Nearly 20 years ago, the book "Broken Trust" shared an account of what led to the overhaul of the Bishop Estate, now known as Kamehameha Schools. Bishop was one of the most powerful land trusts in the country some 25 years ago.
Humility is a value in Hawaiian culture, and on the Bishop Estate board, it had been replaced by arrogance, some say. The Bishop Estate trustees, who controlled billions of dollars, had lost their way.
The groundswell that followed was dramatic. The IRS threatened to rescind the estate's tax-exempt status, and a group of community leaders stepped up to say enough. They marched in numbers — and the rest is history.
"Broken Trust" was penned by a law professor, a federal judge, a state judge, a priest and an educator. It has been released as a free e-book and, more recently, as a free audiobook, thanks to Kamehameha Schools. Following the scandal, the estate changed its name to Kamehameha Schools to reflect its mission.
One of the book's authors, retired University of Hawaiʻi law professor Randall "Randy" Roth, spoke to The Conversation alongside Louise Kealiʻiloma King Lanzilotti. Her father, the late federal judge Samuel P. King, was the co-author.
Lanzilotti also voiced the audiobook. But you may know her as the host of HPR's Hawaiian music program "Kanikapila Sunday."
"I've read the book several times. It's even more shocking when you hear it aloud. I would even say, you know, I would know that a chapter would end on a high note because it always did, it was very well-written book. But sometimes I would just go, oh my goodness, it's even worse than I thought," Lanzilotti said.
In a nod to the importance of media, back then Honolulu was a two-newspaper town. Roth said that the larger morning newspaper, The Honolulu Advertiser, declined to share the original 1997 essay about the estate, so he turned to the Honolulu Star-Bulletin.
The essay was later expanded in the 2006 book "Broken Trust: Greed, Mismanagement & Political Manipulation at America’s Largest Charitable Trust."
Interview Highlights
On why Bishop Estate trustees were not formally questioned or criticized
RANDY ROTH: There was a price to pay that the trustees themselves were known as being very vindictive. You didn't want to cross them. But they had their tentacles in the executive branch, the legislative branch and the judicial branch. And an awful lot of people who were in a position to see that things were not right, for whatever reason, chose not to cross these powerful people. And it was only when members of the Native Hawaiian community, and particularly the Kamehameha Schools ʻohana, the alumni in particular, and then there were teachers at the school that formed a group, Nā Kumu, and a group of alumni that formed a group, Nā Pua, and these folks were so courageous. I mean the risk to them that their kids or grandkids wouldn't be admitted to Kamehameha School, that they would lose their jobs, that all sorts of bad things were happening, but they could see that what was going on was wrong, and they stood up and they got the job done.
On how the IRS forced changes at the Bishop Estate
ROTH: I got involved because I happened to teach a lot of different courses that involved legal principles that were involved in this situation. But one of those courses that I have taught for many years was taxation, and I was absolutely convinced that these trustees were going to lose the tax-exempt status of this charitable trust. We eventually learned that had that happened, and they were on the verge of losing it, we learned that from the IRS, had it happened, the IRS would have sent a bill payable immediately for upwards of a billion dollars, and taxes would have been imposed at at least $100 million per year, each year going into the future. And so that really concerned me that they were going to hurt all of the children and future generations of children that should be benefiting from Princess Pauahi's Trust but wouldn't. And what the IRS did is interesting. When everything came apart for those trustees and they were kicked out, it was because a federal agency, the Internal Revenue Service, forced the action. The local judiciary, it was as if they were paralyzed. It was like they just couldn't make the decision to remove these trustees. The IRS didn't have the power to do it themselves. But what they did was, in effect, make the local judiciary an offer it couldn't refuse. The IRS said either you remove these trustees immediately or we're going to send you a bill for a billion dollars and $100 million a year going forward, in other words, we're going to take away the tax-exempt status. The IRS had never done that before. They haven't done it since. Some of my scholar friends have sharply criticized the IRS, and it was an almost unbelievable flexing of muscle. But at the time, it was either that or the status quo was going to continue. And so I had very mixed feelings about the IRS coming into town and forcing the local judiciary to take action.
On accountability for the breaches of trust
ROTH: After the IRS forced the local courts to remove the trustees and get the trust back on the right path, there was virtually no accountability for a world record of breaches of trust, for a lot of shortcomings in the judiciary, especially with the justices who shouldn't have been picking trustees in any event, and then when they did, they were doing it on a total politicized basis. There was no accountability there. There were an awful lot of lawyers that, I believe, enabled, facilitated, protected those trustees. There was no accountability there. I guess it makes sense. As politically powerful as the people involved in all of this were, I guess it makes sense that the people in power at the time just kind of brushed it under the rug and said we want to look forward, not back, we want closure and healing — where we needed transparency and accountability. So I think one reason why we had the recent crime wave of public corruption, the Kealoha cases and other local cases, I think in many ways it's directly attributed to the lack of accountability following the whole Bishop Estate controversy. And so a book can't by itself do what government should be doing, but hopefully there will be enough people reading and now listening to the book that they'll say, whoa, we as a community have to get a lot better at holding accountable people who engage in wrongdoing.
On her family's relationship with Bishop Estate over the decades
LOUISE KEALIʻILOMA KING LANZILOTTI: My grandfather was a Bishop Estate trustee, and back in the day, in the '50s, the Bishop Estate trustees were dedicated to doing what the mission of the Bishop Estate was, which was to provide education for children. And as the state grew and grew and grew and into the '70s and '80s, it started becoming much more political. Who were the trustees? They were named by the Supreme Court, as was said in the will, but they were named by the Supreme Court. But yeah, being with my dad, I would see people being chosen for Bishop Estate, and he would just shake his head or say something about it — and it just got worse and worse. And there were some appoints at which he did speak up a little bit. He was involved in a couple lawsuits to get things done there. But he did not go to Kamehameha. He was not an alumnus, but he was watching out over this estate because Grandpa had been there and because it was important to him. He didn't want to be a trustee. He was a lawyer, a judge. But then, as it became more and more obvious that, you know, they were taking a lot of money, they were not really taking care of the students, the community got involved, and they got involved over Lokelani Lindsey, who was a trustee that was supposed to be in charge of education, which is not really the role of the estate. The trustees are overseeing the estate, right... So she was micromanaging. And so the people got very upset, and they had a march, as you were discussing, in '97 and so that march, I think, set off the ability for them to speak up. But then all these other things were happening in the middle. My father was very worried about the fact that the Supreme Court was still naming the trustees. But then there were all these lawsuits going on in which the trustees were then involved in the lawsuit, but the Supreme Court was hearing the case, and that's, I think, trustee, you know, 101, that's a conflict of interest.
On accountability at Hawaiʻi institutions
ROTH: I think the IRS forced a lot of important changes at the trust, Kamehameha Schools as it's now called. And I think the people who've been in charge of that trust during this 20-some year period have taken those changes very seriously, and I think from what I can tell, they're not doing anything nearly like what the trustees who were kicked out were doing. I'm not as sure that people involved in government agencies — whether it's the executive branch, legislative branch, judiciary — I'm not as sure that there's been significant change there. When I read Ali Silvert's "Mailbox Conspiracy" and I see how obvious it had to be within the police department and the prosecutor's office that there was very serious wrongdoing going on over an extended period of time, and there were zero whistleblowers from these two offices that are just filled with really smart people who are trained in spotting wrongdoing — there's something wrong there. There's something of great concern. It's almost like they thought people had too much clout to be questioned, which is exactly word for word what The Wall Street Journal had said about those trustees who several years later were kicked out.
LANZILOTTI: We must keep learning from what happened, and we must keep trying to live well. And to me, living well means living honestly and trying to make the world a better place. So, you know, we have to keep moving ahead no matter what, that's what I say. And this book gives you a lot of good examples of people who acted really well while everyone else was acting badly.
ROTH: And these weren't people who ran big organizations. These weren't people that were in government positions. These were just regular people, and I agree that's the message.
This interview aired on The Conversation on July 3, 2024. The Conversation airs weekdays at 11 a.m. on HPR-1. Sophia McCullough adapted this story for the web.
