Ex-senator Hiram Fong files for bankruptcy
By Dan Nakaso
Advertiser Staff Writer
Former U.S. Sen. Hiram Fong Sr., who has been locked in a power struggle with his middle son and daughter-in-law for control of a sprawling family business, filed for bankruptcy protection yesterday, calling it "one of the most difficult decisions of my life."
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"The actions taken by my son, Marvin, and his wife, Sandra, have left me with no other options," Fong, 96, said. "After suing his mother and me, they have refused to settle the differences between us. It is most unfortunate when people 'bite the hand that feeds them,' especially when it's your own son and his wife."
Filing for bankruptcy marks the latest financial problem for Hiram Fong Sr.
Marvin and Sandra Au Fong issued a statement last night, saying they tried to help the elder Fong with his financial situation, "but he has refused."
"It is unfortunate that it has come to this, and the senator has to blame us for his own misfortunes, which started more than 15 years ago with bad investments.
"It has caused a rift in the family, and we are concerned about the impact that this has on our children." They said the senator's financial problem "does not affect the operations of Market City Ltd."
The former senator and his wife, Ellyn, filed for Chapter 11 bankruptcy protection, citing at least $937,000 in debt.
Also yesterday, Finance Factors Ltd., which Fong helped found in 1952, announced the former senator was immediately resigning "for personal reasons."
The bankruptcy filing is the latest in a series of financial problems to plague Fong. Last September, Bank of Hawaii filed a foreclosure complaint against Fong and his Senator Hiram Fong's Plantation & Gardens Inc. attraction park in Kahalu'u. The bank alleged that the Fongs owed $698,867 plus $184.42 in daily interest.
Fong's problems with his son, Marvin, surround Market City, which owns the Market City shopping center in Kapahulu, a retail center in Oregon and other Hawai'i real estate, including an interest in the historic Kress Building in Hilo.
Marvin Fong, the youngest of three sons, and his wife, Sandra, are the company's top two officers and sit on the board of directors.
Marvin Fong filed suit in Circuit Court in October alleging that his father and mother reneged on an agreement to option their stock to Marvin and his wife. Hiram Fong contested the buyout, saying they either did not sign the agreement or signed it without understanding the terms.
In his statement yesterday, Fong said, "I want to assure everyone that I take this action only after long and careful deliberation. I feel this is the only way I can regain control of my financial situation."
Fong underwent kidney dialysis treatment yesterday and would have no further comment on the bankruptcy filing, said his attorney, Harrison P. Chung.
Market City Ltd. was established nearly 60 years ago when friends Hiram Fong, Mun On Chun and brothers K.K. Chang, Y.K. Chang and Charlie Chang pooled their money. Today, it is run by various factions of the three families.
They and their descendants are divided among various power lines, with factions of Fongs and Changs supporting the Chuns in trying to wrest control from a group consisting of Fong and Chang directors.
Another Circuit Court suit filed by minority shareholders alleges that Marvin and Sandra have mismanaged the company. The suit was filed by the son of the late Mun On Chun. He alleged that Marvin and Sandra increased their salaries by 350 percent to 680 percent, against a consultant's recommendations, after using voting rights from Hiram and Ellyn Fong, by rewarding other shareholders, and by installing a new board.
In his statement, Hiram Fong said, "I'd like to thank my family, friends and colleagues for their support and understanding during this very difficult time. I look forward to being able to resolve these issues."
Correction: Marvin Fong is the youngest son of former U.S. Sen. Hiram Fong Sr. A previous version of this story incorrectly described him as the elder Fong's middle son.
