Ka Wai Ola - Office of Hawaiian Affairs, Volume 12, Number 11, 1 November 1995 — A matter of trust [ARTICLE+ILLUSTRATION]

A matter of trust

by Kīna'u Boyd Kamali'i Trustee-at-large Having served as bolh a state legislator and OHA trustee, I am continually struck by the basic differences between being an elected puhlie officiaI and the guardian of an

Hawaiian trust. As a state representative I learned that most of our officials only do what's popular and what will keep them in the good graces of leadership and especially the money committee chair's. As a trustee of the Office of Hawaiian Affairs I have special and specific dulies to the Hawaiian people whieh are sometimes unpopular and will bring us into eonfiict with the Legislature.

Two recent decisions that I had to make again underlined these differences. Thc first was the decision to fire t'ormer Administrator Dante Carpenter. Although there were a number of issues whieh made me uncomfortable about his tenure, the decisive factors involved fiduciary responsibility for the trust and to you and the other beneficiaries of OHA. As the board leamed months after the fact, Mr. Carpenter used operating funds to eon-tractually-hire Mr. Kenneih Wong to advise administration regarding short-term investment of cash reserves at OHA. This contract and subsequent authorizations to invqst such cash occurred without Board knowledge or approval. Although criminal action or liability was not incurred, leaving the trust and trustees vulnerable to such charges was unconscionable and could not be allowed to continue. Worse, when confronted with these legitimate eoncems, Mr. Carpenter's only resp<jnse was that the investments had made money — and he couldn't understand what all the fuss was all about. It stmck me that Dante was acting as if he were still in the state Senate, not the employee of a trust. That laek of understanding would have continued to jeopardize the trust. I had to vote for his termination. A similar laek of understanding has been

demonstrated in recent discussion regarding the OHA budget. In particular requests for OHA to voluntarily "cut and retum" general funds from the hiennium budget have severe implications for trust duty whieh I wanl to share wiih you. My reading of trust doctrine is pretty

straight forward: 1. Undivided loyalty is dcmanded by a trust and its sole use must be for the purjx)ses or beneficiaries identified in establishing the tmst; 2. Trust assets must be segregated and subject to independent audit; and 3. The trust must be managed in a prudent fashion to enhanee ils assets and to serve its beneficiaries.

For our purposes, our sole loyalty as a board is to the native Hawaiian and Hawaiian beneficiaries of OHA. Any action whieh is taken to benefit or to respond to "ihe public" ai the expense of the tmst is a division of Ioyalty and a breach of duty. The general funds share of Ihe OHA budget is the primary ineome mechanism for honoring the tmst established to benefit Hawaiians. Onee the required legislative and cxecutive actions are completcd and the OHA bicnnium budget and general funds are approved, these monies must be treated as a second tmst. The board is then constrained to regard, manage and use these general funds as a tmst for all Hawaiians. Clearly, none of us believe or would act to cut and retum to thc state thc special fund portion of the legislatively-approved hiennium budget. However, the general funds share of lhis same budget may have been fundamenlally misunderstood as puhlie funds rather than a separate trust. Thus, any action diminishing either the "native Hawaiian trust" Hawaiians or the all Hawaiian tmst would be a breach of duty. To uphold this duty, required, in one instance that I vote to fire the administrator and in another, to mainlain the Hawaiian share of benefits to whieh OHA is entitled. In both instances, it was a matter of tmst.