinney left the table once Hee reconvened the meeting. Hee thanked Ota and the rest of the 442nd members for their bravery during the war.

"I stand by Charles Ota because he's Japanese," Hee said. "And I would stand by him if he was Chinese. As I would I stand by as if he was Hawaiian."

Office of Hawaiian Affairs

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