Bobby N. Harmon, CPCU, ARM
Honolulu, Hawaii 96818
April 12, 1998
Federal Bureau of Investigation
Prince Kuhio Federal Building, Rm. 4307
300 Ala Moana Blvd.
Honolulu, Hawaii 96850
Re: Investigation Relating to Milton Holt and Bishop Estate
Gentlemen:
This is to provide information relating to your investigation into the possible misappropriation of campaign funds by Milton Holt.
I was employed by Kamehameha Schools Bishop Estate (KSBE), a tax-exempt charitable trust, as their Risk/Insurance and Safety Manager from November, 1988. I was president of P&C Insurance Company, Inc. (P&C), a for-profit subsidiary of Pauahi Holdings Corporation (PHC) from October, 1994.
I was terminated from my position at KSBE by Nathan Aipa on November 20, 1996; and from my position at P&C by Henry H. Peters on the same date.
I have previously provided information to the I.R.S., the State Attorney General, the court-appointed Master for KSBE, the State Insurance Commissioner, Coopers & Lybrand and the five trustees of KSBE, regarding various questionable, and possibly illegal, activities I witnessed while I was employed by KSBE and P&C.
In a letter to KSBE's trustees dated 12/29/96, I described various political activities by Henry Peters, Milton Holt and others, which appeared to be highly questionable, if not illegal. One concern I expressed was the use of KSBE personnel and Bishop Museum facilities to campaign for the elections of Peters, Holt and Robert Herkes. (The trustees for KSBE and the Charles P. Bishop Estate, which endowed the Bishop Museum, are the same.) In my letter, I also described an occasion when Gil Tam asked me to help campaign for Henry Peters' reelection.
Another issue in my letter touched on the extensive, secretive "lobbying" activities going on at the estate. The Government Affairs Department, headed by Nam Snow, reviews every bill introduced each year in the legislature. Key managers in many departments, including myself for insurance-related bills, were asked to provide comments and advise if the estate should lobby for the bill or not. This activity consumed thousands of hours of staff time.
In my letter, I described a situation involving Rocco Sansone, Vice-President, Marsh & McLennan, Inc. Sansone had asked me to talk with Henry Peters about supporting a bill for "wrap-up" insurance legislation. This legislation, if passed, would be of great financial benefit to M&M. I saw no benefit to KSBE in the legislation; consequently, I did not push this with Peters or the Government Affairs Department. Sansone advised me later that he had met privately with Peters for assistance in supporting the bill, and he indicated that KSBE would help push it through.
Another bill that M&M appeared to be pushing at the time was a "pure Automobile No-Fault" bill. Coincidently, or not, Milton Holt was taking the lead role in pushing this bill in the legislature.
At the time, I felt these were breaches of fiduciary duties on the part of Peters. But these breaches, of course, pale in comparison with the allegations that Holt used his KSBE credit card to charge thousands of dollars at strip bars and Las Vegas casinos.
These incidents, which apparently occurred on frequent occasions over a period of years, were not reported to me during the time I was employed at the estate. In my position as Risk/Insurance Manager, I would have been obligated to report any unauthorized credit card charges of this nature to KSBE's crime insurance carrier as a misappropriation of KSBE funds. These losses would have been insured under the Employee Dishonesty section of their Crime insurance policy. It would not have been necessary for KSBE to give Holt a retroactive pay raise, as has been reported in the media, in order for Holt to "pay back" these "unauthorized" charges to the estate.
As I am familiar with the policies and procedures of KSBE relating to company expense accounts and use of credit cards, I believe that it would be very difficult for any employee to use their KSBE credit card, or to be reimbursed in other ways, for unauthorized and/or inappropriate expenses without the knowledge and approval of the employee's supervisor, the Budget Manager, the Controller Division and the person who signed the checks (who I suspect would have been Henry Peters).
Employees are required to complete Business Expense Request forms, giving the names of all persons attending business meetings, being entertained, etc., and the business purpose of the meeting. This form must be approved by the employee's supervisor. The form then is usually reviewed and approved by the Budget Manager, the Controller's office and one or more of the trustees. Therefore, it would appear that either Holt falsified these expenses, or else they were approved by his supervisor, the Controller, the Budget Manager, and a trustee or trustees.
Unfortunately, I cannot provide you with a copy of my letter of 12/29/96, as KSBE obtained a court order for the return of all my letters and personnel records, even the letter which I sent to the trustees after my termination. However, I thought that the information provided in this letter, as well as some of my recent correspondence with other governmental agencies, might be of some assistance in your investigation.
If I can be of any further assistance in this matter, please feel free to contact me at 839-0654 (home) or at 522-8686 (work), or at the address shown above.
I commend you for your investigation, and wish you quick success.
Very truly yours,
Bobby N. Harmon
encls.
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