A Boy, A School, A Princess
Sightings from The Catbird Seat
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Excerpts from the book ...
By J. Arthur Rath
© 2006, by University of Hawaii Press
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“I learned who I was...at Kamehameha”.
During the Depression years, J. Arthur Rath spent his early childhood shuttled between relatives and foster parents in Hawaii and on the mainland while his single mother, Hualani, struggled to make a living. After the attack of Pearl Harbor, his grandparents sent him to the Big Island and Konawaena School, where he heard the Kamehameha Schools boy choir at a school assembly. The performance made a deep impression on Rath, and a year later, in 1944, he entered Kamehameha as an eighth-grade boarder. Thus began Rath’s love affair with an institution that he credits with turning his life around, with giving him and other disadvantaged children of native ancestry – Hawaii’s “lost generations” – the confidence and support necessary to make something of themselves. This is the story of that love affair. It is also the story of Rath’s recent battle, together with other alumni, for the integrity of his beloved Kamehameha against the school’s trustees and their organization, the powerful Bishop Estate....
“Lost Generations” is the story of a boy’s love for his school and its royal founder, whose foresight and commitment to educating her people gave him the chance to succeed.
– From the book jacket of Lost Generations.
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EXCERPTS: CHAPTER 1 - HIGH SCHOOL REUNION - 1994
I LEARNED who I was in the eighth through twelfth grades at Kamehameha School for Boys during the years 1944 to 1949. I found out what I was from my forty-fifth class reunion. It began with a casual remark.
At the welcoming reception, classmate Tom Hugo said, “I’m pleased at how things turned out for you. My dad would have felt the same.”
Huh? I hadn’t known Tom Hugo Sr., his dad. Uncomprehending, I smiled quickly, nodded my head while saying “thanks,” and went to the next event – an orientation on the new directions for Kamehameha Schools.
We sat in the auditorium containing so many fond memories as the speaker said, “Kamehameha wants early achievers. We’re enrolling those who’ve proved to be outstanding students by the sixth grade.”
Older alumni looked uneasily at each other.
Many of us wouldn’t have been admitted under such criteria. Erratic early school records would certainly have kept me out. I shuffled through five schools in two states and on two islands during my first six grades....
This happened in June 1994 during Kamehameha Schools new “alumni week.” It was my first association with class members in forty-five years....
We older male alumni had attended a diversified Kamehameha that offered pre-college, general studies, and vocational education paths. All boys took some vocational courses, starting in the schools vegetable gardens. Girls chose precollege or general education, and all learned home nursing. Young women boarders acquired social graces within a finishing school environment.
Only a college preparatory program remained....
Princess Bernice Pauahi Bishop willed her wealth to educate Hawaiians, to help them meet challenges from an encroaching Western civilization. Kamehameha Schools purpose was to produce “industrious men and women.”
I had an idea: Our class represented the diversified educational tracks Kamehameha once offered. During our fiftieth reunion we could present trustees with a summary of our career outcomes. Maybe this would help make the schools more inclusive again. After all, Oz Stender, vocational student from the class of 1950, became an important businessman and is now a Bishop Estate trustee. I’d do the research and find out if classmates wanted me to draft such a letter....
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EXCERPTS: CHAPTER 2 - ALUMNI OFFER HELP - 1994
DON HO invited classmates to his evening show at Waikiki’s Polynesian Palace Hotel; our drinks were “on the house.”...
Sitting grouped in a circle in his apartment-sized dressing room, we were enjoying the lingering good feeling his shows create when Don asked, “What can we do to help the Bishop Estate?”
We’d toured Bishop Estate headquarters at Kawaiahao Plaza that afternoon. An investment department official told us how rich the estate was becoming and encouraged us to bring any good deals to his attention. While the crowd moved on to an outdoor party, I asked what was considered “a good deal.”
“Anything yielding the equivalent of a 25 percent annual return,” he replied....
Don explained that the state legislature enacted a law forcing the Bishop Estate to sell land leased to homeowners at a fraction of its value.
Those of us living on the mainland were hearing this for the first time and expressed the fear that Kamehameha would lose its financial base.
“Why not organize a political action committee?” suggested one.
“Yes; 20 percent of Islanders are Hawaiians who can help influence political opinion,” responded another.
“Let’s talk with Oz Stender about it,” urged a third....
Oz hosted a lunch at the Oahu Country Club and invited representatives from other classes, a member of the estate’s legal staff, and its government relations manager. He’d checked with estate’s lawyers before arranging the luncheon; they reviewed our plans and didn’t think they posed any problems. As far as Oz was concerned, we had a green light and could start the plan after the meeting....
The meeting went well. The lawyer was very positive, but the government relations manager said virtually nothing and just looked sour and annoyed. Judge Fernandez met privately with her after the meeting while I paced excitedly in the country club lobby.
Bill Fernandez appeared about an hour later. He had a long expression and shook his head. The government relations manager told him our plan was impossible because, in her words, “Political activity puts the estate’s tax-exempt status in jeopardy.”
“I explained it again to her,” Bill said; he was trying to reassure me that he did his best. “I promised her that we’ll implement the program ourselves, raise outside contributions for political education, and distribute money fairly in a nonpartisan way to candidates interested in helping Hawaiian children. ... I explained that we wouldn’t identify ourselves with the Bishop Estate.
“She looked me straight in the eyes when she said, ‘The estate has a completely hands-off policy on any political activity. It does not encourage participation by groups connected with the estate in any way.’”
“I reminded her, ‘We, not the Bishop Estate, we’ll be doing this.’
“She answered, ‘Alumni will be linked implicitly with the Bishop Estate.’”...
The next day I went to the trustees’ headquarters to talk with the government relations manager.
“Alumni just want to be helpful,” I explained. “Hawaiians are vastly outnumbered in the legislature. They have little political clout with elected representatives because not enough of them vote. Encouraging Hawaiians to be part of the political process is the crux for our plan.”
Unaware that I was talking with “Madam Svengali,” I thought her answer was incredibly naive: “The estate can master support in front of the legislators. I arrange for alumni to show up and carry signs.”
She just doesn’t get it, I thought, attempting to depart graciously.
Don, Bill and I ate chow mien in a small restaurant after Don’s late show that night. I told Don the estate couldn’t accept our help because it had to avoid political activity. Bill repeated what he had been told and concluded with this observation: “Trustees are going to extreme lengths to be proper.”
The Bishop Estate’s government relations manager had perfected the art of political misdirection.
For more, see www.starbulletin.com/2000/10/31/news/story1.html
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EXCERPTS: CHAPTER 32 - BOBBY HARMON LOSES HIS JOB
OZ STENDER hadn’t been the only insider questioning trustees’ decisions. Bobby Harmon served for eight years as the estate’s “risk manager” – in charge of its insurance programs – and a president of P&C Insurance Co., a for-profit subsidiary he helped organize. By 1994 he had reached the pinnacle of his career, and life was good. Bobby prided himself on his high principles and professionalism.
Federal Insurance Company, Inc., a member of the Chubb Group, conducts business through insurance brokers as well as through licensed general agents of the company. In Hawaii, one of Federal’s licensed general agents is Marsh & McLennan, Inc. “M&M” as it is known, is the world’s largest insurance brokerage firm. It was very chumy with the investment arm of Bishop Estate.
It was a coinvestor with the Bishop Estate in Underwriters Capital Ltd., a short-lived Bermuda company with losses of several million dollars in its first year of operation. As was his practice, Henry Peters became a director for Underwriters Capital. The Bishop Estate also invested heavily in a former M&M subsidiary acquired by Terra Nova, another insurance company.
While president of P&C, Bobby received an insurance management proposal from M&M for services on a time-and-expense basis, at an estimated annual cost of around $70,000. There was no mention in the proposal that M&M would charge an additional $200,000 annual fee for brokerage, risk management, or other services....
Bobby refused to pay the $200,000 service fee for work he felt was not under contract and unjustified. He pointed out that premiums to M&M for insurance could be obtained through other insurance brokers at substantially lower cost.
It became apparent to him that Nathan Aipa, his direct supervisor, and Henry Peters wanted tight control over all insurance matters, including parceling out related legal work to attorneys they selected.
On October 11, 1996, Bobby was called into a meeting by Henry Peters, acting in his role as Bishop Estate trustee and chairman of the board of P&C. With him was Nathan Aipa, Bishop Estate general counsel and assistant secretary and assistant treasurer of P&C. “You can be replaced as president of P&C if you fail to follow Nathan’s directives,” Henry said. Bobby didn’t “sell his soul” and continued working for the good of the trust.
He told representatives of Coopers & Lybrand, the estate’s auditors, of his concerns over apparent sweetheart deals with M&M. He said he would not sign P&C’s annual financial statements because of the apparent conspiracy among certain trustees, managers, directors, and officers at Bishop Estate, P&C, and M&M to defraud the Bishop Estate, P&C, and the IRS....
A month after Bobby was warned, Peters fired him from P&C and Aipa fired him from the Bishop Estate.
Almost a year passed. Then, in August 1997, three months after Auntie Nona demonstrated that it was possible to criticize Bishop Estate trustees, Bobby fearlessly stepped forward.
He spoke to an Associated Press reporter, a local TV reporter, and a Honolulu Advertiser reporter about how the Bishop Estate was exposed to hundreds of millions of dollars in damage claims and millions of dollars in legal fees because trustees tried to keep their insurance company and the public from knowing about embarrassing lawsuits on the mainland.
He told them Bishop Estate employees “controlled” and “managed” claims directly with outside lawyers and disregarded insurance company guidelines regarding use and payment of these firms.
He talked with reporters about a $2.3-billion lawsuit in 1993 against the trustees and others who had participated in other ventures with the Bishop Estate. Henry Peters and his cohorts viewed Bobby Harmon as a loose cannon on the deck of their jolly ship....
The story of the estate’s $85 million investment in McKenzie Methane Inc., a Houston-based energy company, had been covered by local newspapers two years earlier. Several trustees and estate executives added $3 million of personal investment to this venture. It went into bankruptcy. Local newspapers stated that the troubled deal could cost the estate as much as $65 million in lost capital and at least twice that much in lost earnings and tax benefits....
This was no longer “news,” but the $2.3-billion legal suit was. The estate was entitled to legal defense reimbursement under an insurance legal liability policy. Bobby learned of this lawsuit several months after it was filed, only as a result of he inquiring about unreported claims as he prepared to renew the insurance policy. When he reported this claim to the insurance carrier, Aipa immediately took control and directed that all correspondence to or from the carrier should come to his attention.
“Nathan Aipa repeatedly refused to furnish information to the insurance company regarding the claim, despite frequent and urgent requests,” Bobby said ...
Eventually, the insurance company closed its files on the case due to Aipa’s failure to respond to requests for information. The actual cost to the estate is unknown, but Bobby estimates that the loss of legal defense reimbursements alone could easily have been in excess of a million dollars....
For more, see: Confessions of a Whistleblower; Claims By Harmon; RICO in Paradise; U S Dept of Justice, David C. Farmer, Trustee vs. Harmon; Latest Songs by Bad Faith & The Whistler
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MORE TO COME
MEANWHILE, FOR MORE FLOCKING BIRDS, GO TO...
DIRTY MONEY, DIRTY POLITICS & BISHOP ESTATE
Part II - Part III - Part IV - Part V
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HOW TO PLUCK A NON-PROFIT
A CONNECTICUT YANKEE IN KING KAMEHAMEHA’S COURT
CLAIMS BY HARMON
CONFESSIONS OF A WHISTLEBLOWER
DIRTY GOLD IN GOLDMAN SACHS
PREDATORS OF PARADISE
THE PUNA CONNECTION
THE PIRATES OF PUNALUU
RICO IN PARADISE
THE DEPARTMENT OF HOMELAND SECURITY
ALLIED WORLD ASSURANCE
ACE UP THE SLEEVE
ALEXANDER & BALDWIN
ALOHA, HARKEN ENERGY
BAILING OUT WALL STREET
THE CARLYLE GROUP
THE BLACKSTONE GROUP
BUZZARDS ON THE BAR
BUZZARDS IN THE HALLS OF JUSTICE
BUZZARDS OF PARADISE
A CONNECTICUT YANKEE IN KING KAMEHAMEHA’S COURT
KAJIMA: BLOOD, BRIBES & BRUTALITY
THE KAMEHAMEHA SCHOOLS’ RETIREMENT FUND
THE MYTH & THE METHANE
THE NATURE CONSERVANCY
NO BAILOUT FOR BILLIONAIRES
THE PEREGRINE FUND
HOW TO PLUCK A NON-PROFIT
I SING THE HAWAIIAN ELECTRIC
THE CONSUELO ZOBEL ALGER FOUNDATION
THE JOHN M. OLIN FOUNDATION
THE QUEEN LILIUOKALANI TRUST
THE GREAT NEST EGG ROBBERIES
THE HARMON ARBITRATION
MARSH & McLENNAN: THE MARSH BIRDS
THE FREEDOM TO SING
THE NESTS OF CB RICHARD ELLIS
THE POOP ON AON
PRUDENTIAL: A NEST ON SHAKY GROUND
P-S-S-T, WANNA BUY A GOOD AUDIT?
THE STORY OF ENRON
SUKAMTO SIA: THE INDONESIAN CONNECTION
VULTURE NESTS ALONG WALL STREET
VULTURES OF THE SANDWICH ISLES
THE WASHINGTON BASEBALL CLUB
WHAT PRICE WATERHOUSE?
YAKUZA DOODLE DANDIES
ZEROING IN ON ZURICH FINANCIAL SERVICES
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Originally posted: March 22, 2006
Last updated July 19, 2009, by The Catbird
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