Broken Trust At Hawaii's Bishop Estate?

When Hawaiian Princess Bernice Pauahi Bishop died more than 100 years ago, it was her dream to establish a school in Hawaii that would last forever. To that end, the Princess created a trust that included vast lands in Hawaii to which she was the sole heir. Today, the Princess' assets, called the Bishop Estate, are worth between $6 billion and $10 billion and include prime real estate in Waikiki and a 9.5% stake in Goldman Sachs. But her philanthropic trust--created to ensure that native Hawaiian children get a decent education--is being rocked by a slew of embarrassing allegations. On Sept. 10, State Attorney General Margery S. Bronster charged the estate's trustees with financial mismanagement, excessive compensation, and kickbacks. The five trustees deny any wrongdoing, but two are cooperating with Bronster. Two grand juries and the Internal Revenue Service are also investigating the estate. It's enough to make a princess weep.

Bronster also took the unprecedented step of asking the Hawaii Probate Court to immediately remove four of the five trustees and to place the trust in receivership to prevent further damage to the trust or its beneficiaries--the students of Kamehameha Schools, the ones owned and operated by the Bishop Estate. Probate Court Judge Colleen Hirai is expected to rule on the Attorney General's request in a few weeks.