More Money, More Problems
How one of the world’s largest charitable funds, Bishop Estate, with a value of around $11 billion dealt with corruption and mismanagement.
Although Bishop Estate has greatly contributed to the upliftment of the Hawaiian community through education, community programs, scholarships, and much more, the management of Bishop Estate, in the past and perhaps in the present, have in the name of fulfilling Princess Pauahi’s will, displaced Hawaiians, and possibly contradicted Pauahi’s trust.
The great-granddaughter of Kamehameha I, Pauahi Pākī, was born on December 19, 1831 in Honolulu, Hawai‘i. Her parents were Abner Kuho’oheiheipahu Pākī, high chief and son of the King of Maui, Kamehamehanui Ailuau, and Laura Kōnia Pākī, high chiefess and advisor to Kamehameha lll.
“As the last royal descendant of the Kamehameha line, Pauahi inherited thousands of acres of land, much of it from the estate of her cousin Princess Ruth Ke‘elikōlani. Her inheritance, about nine percent of the island chain’s total acreage, made Pauahi the largest landholder in the kingdom”(Pauahi Foundation).
After Pauahi’s death on October 16, 1884, Charles Reed Bishop, her American husband, was named a trustee of Bishop Estate and later founded Kamehameha Schools. Ironically, Robert Wilcox, one of the primary American men who helped overthrow Hawaii, gave a speech at the graduation of the first class of Kamehameha Schools in 1891.
After the removal of all five trustees appointed by the Supreme Court, Henry Peters, Richard “Dickie” Wong, Lokelani Lindsey, Gerard Jervis and Oswald Stender, in the late 1990’s, the selection of Bishop Estate’s board members has been an extremely sensitive matter. In past years, the selection of trustees was made more for the best interests of the current political regime rather than a qualified candidate to act in the best interest of nā kanaka maoli (Native Hawaiian people).
“In 1971, during Jack Burn’s third term as governor, a seat on the Bishop Estate board became vacant. Now he [Burn] had someone in mind for the Bishop Estate opening: Matsuo Takabuki. The chief justice, Richardson, had been Burn’s lieutenant governor until the governor moved him to the top seat on the bench. Now, in 1971, Richardson and the other justices did as Burn’s asked: they chose Takabuki as a trustee. As the governor’s campaign organizer and moneyman, he was Burn’s closest confidant. The selection of Takabuki, announced in the middle of the standoff at Kalama Valley, stirred up a storm of protest.”(Broken Trust 66).
After countless threats to resign, petitions, letters, and meetings, both in secret and with the board members themselves, which outlined the concerns and demands of the people of Hawaiʻi, the Bishop Estate trustees, at the time, failed to compromise with the very people of the trust helped.
Referring to the early stages of the 2006 book, Broken Trust: Greed, Mismanagement & Political Manipulation at America’s Largest Charitable Trusts, the essay at the time, was the one of only exposés that showed the severity of corruption with mismanagement of the Estate.
“Five people had submitted “Broken Trust” to the Star-Bulletin […] A former Kamehameha principal, two judges, a professor of trust law, and a Catholic priest. Four of the five were Hawaiian: Brandt, Heen, Kekumano, and King. And four of these were also kūpuna, Hawaiian elders, with the wisdom of age: Heen was sixty-nine; Kekumano, seventy-eight; King, eighty-one; and Brandt, ninety. These did not seem like people who would try to garner publicity for themselves or hurt the sacred trust of a Hawaiian princess, an aliʻi nui”(Broken Trust 153).
Its was not in the best interest of the Trust to hire a fact-finder and probate judge, who was not only being paid by the very people he’s legally analyzing, but a relative of one of the trustees as well.
“Wong and Lindsey did not tell Benham that lawyers for the trustees were at that very moment asking the probate court to appoint a retired probate judge, Patrick Yim, as a fact-finder to look into allegations of mismanagement at
Kamehameha Schools”(Broken Trust 146).
There was a lack of oversight and accountability for the trustees, allowing them to get away with many shady and illegal acts.
“Stories were told: […] How Waiheʻe, after failing to get onto
the board, went straight from the governorʻs office to a law firm that was paid seven-figure legal fees to preserve the right of the Bishop Estate trustees to pay themselves excessive compensation.[…] How Lokelani Lindsey used Bishop Estate staffers for her own private purposes. How Henry Peters negotiated a transaction on behalf of a group buying real estate from the Estate. How trustees improperly put their own money in a Bishop Estate oil deal”(Broken Trust 152).“KS/BE trustees have paid themselves annual fees averaging about $900,000 each. They argue that this has been within the compensation cap set by mechanical application of Hawaii’s statutory fee provision. But the nation’s preeminent authority on trust law has called this formula “practically incomprehensible … an awful statute(Roth).
However, to what extent can one judge how the management of Bishop Estate invests their money because, ultimately, Bishop Estate does more “good” than “bad” and positively impacts Hawaiʻi’s youth, in ways no other charity could.
La Croix, S., Mak, J., & Rose, L. (1995). The Political Economy of Urban Land Reform in Hawaii. Urban Studies, 32(6), 999–1015. Retrieved from http://www.jstor.org/stable/43198108
Pauahi Foundation. (2021). Our legacy. Pauahi Foundation. Retrieved September 26, 2021, from https://www.pauahi.org/our-legacy.
Roth, R. W. (1998). Overview of the Bishop Estate Controversy. The International Journal of Not-for-Profit Law, 1(2).
Roth, R. P., & King, S. (2006). Broken Trust: Greed, Mismanagement & Political Manipulation at America’s Largest Charitable Trust. University of Hawaii Press.
Disclaimer: I am only analyzing the complexity of Bishop Estate’s legal and political history in order to bring awareness and encourage others to know about Bishop Estate’s history.
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