The Land of Oz
There's a hidden history behind Oswald Stender's efforts to topple the Bishop Estate.

Robert M. Rees

June 23, 1999

Oswald Stender, affectionately called "Uncle Oz" by the students at Kamehameha Schools, is now a sort of folk hero. After all, he is the person most responsible for bringing down Bishop Estate’s edifice of avarice.
     Bishop Estate’s former trustees have been ousted, and Stender may seem to have stayed above the fray. In reality, though, he had his own conflicts, allegiances and self-interested motives in directing this successful maneuver.
     A reconstruction of why and how Stender did it, based on court documents and other sources, provides a fascinating glimpse of how the pillars of our society wage war over money, power and prestige.

THE ORIGINS
     Stender and his allies won their war, or at least its major battle, on May 6. As a result of a lawsuit brought by Stender and fellow Trustee Gerard Jervis, Circuit Judge Bambi Weil permanently removed Lokelani Lindsey as a trustee. (In her final opinion, released just two weeks ago, Judge Weil cited Lindsey’s "poor judgment," "creation of a climate of fear," "misappropriation of trust assets to her own benefit" and breaches of loyalty and trust.)
     The day following Weil’s decision, Circuit Judge Kevin Chang temporarily removed trustees Jervis, Lindsey, Henry Peters and Richard Wong, and at the same time accepted the timely (and perhaps temporary) resignation of Stender.
     This conclusion came four bitter years after the war had begun. The first real firefight occurred in June 1995, following a meeting at the Turtle Bay Hilton during which all five trustees agreed to terminate the outreach programs of Kamehameha Schools.
     When the trustees came under attack for their decision to fire 170 outreach employees, Stender not only reversed himself, but apparently enlisted the help of Honolulu Star-Bulletin columnist Bud Smyser in going after the lead trustee for the school’s Education Group, Lindsey.
     Smyser, citing "people I trust" as a source for a series of columns in early 1996, used for the first time what was to become the buzz word of Stender’s anti-Lindsey effort: "What seems beyond doubt is that the schools are being micromanaged by the estate trustees, represented on campus by Trustee Lokelani Lindsey."
     Jervis, in a viciously angry memo to Stender, later described Stender’s behavior: "The five of us agreed. We held hands, prayed and each committed ourselves to that collective decision. And then you stepped outside of that room and went back on your word."
     During this same period, June to December 1995, Stender had a second major skirmish. This one concerned the possible acquisition of Maui Land & Pineapple Company Inc. — a takeover pursued by both Bishop Estate and by Stender himself. The problem was that no one other than Stender seemed to be able to distinguish, as BankAmerica put it later, "between Oz Stender as independent investor and Oz Stender as Trustee."
     Stender, in later sworn testimony, said his decision to pursue ML&P personally came only after Oct. 26, 1995, the day the trustees made a decision to drop the matter on behalf of Bishop Estate. Yet, on Oct. 18, ML&P chair Mary Cameron Sanford wrote Stender, "The interest you and/or Bishop Estate have expressed in acquiring a substantial block of ML&P stock does not seem congruent with [our] goals." Even before that, on Sept. 1, 1995, BankAmerica’s securities division, BA Partners, wrote to Stender regarding "Project Ulua." This was the code name given to the private hui formed by Stender, Bishop Estate capital markets manager Dan Jones and outside partner Keith Fernandez to acquire ML&P.
     Lindsey, in a memo to Stender of Dec. 14, 1995, indicated that Stender’s pursuit of ML&P might be "a direct conflict of interest." Stender must have found this outrageous. After all, he had worked at the Campbell Estate for 32 years, and was CEO there from 1976 to 1988 before becoming a Bishop Estate trustee in 1990. Now, in 1995, he was under attack by a clumsy new Bishop Estate trustee whose previous job had been superintendent of public schools on Maui. (As Michael Green, an attorney for Lindsey, later put it, "Oz always hated Loke. ... Then Loke pointed out his conflict of interest.")
     Stender and his hui withdrew from the deal when ML&P complained about rumors of "a hostile takeover." Later, when the matter surfaced in 1997, Stender told KITV-4 news, "In hindsight, maybe I shouldn’t have done it. ... There’s a time in a man’s life he gotta take a shot somewhere, right?"
     At the request of the trustees, the law firm of Cades Schutte Fleming & Wright looked into the matter. They issued a confidential opinion, stating, "Whether or not Trustee Oswald Stender engaged in any material breach of his fiduciary responsibilities as a Trustee of Bishop Estate is inconclusive at this time."

ALL QUIET ON THE EDUCATION FRONT
     In spite of the two major clashes between Lindsey and Stender in 1995, and in spite of Stender’s concerns about the quality of education at the Kamehameha Schools, Stender for a while seemed to be overwhelmed by outside interests. He has acknowledged in testimony that he "missed 20 to 25 percent of board meetings."
     Perhaps as a result of his absenteeism, he missed Lindsey’s memo of June 8, 1996. The memo asked hard questions about the education at Kamehameha Schools, including, "Why do we continue to allow 25 percent of our students to read and compute below the 50th percentile without someone being accountable?" Incredibly, Stender later testified that had he seen this memo, he might have viewed the situation and Lindsey differently, and all that followed might have been avoided.
     The memo also asked questions about the president of the schools, Michael Chun. Following a career in engineering, part of it as chief engineer for the City & County of Honolulu, Chun was named president of Kamehameha Schools in 1988. (The former president of Punahou School, Rod McPhee, later testified that had it been up to him, Chun wouldn’t have been in the top three or even top five candidates to run Kamehameha Schools.) He had hoped to become a Bishop Estate trustee, but was passed over on two or three occasions.
     Lindsey’s memo questioned Chun’s annual entertainment budget of $150,000: "Why do we allow thousands [of Bishop Estate dollars] to be spent hosting dinners for outside groups such as Park Engineering [Chun’s former firm], the YMCA [Chun was on its board of directors], the judicial board [where Mrs. Bina Chun served following an appointment by Gov. John Waihee] ...?"
     Lindsey’s not-very-subtle attack on Bina Chun was an extension of a quarrel that began when Lindsey, on one of her first visits to the school, discovered that Bina, often referred to as the "Queen of the School," had ordered $600,000 of koa wood furniture. Lindsey canceled the order.
     Taking on the Chuns was risky. Both Chuns were well-connected and well-provided for in the community. (For example, Bina was able to insert herself as a consultant into transactions between Bedford Properties Inc. and Bishop Estate involving leasehold-to-fee conversions in Hawai‘i Kai in 1991 and 1992. Working for Bedford based partially on her contacts at Bishop Estate, Bina wound up earning fees in excess of $1 million.)
     The powerful Chuns and the powerful Stender, already close friends, now had a common enemy: Lokelani Lindsey.

DECLARATION OF WAR
     Increasingly, given Lindsey’s assignment from the board to "clean up" the school, there were rumors that Michael Chun was about to lose his job. Bina Chun even called an internationally known political consultant in New York for advice on what to do.
     All of this came to a head at a Board of Trustees meeting of April 29, 1997. Concerned about Chun’s job performance, the trustees refused to approve his serving as a paid director on the board of Hawaiian Airlines. (Chun, a regular part of the establishment, was already a paid director on the boards of Bank of Hawai‘i, Alexander & Baldwin and Matson.)
     In a memo of April 30, Stender argued with the board: "To say that the school needed to be ‘cleaned up’ is not so and is an affront to all those at Kamehameha then and now."
     Stender concluded with what now can be seen as a declaration of war on Lindsey: "You cannot have two people running the ship and then blame one for sinking. ... Part of the problem as I see it is that the ‘talk’ of micromanagement is true."
     On that day, Stender took what was to be an historic preemptive strike. He called a student at Kamehameha Schools to whom he was extremely close, student body president Kamani Kuala‘au, to discuss the situation. The two, trustee and student, had discussed board matters before, including the status of Chun, and had even done so in Kuala‘au’s dorm room.
     Stender told Kuala‘au what had happened at the board meeting. He encouraged Kuala‘au to develop an open letter from students on behalf of Chun, and said he would help to pay to run the letter as an ad in The Honolulu Advertiser. Further, as Stender recalls it, "I suggested he send the letter also to the justices of the Supreme Court."
     Another student, senior class president James Moniz, later testified that Kuala‘au told him on April 30 that Stender had called to relay that the trustees were in the process of removing Chun. Testified Moniz, "Kamani kind of said that, you know, it’s really urgent ... and we should get it [a letter] done that night since we were together."
     The letter written by Kuala‘au and Moniz, "A Message to the Justices of the Supreme Court of Hawai‘i from Concerned Students of the Kamehameha Schools," never went out. However, Kuala‘au read it aloud to his classes on the next morning, May 1. Among other things, it stated that many "are dissatisfied with the current Board of Trustees’ new leadership and management styles."
     Lindsey, in her office at the Bishop Estate headquarters at Kawaiaha‘o Plaza, received three phone calls about what was going on. In a seminal moment of stupidity, one she would live to regret, Lindsey asked to see the student in her office. That afternoon, Kuala‘au was escorted by Kamehameha Schools Principal Tony Ramos to the headquarters.
     Two versions of this encounter have surfaced. Ramos sat in on the meeting between Lindsey and Kuala‘au, and he later wrote down his impressions of what he saw as a benign meeting, during which there had been no threats or intimidation. Ramos said, "As we left, [Kuala‘au] gave [Lindsey] a hug and kiss and said something to the effect that he wouldn’t do anything to harm her." The student later testified that Lindsey had intimidated him, and Judge Weil cited this in the order permanently removing Lindsey.
     On the drive back to school, Kuala‘au asked Ramos, "If uncle Oz said they are going to fire Dr. Chun, and Mrs. Lindsey said they have never discussed the issue, then who is telling the truth?"
     Word of the encounter, and various versions of it, spread quickly. As the former attorney for Na Pua a Ke Ali‘i Pauahi ("The Children of the Princess"), Beadie Dawson, now points out, "People were blowing what had happened out of proportion, and making it far worse and more egregious than it was."
     Based on news of the encounter, others joined in support of Chun. On May 3, 1997, revered Hawaiian language teacher Nona Beamer wrote to the Supreme Court, "Mrs. Lindsey’s micromanagement methodology is an utterly diabolical plan of a self-serving egoist! We call for an impeachment and Supreme Court redress."
     By this time, according to the testimony of Roy Benham, then the president of the O‘ahu region’s Kamehameha Alumni Association, Stender was actively distributing confidential copies of his board memos on various matters. (Stender later testified that it was "probably true" that he "gave out so many memos to so many people" that he couldn’t remember to whom he had given them.)
     On May 7, in a meeting at the Pacific Club, the group later to be called Na Pua a Ke Ali‘i Pauahi was formed, and plans for a march on Bishop Estate were formulated. The only trustee to attend the meeting was Stender. (Lindsey claims that Michael Chun later characterized the march as "Oz’s thing.")
     One of those Na Pua called was Beadie Dawson, Chair of Dawson International Inc., and a former deputy attorney general from 1982 to 1996. She herself had been considered for appointment as a Bishop Estate trustee, but had lost out to Lindsey and Wong in 1993. As Dawson recalls it, representatives of Na Pua called and said, "We can’t communicate with the trustees ... come and march with us." Dawson did, and she became a member of Na Pua the next day.
     On the day before the march, the trustees, realizing they were caught in a firestorm, did file a petition with the probate court requesting approval to appoint retired Circuit Judge Patrick Yim as an independent fact-finder. As part of the filing, the trustees, including Stender, agreed amongst themselves to keep silent, and to talk only with Yim.
     The May 15 march from the Royal Mausoleum to Kawaiaha‘o Plaza attracted 700 participants, and Na Pua would later claim a membership of 2,000. Among other things, the demonstrators presented a "Statement of Concerns" developed by a faculty group, Na Kümu. The number one concern: "The micromanagement of our schools."
     In June, acting as attorney for Na Pua, Dawson filed a motion to intervene on behalf of the beneficiaries. "Everything," recalls Dawson, "sort of took off from there."
     After she filed, Dawson heard from another player, Randy Roth, a professor of trust law at the University of Hawai‘i at Mänoa, who had long objected to the practices of Bishop Estate. Recalls Dawson, "I got a call from Randy: ‘Beadie,’ he said, ‘I think it’s wonderful you have filed a motion.’"
     Roth went on to say he was "thinking of doing something on the selection process," a reference to the selection of Bishop Estate trustees by Supreme Court judges. This effort, three months later, would be published as "Broken Trust."

P.R. AND THE PRESS
     In early July 1997, on the advice of Dawson, student body president Kamani Kuala‘au met with The Honolulu Advertiser’s Greg Barrett to discuss his May 1 session with Lindsey.
     Dawson, who while under oath refused to disclose or acknowledge her advice to Kuala‘au, claiming attorney-client privilege, today says, "I absolutely did advise him to talk to the newspapers. First of all, I trusted Greg Barrett. He was very sensitive to us, and to protecting us when we told him things on background."
     Barrett’s story ran on Sunday, July 6. It began, "The day after he helped draft a letter in support of embattled school president Dr. Michael Chun, the 1997 Kamehameha Schools student body president was ... summoned downtown by Bishop Estate Trustee Lokelani Lindsey."
     On July 15, Stender, even though he had agreed to talk only to fact-finder Yim, himself talked with Barrett about Lindsey and Bishop Estate. Among other things, Stender described the "Gestapo atmosphere on the board." It was a devastating account from one of Hawai‘i’s most revered Hawaiians.
     After his interview with Barrett, but before the story ran, Stender sought input from what he calls "my focus group ... people that help me to sort through the issues that concern me." On that particular focus group were Campbell Estate Trustees Dave Heenan, Clint Churchill, Paul Cassiday and Wade McVay. Also on it were Roy Benham (of the O‘ahu alumni group), Doc Stryker (a retired co-founder of Stryker Weiner Associates Inc., one of Hawai‘i’s best public-relations firms), Momi Cazimero (a former UH regent, a community leader in the arts and cousin of former Governor John Waihee) and others.
     Stender later testified, "I met with my focus group and discussed what I had done, and — and had a change of heart. ... I was concerned how the story might affect the trustees."
     Stender says he wrote to the Advertiser in an attempt to withdraw his interview. If such a newsworthy letter was sent, the Advertiser didn’t mention it in its July 20 front-page story. (Dawson, who says she has seen the letter, believes that it was not a letter of withdrawal so much as a correction of one point.)
     The day after the article ran, Stender received a congratulatory note from Stryker: "While your fellow trustees won’t realize it, you have done them a great service. Because they have all come from a behind-the-scenes, closed-door, one-party power structure, they simply don’t get it."
     Meanwhile, "Broken Trust" was in full swing. Stender got involved with the five co-authors — former principal of the Kamehameha School for Girls Gladys Brandt, retired state appeals Judge Walter Heen (now chair of Hawai‘i’s Democratic Party), Monsignor Charles Kekumano (now deceased), Senior District Judge Samuel King and Randy Roth — and met with some of them before the article was drafted to discuss the harm he thought Lindsey was doing.
     Then, in early August, Stender met with the five co-authors at Brandt’s apartment to review a draft of the article. He offered corrections and comments. In fact, the title of the document apparently was borrowed from a December 1991 report prepared by Stender and other members of the Hawai‘i Advisory Committee to the U.S. Commission on Civil Rights: "A Broken Trust."
     The publication of "Broken Trust" on Aug. 9, 1997, in the Honolulu Star-Bulletin added to the firestorm. On Aug. 12, the governor asked Attorney General Margery Bronster to investigate.
     Bronster claims this mandate from the governor was superfluous. She has recently related how she and Stender met "long before" the governor got into it. Bronster says Stender asked if she would investigate Bishop Estate, even though it might cost her her job. Bronster says she replied, "Yes, Oz, I will." (Dawson discounts this view of history, and notes, "Bronster had done nothing until the governor told her to.")
     By October 1997, Doc Stryker’s PR effort on behalf of Stender was in full swing. Stender was even asking Stryker what he should or should not turn over to the attorney general: A fax of Oct. 3, 1997, from Stender’s secretary to Stryker, reads: "Spoke to Mr. Stender and he said AG wants a copy of his memo to trustees, and once she has copy, press will probably get it too. Should copy be given to AG?"
     In October, Stryker advised Stender to be like Abe Lincoln. Lincoln, noted Stryker, "did not position himself as anti-South or anti-slavery. He positioned himself as for the Union. ... [Hawaiians] desperately need a symbol of goodness, generosity, unselfish dedication and simplicity. ... They have been poorly served by the likes of Henry Peters, Lokelani, Milton Holt, Clayton Hee and others. They must prevail this time to take the whole sovereignty movement away from the radical, the arrogant, and the political. ..."
     Added to this was a rationale for Stender’s remaining on the board himself: "It is essential that one trustee is involved. ... Prevents the others from presenting a solid front of self justification." Stryker capped all this with a dismissal of any concerns about the students: "Don’t worry about time. The kids at Kamehameha are doing fine."

THE CONCLUSION
     On Dec. 5, 1997, Lokelani Lindsey made another egregious mistake. She distributed her educational report, "An Imperative for Educational Change." [Editor’s note: This report was partially based on statistical analysis done by Chuck Giuli, husband of Honolulu Weekly Publisher Laurie Carlson.] It was based on this report that Lindsey’s attorney, Michael Green, described Kamehameha Schools as a "factory of failure," because, "for the last 10 years Kamehameha Schools had flunked out 65 percent of their elementary school kids that are trying to get into the seventh grade."
     In a vacuum, the report might have been important. In context, it was a disaster. A hostile community saw it as merely a counterattack on Michael Chun. Chun and attorney Doug Ing (who would later represent Chun, along with Crystal Rose) drafted responses.
     In another public relations assault, Kamani Kuala‘au sent a letter to Trustee Richard Wong, asking for a published apology in the Advertiser for how Lindsey had treated him. Concluded the letter, "Please refer any questions to my lawyer, Mr. Rodney Veary."
     The trustees decided not to take any action. When the ad of apology didn’t appear, Randy Roth sent a copy of Kuala‘au’s letter to the Advertiser. (Roth declined to say how he got it.)
     By now, Stender and his allies had won. All that remained was for the courts and attorneys to mop up. At the end of it, there was so much venom around town that an attorney not even involved in the case, William Fenton Sink, actually ran TV commercials that invited the general public to use him for any future lawsuits against former Trustees Lindsey, Jervis and Wong. (During a January court appearance, Lindsey blamed Stender, Bina Chun and others for orchestrating an attack on her as trustee. Stender reportedly denied it.)
     As for Stender, who did not return calls concerning this article, he may have an opportunity to return as trustee. After all, he not only cooperated with, but pushed the attorney general on the case.
     Whether or not Stender returns to the Bishop Estate’s board, he has become one of the most recognized — and revered — Hawaiians in the Islands. He has money, and he has powerful allies, who are now flush with success over the KS/BE debacle. Michael Chun’s recent commencement speech compared Stender to King Kamehameha. Meanwhile, he has left his nemesis Lindsey, in her attorney’s words, "a wreck."
     What’s next in the land of Oz?