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Monday, February 22, 2010
Reservation for a Broken Trust?
By Andrew Walden @ 12:07 AM :: 23658 Views :: Akaka Bill, Ethics, Hawaii History

By Andrew Walden  (Originally published August, 2005)

The Aug. 25, 2005, announcement of an agreement between Gov. Linda Lingle and the Bush administration’s Department of Justice on four amendments to the Akaka Bill (S147) increases the chances of the Bill’s passage in the U.S. Senate and the House. Since no court in the history of the United States has ever overturned Congressional approval of a tribal group, there is cause to look ahead at the possible forms a Hawaiian "tribal" government could take.

U.S. history has precedent for two types of native organizations: Indian reservations and Alaskan native corporations. Alaskan native corporations are for-profit corporations owned and operated by the members of native Alaskan tribes as stockholders. Each member is an equal shareholder. They are subject to most of U.S. corporate law, but are able to protect the tribal benefits from race-discrimination lawsuit claims by providing benefits on the basis of tribal membership rather than race -- even when the two are indistinguishable. Alaskan natives have been able to enjoy the profits coming from their corporate assets, thus increasing their economic status. Indian Reservations, on the other hand, operate often as a power unto themselves without state oversight and with very limited federal oversight. For that reason, poverty and corruption are the norm on many U.S. Indian reservations.

Contrary to popular opinion, Indian reservations have a history in Hawaii. An Oct. 12, 1999, article in the Honolulu Star-Bulletin describes the efforts of Kamehameha Schools/Bishop Estate (KSBE) trustees in 1995 to evade oversight of their corrupt doings. The Trustees’ self-serving investments caused losses of $264,090,257 in 1994 alone. To avoid scrutiny, they considered moving KSBE corporate headquarters out of Hawaii to the windswept plains of the Cheyenne River Sioux Indian reservation in South Dakota.

    In an apparent attempt to circumvent state and federal oversight, the Bishop Estate paid Washington D.C.-based (law firm) Verner Liipfert Bernhard McPherson and Hand more than $200,000 to look into moving the estate's legal domicile, or corporate address, to the mainland, sources said.

    Verner Liipfert, whose local office is headed by former Gov. John Waihee, identified the Cheyenne River Sioux Reservation as the top relocation prospect after reviewing the legislative, tax and judicial environments of 48 mainland states and Alaska.

    The study was part of a broader effort by the former board members to lobby against federal legislation limiting trustee compensation and to convert the tax-exempt Bishop Estate to a for-profit corporation.

The KSBE trustees’ efforts are also described in "The Cheating of America" by Charles Lewis and Bill Allison of The Center for Public Integrity. They quote former Hawaii Attorney General Margery Bronster explaining KSBE’s actions: "Their main motivation was to avoid oversight from the State Attorney General and the IRS."

The Honolulu Star-Bulletin further points out:

    Gregg Bourland, chairman of the Cheyenne River Sioux tribal council … said there is good reason for an entity like the Bishop Estate to make inquiries about changing its domicile to the South Dakota reservation ...

    Since the 1800s, the Cheyenne River Sioux have had a government-to-government relationship with the United States which allows them to operate their own police force, court system and legislative functions.

    Such a system may shield the trust from Hawaii Probate Court jurisdiction, although Bourland was unsure if the IRS would continue to oversee the trust.

Such a move would have also shielded Bishop Estate from the investigations that state Attorney General Margery Bronster was forced to launch as "Broken Trust" revelations emerged in the press. According to Lewis and Allison the activities Bishop Estate trustees were attempting to shield included:

  • Giving themselves significant pay raises, even while programs at the school were being cut;

  • Moving profits from the estate’s taxable subsidiaries back into the (non-profit) estate to lessen the subsidiaries’ tax burdens;

  • Investing in questionable ventures recommended by a trustee’s personal acquaintances, including an Internet directory of would-be-adult-film actors and casting agents;

  • Frequenting adult entertainment clubs and casinos using money from the charitable trust’s coffers, reportedly inviting state legislators on such trips; and

  • Lobbying Congress to defeat or alter legislation designed to give the IRS more authority to penalize their multi-million dollar compensation packages.

    As U.S. District Judge Samuel King told the Honolulu Star-Bulletin:

      "It's another indication of how arrogant, greedy and insensitive this whole bunch is ... Their claim that they are supporting Princess Pauahi's will is laughable."

    While looking into a move to the Cheyenne River Reservation, KSBE trustees paid $900,000 for Verner, Liipfert to lobby Washington against the 1996 "Intermediate Sanctions Act" which, as Lewis and Allison explain:

      ...(would impose) an excise tax on "insiders" at non-profit organizations who partake in "excessive benefit transactions" --exactly the sort of transactions that the Bishop Estate trustees were involved in for years.

      Among those enlisted by the Bishop Estate was former Hawaii governor John Waihee, who after leaving the gubernatorial mansion joined Verner, Liipfert. Waihee met with Clinton’s then deputy chief of staff, Erskine Bowles, in late 1995 to discuss the bill; he and his wife have also spent the night at the White House as a guest of the President (Clinton). Waihee’s partner at Verner Liipfert, former Senate majority leader George Mitchell, also contacted Clinton’s then chief of staff, Leon Panetta, about the bill.

    The Akaka Bill is justified by its supporters as necessary for the defense of public and private native Hawaiian entitlement programs set up beginning with the 1884 founding of the Bishop Estate, continuing with the 1920 Hawaiian Homelands Act and the 1978 creation of the Office of Hawaiian Affairs.

    These programs are thrown into question by what Hawaiian leaders refer to as "the lawsuits" -- starting with Rice v. Cayetano. The Feb. 23, 2000, U.S. Supreme Court decision in the Rice v Cayetano case ended Hawaiian-only elections for the Office of Hawaiian Affairs (OHA). Rice’s attorney at the time of filing in 1996 was John Goemans, a former Hawaii Democratic state legislator who describes himself as a "left wing liberal" in an Oct. 27, 2003, interview with The Honolulu Advertiser. Representing the state of Hawaii before the U.S. Supreme Court was John Roberts. Roberts is now President Bush’s nominee for the U.S. Supreme Court.

    But these were not the only attacks on Hawaiian entitlements in the 1990s. In fact what Hawaiian leaders refer to as "the lawsuits" began almost exactly at the same time as the Broken Trust scandal revelations emerged. Lokelani Lindsey, the last of the five "Broken Trust" Bishop Estate trustees, was forced to resign Dec. 16, 1999. A few months later, in 2000, the first version of the bill that bears his name was introduced by Sen. Daniel Akaka.

    Passage of the Akaka Bill would open up debate and negotiations on the form and scope of a new Hawaiian government. This could bring lobbying for an Indian Reservation by those political forces wishing to restart their looting of Princess Bernice Pauahi’s legacy.

    The corrupt forces who believe in moderation to avoid detection may favor the Alaskan Native Corporation model. To understand the danger posed by adoption of the Indian Reservation model, consider this: over 100 Hawaii Democrat politicians (and one Republican) have been charged, convicted and sentenced for campaign spending violations and other illegal political schemes since 1997.

    Current OHA trustees include OHA Vice President, John Waihee IV, son of former governor John Waihee III.

    Another current OHA trustee is Oswald Stender who resigned as a Bishop Estate trustee in 1999. Singled out for praise by the five authors of the key "Broken Trust" Honolulu Star-Bulletin article, Stender nonetheless was one of the five trustees whose high pay forced the IRS to threaten to revoke non-profit status for KSBE.

    OHA Chief Counsel, Robert Klein was an associate justice of the Hawaii Supreme Court until he resigned on Feb. 1, 2000. He authored the PASH decision in 1995 which includes the statement, "western understandings of property law … are not universally applicable in Hawaii." An editorial in the Jan. 19, 2000, Honolulu Star-Bulletin explains:

    Klein’s most notable act as a Supreme Court justice may have been his authorship of a decision allowing native Hawaiians to go onto private property to engage in traditional religious, cultural and gathering practices ...

    Klein disagreed with the decision by the other four justices in December 1997 to withdraw from the role of appointing trustees for the Bishop Estate, calling it an "uncharted leap of blind faith."

    Klein admits giving "recommendations" for Kamehameha School admission while serving on the Supreme Court bench. As an April 3, 2001, Honolulu Star-Bulletin article explains:

      '''In sworn testimony, the (Bishop) estate's admissions director, Wayne Chang, said that former (Bishop Estate) trustee Lokelani Lindsey ordered him to admit the child only after she received a request from then-state Supreme Court Associate Justice Robert Klein ..."

      Chang -- in a Aug. 11, 1998, deposition taken in preparation for the trial to oust Lindsey -- said ex-board members Lindsey, Gerard Jervis and Henry Peters and senior school officials pulled strings for friends and relatives of several politically connected isle families, including:

    • A distant relative of ex-Gov. John Waihee.

    • A relative of Big Island rancher Larry Mehau.

    • Former state Sen. Milton Holt's sons.

    The former trustees denied that they influenced the admission process. However, investigations by the Internal Revenue Service, the Attorney General's Office and the estate's internal auditors concluded that trust officials improperly influenced the Kamehameha Schools' admissions and financial aid awards.

    Lindsey declined comment, but Klein confirmed that he spoke with the former trustee after the child's mother, a longtime friend, asked him to put in a good word. Klein said he saw no conflict in the request and added that school administrators were welcome to ignore his recommendation.

    '''"The fact of the matter is, judges recommend children and people for jobs (and schools) all the time, whether it's Punahou Schools or Kamehameha Schools," said Klein, who is now in private practice. "That's what judges do. That's what people do in this community ..."

    Those kind of "doings" would be facilitated by lack of state and federal legal oversight -- such as on an Indian reservation. Recent debate over the support for ANWR drilling by Hawaii Senators Daniel Akaka and Daniel Inouye is a further reflection of opposition to the Alaskan Native Corporations (ANCs). In an April 20, 2005, article published in Honolulu Weekly and later in the Hawaii Island Journal, Lance Holter, the Maui Group Chairman and Conservation Chair for the Hawaii Sierra Club, condemns as "corporate" those ANCs which dare to support oil drilling on their own lands:

    [Inouye] speaks about these 229 tribes, which are really corporate entities. They are not tribal governments; they are not representative of the tribe.

    Robin and Jade Danner are leaders of the Council for Native Hawaiian Advancement (CNHA). Native Hawaiians who lived for many years in Barrow, Alaska before their return to Kauai, the Danner sisters have extensive experience with ANCs. They might reasonably be expected to champion the formation of one or more Hawaiian Native Corporations modeled on the Alaskan natives’ experience.  (NOTE 2/22/2010: This is obviously incorrect as Robin Danner and the CNHA played a key role in creating the secret version of the Akaka Bill unveiled in December, 2009.  That version created an instant Indian Tribe.) 

    Opposing the Danners publicly, are the secessionists calling for reestablishment of an independent Hawaii. A key series of 2003 articles attacking the Danners are authored by Anne Keala Kelly and reproduced on several secessionist Web sites. They are attacked for working with "corporate" ANCs and oil lobbyists in support of ANWR drilling. Kelly, a supporter of independence, spoke in Honolulu at an Aug. 23, 2005, Akaka Bill forum held in the Japanese Cultural Center.

    Some Indian reservations (including Cheyenne River) have their own judiciary, legislature, and executive branches of government. The secessionists’ rhetoric could lead them to prefer these "sovereign" trappings. They claim the Akaka process represents a surrender of sovereignty on the part of the Hawaiian people. This sly choice of argument against Akaka will create a justification for participation in the Akaka process once that sovereignty has been "surrendered."

    The "Nation of Hawaii" group led by convicted felon Dennis "Bumpy" Kanahele (who was pardoned by former Gov. Benjamin Cayetano) seems to be preparing for integration into the "official" Hawaiian institutions. One sign of this are the December 2004 speeches given by Kanahele’s attorney Francis Boyle in a series of "Nation of Hawaii" meetings across the state. The events were funded by the Office of Hawaiian Affairs. Boyle is a University of Illinois law professor who also works for the Palestine Liberation Organization, the Bosnian Government, and Chechen forces led by the recently departed Aslan Maskhadov. Notably, Boyle has also represented the Lakota Nation of the Cheyenne River Sioux Indian Reservation. At a 1998 UH Hilo meeting, Boyle spoke alongside a Lakota representative to Hawaiian sovereignty activists discussing "human rights, land titles and the Hawaiian Kingdom."

    In his December 2004 speeches, Boyle advised the assembled crowds:

    "what we really need now is a government of national unity for the Kingdom of Hawaii. We need all the disparate groups and factions to come together and settle ... this was the situation that confronted the Palestinians 35 years ago. There were many different groups, and organizations, and factions. And yet eventually the late president Arafat and his organization Fatah were able to pull them all together, and by the process of consensus and debate and argument and set up a government."

    The demented idea that the West Bank and Gaza show a way forward for the Hawaiian people is so distracting that it may prevent readers from noting what underlies: an implied appeal for independence activists to involve themselves in OHA and other official Hawaiian bodies. The array of social programs administered by OHA, Department of Hawaiian Home Lands and the private trusts such a KSBE are certainly the closest thing to an Hawaiian "government of national unity" existing today.

    With its own judiciary, legislature and executive branch and government-to-government relations with the U.S. government, the Indian reservation model provided by the Cheyenne River Sioux creates enough of an illusion of independence that they could justify it to their supporters. If the Akaka Bill passes, Hawaii can look forward to an effort on the part of the "sovereignty" activists and the corrupt to push this model.

    Anyone following the stories of Enron, WorldCom, Martha Stewart, and other corporate disasters in the recent news knows that organizing as a corporation does not guarantee clean operations. But the corporate model does allow oversight by the state Attorney General, the IRS and other public agencies. This type of oversight brought these scandals to light and brought some malefactors to justice. This same oversight brought the Broken Trust trustees of KSBE and some of their cronies to heel, if only for them to then scatter and form new schemes. The Alaskan Native Corporation model maximizes the protection given Hawaiian beneficiaries and the body politic of Hawaii by increasing the enforcement power necessary to expose and prosecute corrupt activities.



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