“Broken Trust Centered”
”’This is a book review of the “Broken Trust: Greed, Mismanagement & Political Manipulation at America’s Largest Charitable Trust” by Samuel P. King and Randall W. Roth; the book is 324 pages, published by the University of Hawaii Press, and sells for $26 hardcover, $16 paperback”’
Who would have known that one of the best follow-the-money courtroom thrillers was not to be found on the fiction shelves, but rather in the non-fiction section?
The true story of the modern plundering of Hawaii’s Bishop Estate Charitable Trust, described as “a world record for breaches of trust,” has elements most novelists couldn’t devise.
Just when you think the only thing missing from this account of avarice, arrogance, corruption and deception is sex, we get lewd acts in a public rest room, no less, as well as strip clubs called Saigon Passion and suicide pacts.
Telling this drama with an admirable level of clarity, accuracy and deliberation are co-authors Samuel P. King, a retired U.S. District Court judge, and Randall W. Roth, a professor at the University of Hawaii Law School. The authors provide historical background and financial conext for the machine that is at the center of the tempest, the Bishop Trust. Princess Bernice Pauahi Bishop was a descendant of the royal Kamehameha blood line in Hawaii.
In the late 19th century, she inherited most of the consolidated royal land holdings in the islands, constituting hundreds of thousands of acres, and became the largest landowner and the richest woman in the kingdom. In 1884, nine years before the overthrow of the Hawaiian monarchy, she died leaving instructions in her will for a trust to be established to build and maintain schools giving preference to Hawaiians “to make good and industrious men and women.” Bishop appointed five trustees by name, ironically all of them haole, or white.
In little more than three generations, due to wildly escalating land values and favorable leases, the Bishop Trust grew to be the nation’s wealthiest, according to the Wall Street Journal. The value in the neighborhood of $10 billion was greater than the endowments of Harvard and Yale universities combined. The trust owned a big chunk of Goldman Sachs, the investment banking goliath, in addition to multiple other corporations. The Kamehameha Schools created by the trust were among Hawaii’s elite.
Those who were fortunate enough to obtain a trustee position got a taste of royal treatment. They were the highest paid trustees in the country, their decisions received complete deference, they functioned without oversight, they made no public accountings and they were never removed from the board.
“From time to time Mainland newspapers and magazines printed stories on Bishop Estate,” the authors tell us. “Reporters would come to Hawai’i for a few days, a week or two at most, and go away shaking their heads. Every article they wrote covered basically the same ground: the huge size of Bishop Estate, the concentration of land, money, and power it represented, its reach, its connections with other sources of power, its penchant for secrecy, and its disdain for outsiders. The articles all seemed to be reports of strange happenings in a faraway place… The tone was one of amazement that such an obvious and extreme situation had apparently been going on unchallenged in Hawai’i for a long time.” In contrast, local media coverage was submissive. “Anyone who wanted to get ahead in Hawai’i assiduously avoided being viewed as a critic, or even associating with the relatively few outsopken critics,” write King and Roth.
Traditionally, the trustees appointed were high ranking businessmen and descendants of missionaries who conformed to a decorous level of behavior. That all changed in 1993. The absolute power of trusteeship corrupted absolutely when the unregulated system of political pay-off allowed at least four new members to take the reins of trusteeship who were entirely lacking in qualifications, demeanor, ability and character.
Their abuses ran the gamut from making under-informed high risk investments, rewarding cronies with no-bid contracts, hoarding trust assets, committing conflict of interest by speculating personal money in trust investments, paying themselves excessive compensation, to using trust staff for personal purposes and enjoying private travel on trust money. The Kamehameha Schools, the primary concern of the trust, began to suffer. One of the members, the first female trustee in Bishop history, meddled so intrusively and abusively in school operation that those staff members she didn’t reduce to tears resigned with heavy hearts.
Hawaiians are not naturally given to public protest, but by 1997 they were frustrated enough with the attitude and ineptitude of the board of trustees that they organized a massive march upon the Bishop Trust headquarters to show dissatisfaction. The local Star-Bulletin newspaper published an in-depth article that was the seedling sprout of this book, outlining the trustees’ failures. King and Roth build tension and suspense by describing how the trustees react to the tightening grip of at least four separate civil and criminal investigations.
Subpoenas fly, surveillance photos are snapped, phones are bugged, tires are slashed, judges cry in court, suicide factors in. The IRS swoops in like a huge predatory bird and threatens to revoke the trust’s tax exempt status, which would cripple the schools. Is paradise lost?
The book does not contain a map of the acreage in Bishop Trust and such a visual aid would have been helpful in appreciating the vastness of the holdings. The authors do not provide figures on the number of students enrolled or the amount of faculty at the Kamehameha Schools, but general estimates can be extraplolated from other references. These criticisms are minor and outweighed by the intelligent placement of the numerous photographs and political cartoons utilized throughout at the corresponding passages of the text, rather than grouped together in a centralized gallery as in most books.
This presentation is reader friendly. Kudos for the superior index, which is a necessary tool for keeping tabs on the hefty cast of characters here.
“Broken Trust” ends with such irony, it seems that even King and Roth can hardly believe it.
If the measure of tragedy is how far the mighty can fall, then this story is enormous. It is important to remember that the catalyst of it all was the perception that Hawaiian children were being compromised through the gift of their royal family, the Kamehameha Schools.
A quote from the book says, “You know, we Hawaiians are kind of funny. You can waste or even steal our money, that’s one thing. But when you hurt our children, that’s something altogether different.”
”’Eve Lichtgarn is a contributing writer to various national publications. She can be reached via email at”’mailto:ELichtgarn@aol.com
”’HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to”’ mailto:Malia@HawaiiReporter.com