[S]hortly after John Waihe'e left the governor's office in 1994, state Representative Ed Case had thought the time might be right for reform at Bishop Estate. He drafted a wide-ranging bill that, if passed, would change the way Bishop Estate trustees were selected, limit trustee compensation, and secure legal standing for Kamehameha alumni so they could hold trustees accountable. In the months preceding the 1995 legislative session, Case painstakingly met with each of his colleagues, one at a time, explaining the bill and why it was needed. These efforts paid off: thirty-one of the fifty-one members of the house signed the bill as co-sponsors, a clear majority.

Then Bishop Estate went to work. Alumni protested, and trustees huddled with their friends in the house. GRD staffers prepared testimony against the bill, recruited people to present that testimony as their own, and arranged for their transportation to the Capitol. On the day the bill was to be considered by Case's committee, Hawaiians flowed into the hearing room, outraged by this "attack" on Pauahi's legacy. Emotional testimony in opposition to the bill went on for many hours.

By then, Henry Peters was no longer speaker of the house, but his successor, Joe Souki, had his own relationship with Bishop Estate: a $132,000 "consulting fee" for services rendered when the trustees bought land in upcountry Maui. As speaker, Souki had the power to hurry a given bill through to a vote on the floor or bury that bill in a committee. To get his way, Souki could offer individual deals that were hard to refuse, such as his support for a legislator's favorite bill, or a committee chairmanship.

Case watched helplessly as the thirty-one co-sponsors of his bill were picked off, one by one, until there were none.

Simply defeating the bill was not enough; the trustees wanted to teach Case a lesson. So they had friends in the legislature propose a house resolution that essentially said the trustee selection process was just fine the way it was. Case argued that the current arrangement had a corrupting influence: "I am confident that, within the bowels of the Bishop Estate, there are those, much more accustomed to the ways of power and influence than I, who are deeply covetous of the direct pipeline into the inner workings of the Supreme Court afforded them by this process, a pipeline afforded virtually no other person or entity in Hawai'i."

Despite the fact that thirty-one representatives had co-sponsored a bill that was in a key way the exact opposite of this new resolution, the resolution passed overwhelmingly.

Legal guidelines for setting trustee fees did exist: the judge-made law in Hawai'i said trustee fees always had to be reasonable, and there were statutory formulas that set maximum fees. But it was never clear whether the statutory "maximum" was automatically considered "reasonable."

Undefined terms were another source of ambiguity. One statute set the compensation cap at 2 percent of "all moneys received in the nature of revenue or income." Another statute said trustees also could take up to 2.5 percent of "cash principal received after the inception of the trust:' Did the first formula refer to net or gross numbers? And a seemingly small distinction that could radically affect the final sum-to what ex tent, if at all, should capital losses offset capital gains in applying the second formula? Opinions differed. Edward Halbach, the trust law expert who had helped Colbert Matsumoto, criticized the formulas, calling them "incomprehensible" and "absurd as applied to Bishop Estate's circumstances,"

Representative Ed Case, whose attempt to rein in trustee compensation failed miserably in 1995, was ready to try again when the 1998 legislative session opened. Because of the May 15, 1997, march and everything that followed it, the political winds had clearly shifted.

Case believed conditions for reform had ripened. There was now widespread support for a revision of the statutory formula. Among the many voices, Cayetano said trustees should not be making more than the state's governor, whose salary was less than one-tenth of what Bishop Estate trustees were paying themselves. Halbach and other independent experts favored a bill that required fees to be "reasonable under the circumstances," an approach that could be found in a number of federal and state statutes, including one in Hawai'i having to do with fees paid to executors.

Henry Peters was the only trustee who testified at legislative hearings on this bill. Naturally, he strongly favored leaving the old formulas in place. He said they provided an appropriate incentive: "People who raise the question want us to apologize for the success of our portfolio. If we had zero returns, guess what our compensation would be." Experts testified differently. One pointed out that under the current formulas, $10 billion invested in a simple savings account, with no additional effort from the trustees, would still result in annual compensation of $2 million per trustee. Another expert noted that according to the trustees' interpretation of the current formulas, they could have paid themselves $11 million in a year during which they experienced net investment losses in excess of a $250 million.

Peters shot back, "I've had it up to here with experts." Indeed, his experiences with compensation experts had not been positive. In 1993 the trustees paid a national firm $105,000 to prepare a compensation study. But when the trustees submitted this study to the IRS in an attempt to resolve questions about the reasonableness of trustee fees paid between 1990 to 1992, the IRS responded that the study was deficient. For $269,000 more, the trustees commissioned another study by an other national firm, but its report was also found to be flawed by IRS standards: neither study, for instance, had taken into consideration compensation levels paid by other nonprofit organizations, and neither addressed the actual qualifications or performance of the five trustees whose compensation the IRS was reviewing.

Peters attributed the IRS position to prejudice: "Nobody talked about commissions when this institution had nothing but haoles here. I've been sitting back and taking all of this bull for too long and I'm personally very sick and tired of it."

Meanwhile, the question at the legislature was: could any reform get passed into law, or would the trustees' friends stop it? A potential roadblock was the House Judiciary Committee, chaired by Terrance Tom, one of the politicians alleged to have visited a strip club with Milton Holt. Tom also received $4,000 each month from Bishop Estate to provide legal services-an arrangement that had been in place for years but there was no record of Representative Tom having been called upon to render any services. Tom claimed that he was able to separate completely his work as a lawmaker from his Bishop Estate monthly retainer fee, but he agreed anyway to delegate work on this particular bill to his vice chairman, who kept it bottled up in the committee. It was later discovered that Tom stayed in direct communication with Bishop Estate's Namlyn Snow via faxes labeled "Confidential." The plan was to prevent the reasonable-compensation bill from getting out of committee and to pass a bill calling for a task force that would study the issue further.

Fortunately, critics of the trustees in the senate managed to keep alive a reasonable-compensation bill in that chamber, which made it possible for Ed Case to force a floor vote in the house.

The media reported all this to a riveted public. Despite the trustees' undeniable power in the legislature, with a public vote about to be taken, it was conceivable that this bill would pass.

Coming up to the day of the vote, there was a lot of head counting. It would be close. The difference between approval and rejection could be a matter of one or two votes-the votes, for example, of Tom and Souki, and of Representative Robert Herkes, who was on the full-time payroll at Bishop Estate. Was it a conflict of interest for someone who was on monthly retainer, or who was collecting either consulting fees or regular paychecks in each case from Bishop Estate to vote on this measure? Souki could have said it was, preventing himself, Tom, and Herkes from voting, but he did not. They all voted, and the bill failed to pass by one vote: twenty-six to twenty-five.

Speaking on behalf of Na Pua, Jan Dill expressed "dismay and disgust that so many legislators failed to vote their consciences." Gladys Brandt urged members of the house "to revive this issue before the close of the legislature." She also suggested that representatives" carefully consider how they vote, because voters of this state will not forget who in the legislature was brave enough to take a stand, and who was not." Both daily newspapers listed the phone numbers of the representatives who had voted no, and these individuals were deluged with calls from their districts. Sensing an opportunity, Case forced a second vote several days later in a seldom-used procedure that bypassed leadership. Souki called it anarchy.

This time the vote was fifty to one in favor of the bill. The public had spoken so loudly, even Souki voted for the bill. The lone dissenter, Calvin Say, would go on to replace Souki as speaker.

What does the Broken Trust book say about Dan Akaka?

The following is from pages 163-64:

The other senator from Hawai'i, Daniel Akaka, defended the trustees. He said the level of compensation was not too high; if anything, the trustees deserved to be paid more. His elder brother, Abraham, still pastor of Kawaiaha'o Church, delivered a completely different message from his pulpit. He said that the moral character of the trustees need to be carefully weighed.

VOTE 2006!...