What Is an OHA Trustee if not a FIDUCIARY…Period!

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Leina‘ala Ahu Isa, Ph.D., Trustee, At-Large

A fiduciary is responsible for tasks that involve finances — managing the assets of another person, or of a group of people. Money managers, financial advisors, bankers, accountants, executors, board members, and corporate officers all have fiduciary responsibilities.

A fiduciary’s responsibilities are both ethical and legal. When OHA Trustees knowingly accept the fiduciary duty on behalf of their beneficiaries, they are required to act in the best interest of the principal, the party whose assets they are managing. This is what is known as a “prudent person standard of care,” a standard that originally stems from an 1830 court ruling.

“Trustees are bound by fiduciary duties that include marshaling OHA’s resources, loyalty, and prudence. The duty of undivided loyalty requires that the trust be administered solely in the interest of beneficiaries.” Source: State Auditor’s 2009 report OHA Recommendations, page 14.

Photo: Courtesy

This formulation of the prudent-person rule required that a person acting as fiduciary was required to act first and foremost with the needs of beneficiaries in mind. Strict care must be taken to ensure no conflict of interest. The trustee/beneficiary relationship is very important and special care should be taken in determining who is designated as a trustee.

What is a “blind trust”?

Politicians often set up “blind trusts” in order to avoid conflict-of-interest scandals. A blind trust is a relationship in which a trustee is in charge of the investment of a beneficiary’s corpus (assets) without the beneficiary knowing how the corpus is being invested. Source: www.Investopedia.com.

So, even though the beneficiary has no knowledge, the trustee has a fiduciary duty to invest the corpus according to the ‘prudent’ person code of conduct. –www.Investopedia.com

We, Trustees, must have (policies are being written to address this) a clear definition of purpose, rather than a broad, loose one that covers everything. Without a clear definition, fiduciaries cannot defend their actions as prudent. Credibility is diminished if decision makers do not know the financial implications of making a decision, and beneficiaries do not understand what options were considered.

OHA’s ability to obtain funding from private, philanthropic and Legislative sources is affected by OHA’s Credibility. OHA Must Become CREDIBLE as an organization.

“Let us affirm forever our way of life: ALOHA, for Aloha is the Spirit of God at work in you and in me, and in the world.” -Rev. Abraham Akaka March 13, 1959.

Mālama Pono, A hui hou till August. —Trustee Leina‘ala Ahu Isa