Trustees of Hawaii’s Bishop Estate Come Under Increasing Fire

HONOLULU —  Kamani Kuala’au--student body president, a senior bound for Princeton--had reason to be nervous.

He had been summoned from his classroom at Kamehameha Schools to a meeting across town at the headquarters of the Bishop Estate, the $10-billion foundation that supports the nation’s wealthiest private school.

A day before, he had helped draft a letter in support of embattled school president Michael Chun. And now he was reduced to tears by Lokelani Lindsey, one of the Bishop Estate’s five trustees--and thus one of the most powerful people in Hawaii.

“I’m not going to do this,” said Lindsey, in the course of what Kuala’au described as a 2 1/2-hour interrogation, “but how would you feel if I wrote a letter to Princeton and told them that you’re a rabble-rouser?”

This private confrontation would soon become part of a very public commotion--an eruption of criticism of the Bishop Estate’s trustees, highlighted by a protest march about two weeks later by 1,000 alumni, students and supporters of Kamehameha Schools.

They accused individual trustees of trying to micromanage the school, usurping the administration and getting involved in such things as homecoming T-shirt designs and school yearbooks.

But the outpouring of censure hasn’t stopped there. Critics say the trustees, appointed by the members of the state Supreme Court, have an incestuous relationship with the judiciary and have failed the children they claim to serve--those of Hawaiian ancestry.

Gov. Ben Cayetano has ordered an investigation into the affairs of a trust that is “so big and it impacts so many people. . . . I think it warrants the attorney general moving forward and taking a look as objectively and as fairly as possible.”

The trust, fueled by revenues from 337,000 acres of once royal lands, was established in 1884 under the will of Princess Bernice Pauahi Bishop, a descendant of King Kamehameha, the 18th century chief who conquered and unified the Hawaiian Islands.

Her will established Kamehameha Schools as the sole beneficiary. Today, the tranquil campus of aging but well-kept buildings sprawls across 600 acres of wooded tropical hillside overlooking Honolulu’s downtown high-rises. It serves 3,100 students.

Although it began primarily as a vocational and trade school, Kamehameha Schools today bills itself as a college preparatory school for Hawaiian children of exceptional ability.

This doesn’t sit well with everyone.

“It would seem to me [that] the school should be there for the kids who are having hard times, who don’t have support in the public education system . . . kids at risk who come from a single-parent home, or the presence of drugs or having become involved in the law,” said Annelle Amaral, a Hawaiian leader and former state representative.

Others complain that the trustees are too involved with the workings of the school. They note that Lindsey once took time at a budget meeting to question an order for 250 pens at a cost of 10 cents each.

Trustee Henry Peters will have none of it. “You’re either managing or you’re not, and I manage,” he said in a recent speech.

They certainly are paid to do more than act as figureheads. Each trustee in 1996 received an annual combined salary and commission of $843,109--compensation ensuring that these jobs are much sought after.

The princess’ will called for the trustees to be named by members of the state’s highest court. The justices, then, are involved with the governance of the school; at the same time, they are sometimes called upon to judge the Bishop Estate’s actions.

In August, four prominent members of the Hawaiian community, including a federal judge, issued a joint statement calling for change.

The four said the trustees are overpaid, they should be investigated to determine if they have violated their fiduciary responsibilities, and the appointments are a conflict of interest for the court.

“The time has come to say, ‘No more,’ ” they wrote. “The web of relationships between the Judiciary and our beloved Kamehameha Schools/Bishop Estate has pushed two great institutions to an absolute critical point.”

Bishop Estate has a complex web of for-profit investment subsidiaries linked with the nonprofit and tax-exempt trust. Some linkages appear to test the “arms-length” policy needed to maintain Bishop Estate’s tax-exempt status.

Investments include 16 acres under the Royal Hawaiian and Sheraton Waikiki hotels, a beachfront property worth $760 million to $1 billion; 300,000 acres of timberland in Michigan worth $100 million; 10% of Goldman, Sachs & Co., worth $500 million in 1993; and part of the exclusive Robert Trent Jones Golf Club in Virginia.

The turning point for Bishop Estate, shifting from a land manager to a well-heeled player in the world of investments, came in 1984 when the U.S. Supreme Court upheld Hawaii’s 1967 land reform act. It uses the state’s condemnation power to force landowners to sell leased house lots to the homeowner.

While the estate’s attorneys vigorously fought the 17-year battle against the law, their loss led to a staggering financial gain for the trust--$1 billion in cash.

Another influx of cash, possibly in the neighborhood of $750 million, may be forthcoming.

After years of failed attempts in the state Legislature to expand the land reform act to include condominiums on leased land, the Honolulu City Council in 1991 adopted an ordinance to force landowners to sell their property to the condo owners. It would affect 7,500 condos on leased Bishop Estate land on Oahu.

The trust’s challenge to the city law is now before the 9th U.S. Circuit Court of Appeals.

Critics like State Rep. Dennis Arakaki charge that in the Bishop Estate’s dealings, its trustees have failed in their larger responsibility.

“They’ve been assertive and combative in terms of retaining the trust, retaining their rights, but we don’t see the same kind of energy happening as advocates for Hawaiian children,” he said.