Ka Wai Ola - Office of Hawaiian Affairs, Volume 13, Number 7, 1 July 1996 — Why should OHA pay more for less [ARTICLE+ILLUSTRATION]

Why should OHA pay more for less

Rowena Akana Trustee-at-large Despite ongoing criticism that trustees of the Office of Hawaiian Affairs rarely work together for the eommon good of our people, onee in a while a bright and shining moment occurs proving that is not always the case. On May 23, 1996, OHA's Budget, Finance, and Policy Committee met to select candi-

dates to manage our short-term investment fund (STIF), an account of approximately $30 million. After submitting a Request for Proposal to OHA, representatives of three loeal banks made formal pre-

sentations to our Budget Committee, chaired by Trustee Abe Aiona. These included Bank of America, Hawaiian Trust Company, and First Hawaiian Bank. Following the presentations, trustees of the Budget Committee unanimously voted to recommend Bank of America and Hawaiian Trust Co. to the full Board. The final selection would be made by all nine trustees at the next scheduled BOT meeting on Maui. One of the main considerations for choosing these two candidates was the amount of fees eaeh company proposed to charge for managing this $30 million account. Bank of America presented the lowest bid. Hawaiian Trust Co. bid 50 percent higher and First Hawaiian Bank bid twice as high as Bank of America. On May 30th, the Board of

Trustees met on Maui to make a final selection. Before the meeting was called to order, however, Aiona passed out a memorandum to all trustees regarding a phone eall from David Kirkebey. (Kirkebey was OHA's first money monitor and was instrumental in setting up our investment accounts.) Aiona's memo stated that Kirkebey, "Indicated that his company (Hawaiian Trust Co.) was lowering their fee ... thereby matching Bank of

America's proposal." Aiona also emphatically added, "Such being the case and all things being equal. as chairman of the Budget, Finance, and Policy Committee, I would endorse Hawaiian Trust Company."

This terse memo by Aiona eame as a comp!ete surprise and it is not completely factual. By claiming, "all things being equal ... I would endorse Hawaiian Trust Company," Aiona contradicts a side-by-side comparison of proposals, prepared by OHA's staff. All things are not equal as Aiona suggests: Bank of America Bank of Hawaii (Hawaiian Trust Co.) • Largest bank in the U.S. • Largest bank in Hawai'i • Over $230 billion in assets • Over $13 billion in assets • Manages $11.7 billion in STIF assets • Manages $906 million in STIF assets • $48.8 billion under total management

• $6.8 billion under total management It is obvious that a financial institution managing $11.7 billion in STIF assets (versus less than $1 hillion) is in a mueh strong'er position to leverage OHA's STIF account, thereby benefiting the assets of our Hawaiian trust. In addition, there are many questions and concems raised by Aiona's memo. 1. Why did the trustee ignore his own Budget Committee's recommendation and endorse Hawaiian Trust Co.? 2. How did Hawaiian Trust Co. learn of Bank of America's lower bid? 3. Did someone leak confidential information to taint OHA's eom-petitive-bid process? 4. Were any procurement codes or banking regulations violated? In order to block what could be perceived as a last-minute ploy to influence our vote, a majority of trustees supported my motion to defer final selection, at least until we could figure out what was really going on. Voting in favor of the deferment were trustees Akaka, Beamer, Kamali'i, Keale, Kealoha, and myself. Only three trustees voted against us: Hee, Aiona, DeSoto. As of this writing, the Board has not made a final decision. Trustees who put a halt to this latest ploy are to be commended. Loyalties to the ruling majority were put aside. Politics were ignored. Something good happened that day.