Honolulu Star-Bulletin from Honolulu, Hawaii • 1

Home ulu Stor-Bulte Stocks Dow average down 2.74 to 946.64 in uncertainty. Stock on F-2 IB oirao VOL 65, NO. 337 20c on Oahu 25c Neighbor Wandt Nine Sections HONOLULU, HAWAII 122 Pages Thursday, December 2, 1976 Timetable for Payments Not Set THC Depositors to Get at Least Part Payments Jhli rci By Ray Maneki Star-Bulletin Business Editor "We will get partial payments out" to depositors of THC Financial Corp. "as soon as we are able to do this," Wayne Minami, director of the State Department of Regulatory Agencies, said yesterday. However, he was unable to say how soon payments can begin, or whether depositors will get all of their money back, because of the complexity of the process of liquidating assets and obtaining court approval of necessary actions.

Minami and the loan company's owner, Hawaii have emphasized that the State takeover of THC Financial assets late Tuesday was in the best interests of the 15,000 depositors who had invested savings of $39 million. Bankruptcy would have been more costly and time-consuming, while the court-ordered receivership proceeding gives the State more flexibility in dealing with the problem. It is now easier, for example, to sell THC Financial to another institution, if any company cares to buy it. MINAMI HAD TALKED to banks and other institutions about the possibility of taking over THC Financial, but found no takers. There may be more interest, however, after all the assets have been analyzed.

THC Financial's debts, in addition to the $39 million owed to depositors, include $4 million owed to the Bank of Hawaii, Amfac Financial and Finance Factors. Minami, speaking at a news conference yesterday, was unable to say whether those three companies must be paid before assets can be distributed to depositors. "We have to take a hard look at all the creditors and the amounts owed to depositors" (before deciding what to recommend to the court), he said. "Because at this time we do not know how long the liquidation process will take, or how much will be realized from it, it is impossible for me to tell you the amount depositors will receive or exactly when payments will be made," Minami said. "We will, however, contact each of the 15,000 depositors in this company individually by letter within the next few days, and will keep them fully apprised of our progress," he added.

MINAMI LISTED THE State's four "priorities for action" as fol-lows: First, the receivership action taken Tuesday insures "that no Carter Will Have Final Say Later By Fred S. Hoffman WASHINGTON (AP) The outgoing Pentagon leadership handed President-elect Jimmy Carter a major problem today by awarding contracts to start production of the B-l bomber, costliest in history. After becoming president Jan. 20, Carter will have to decide whether to let that decision stand or reverse it. During the campaign, he said he would not build the B-l.

Defense Secretary Donald Rumsfeld announced the go-ahead decision after consulting President Ford. The move came as no surprise because Ford said last April "we must build the B-l bomber and we're going to." Rumsfeld and Air Force Secretary Thomas C. Reed claimed it is imperative that the B-l be produced to help offset growing Soviet strength in strategic nuclear weapons. "It would be irresponsible not to initiate B-l production at this time," Reed told a news conference. THE B-l, ABOUT two-thirds the size of the B-52, is a swing-wing, four-jet aircraft that is designed to fly between continents at supersonic speeds at high altitudes, and then drop down to treetop heights in order to penetrate air defense radar at high subsonic speeds.

The plane will be equipped with protection against the effects of nuclear blasts and will be armed with air-to-ground missiles and bombs. The Pentagon awarded a total of $704.9 million in contracts to produce the first three B-ls, an option to build eight more, and to tool up for full production. The contracts went to Rockwell International which makes the plane itself; General Electric Co. for the engines and the Boeing Co. for electronic equipment.

If the Air Force gets its wish and builds a total of 244 B-ls to replace aging B-52 bombers, it would cost the Treasury $22.9 billion over the next 10 years or so, or an average of $93 million a plane. BUT THE FIRST production contracts were structured by the outgoing Pentagon leadership in such a way as to limit money obligations to the contractors on a month-to-month basis until the end of June to give Carter time to study the B-l question. Reed said this gives Carter a "great deal of flexibility" and could hold extra spending on the B-l to $140 million if he should make up his mind to cancel it by Feb. 1, which is only 10 days after he takes office. Beyond that, the spending obligation would continue to be limited to $87 million a month until the end of June.

DURING THE pre-election campaign. Carter apparently somewhat softened his position on the B-l. In a letter to the Democratic Platform Committee in June, Carter said the new bomber "is an example of a proposed system which should not be funded and would be wasteful of taxpayers' dollars." assets will leave the company, so that the maximum amount will be available for the benefit of depositors. This is why it has been necessary to suspend all withdrawal and deposit activity." Second, a staff will be assembled within the next few days to "effectively and rapidly carry out the liquidation process." Third, all assets will be determined and liquidated "on the most favorable terms possible." Fourth, proceeds will be distributed as they are accumulated. "We will make interim payments wherever we can and as soon as we can," Minami said.

STATE LAWS regulating industrial loan companies require them to have cash or securities reserves equal to 4 per cent of investors' deposits, and THC Financial's inability to meet this requirement led to the State takeover. Other restrictions and controls "we felt were necessary" were recommended to the State Legislature and passed this year. Some of the controls go into effect next month. Starting Jan. 1, cash and securities reserves equal to 5 per cent of deposits are required.

From Jan. 1, 1978, reserves must be at least 7 per cent of short-term (less than one year) deposits, certificates and debentures, and 5 per cent of long-term certificates and debentures. HAWAII HAS 25 industrial loan companies (a legal term for finance companies that seek deposits and make loans). On June 30, when THC Financial was still active, the 26 companies had passbook accounts and investment certificates outstanding amounting to $415,454,232. Among problems they face, in addition to the stiffer reserve requirements, are the competition of Hawaii Bancorporation Inc.

(parent company of the Bank of Hawaii), which is planning to enter the field, and a possibility that the State will require some form of depositors' insurance to protect investors. Minami said his department will ask the State Legislature to authorize a State-operated fund or organization which would insure each account up to specified limits, just as federal insurance now protects savings in Hawaii's banks and savings and loan associations. THIS WOULD increase the operating expenses of industrial loan companies, and make it harder for them to pay higher interest rates than the banks and savings and loans. The laws passed this year and the provisions taking effect in the next 13 months will improve the industrial loan industry, Minami said. He pointed out, however, that a great deal of a company's financial health depends on "good sound judg-Turn to Page A-4, Col.

1 President's Holf-Brother Killed in A uto Collision THAT TIME AGAIN With the holiday season arriving, ahi filet, the Island favorite for sashimi, is rising in price almost daily. The filet normally sells for about $4 per pound, but, as Tamashiro Market manager Hari Kojima demonstrates here, ahi was $5.95 yesterday. Fish markets say the rise is caused by the heavy demand and a short supply. State Has Doubts About a Ha bili tat Koolau Takeover aid the President expressed his sympathy and regrets but said he would be unable to attend the funeral, scheduled at 2 p.m. EST Saturday at the First United Methodist Church at Cookeville.

"The President is not coming," Hooper said. "He called Mrs. King and talked to her personally. He expressed his regrets and said due to circumstances beyond his control he cannot be here for the funeral." HENDERSON SAID witnesses told the highway patrol that King's car was "traveling at a high rate of speed, but I don't know exactly how fast he was going. "Some truck drivers tried to warn him on their CB because he had a CB too, and they flashed their lights, but he apparently didn't see them," Henderson said.

Witnesses told police they saw King enter the wrong lane of the interstate at U.S. 231, about five miles from the accident scene. The driver of the truck was identified as Billy Hutson of Sparta, who was hauling a load of plastic pipe from Gulfport, to Can-Tex Corp. at Sparta. Sgt.

Ronnie Hill of the highway patrol said Hutson was "scared to death" but was not injured. LEBANON, Tenn. (UPI) President Ford's half-brother, Leslie H. "Bud" King, was killed today when he drove his 1977 Lincoln Continental onto an interstate highway from the wrong direction and was hit head-on by a tractor-trailer. The accident happened about 2:45 a.m.

EST five miles west of Lebanon and 25 miles east of Nashville on Interstate 40. King, 53, was pronounced dead on arrival at a local hospital. Investigators said there were two cases of whisky in the car, leading to speculation that King had purchased the whisky in Nashville and was taking it back to his home in Cookeville, which is dry. JIM HENDERSON, information officer for the State Safety Department, said a blood-alcohol test would be conducted to determine if King had been drinking. He said such tests were routine in accidents of this nature.

The President was notified of the accident early today and telephoned King's widow at her Cookeville home. King, a tire dealer, was the son of Ford's father, who divorced the President's mother and remarried, Ed Hooper, owner of the funeral home where King's body was taken, at half the $1,131,854 budgeted annually for the Koolau program. His proposal was the subject of resolutions passed in the State Senate and House last session ordering DSSH Director Andrew Chang to "evaluate the effectiveness of contracting with the Habilitat to operate Related Story on A-17 the Hawaii Youth Correctional submit his findings and recommendations to the (1977) Legislature." In July, Marino and his staff sent Chang a draft proposal listing what Marino termed three "salient alternatives." THE FIRST proposal called for the complete takeover of the Koolau facility by Habilitat. Habilitat would accept all juveniles committed to the DSSH, with the only exceptions being juveniles in need of psychiatric hospitalization. The juvenile would first enter a maximum security building staffed by male and female Habilitat "graduates." He or she would remain there a minimum of 30 days.

The juvenile would then be allowed to enroll in the Habilitat program if he or she so desired. The program's Torn to Page A-4, Col. 4 By Jim McCoy Star-Bulletin Writer State corrections officials have asked the Legislature to fund an independent study before acting on a proposal by Habilitat, the private rehabilitation facility, to take over all or part of the Hawaii Youth Correctional Facility at Koolau. Habilitat director Vincent Marino called the move a "very sloppy stall." Citing "reservations regarding Ha-bilitat's claim of program superiority. its proposed budget," officials of the Department of Social Services and Housing (DSSH) recommended lawmakers fund a "third party" study to evaluate the effectiveness of the Habilitat program in working with juvenile delinquents.

THEV SAID the study group should collaborate with Habilitat and DSSH personnel and should address whether or not the Habilitat program, which presently screens and accepts troubled persons only if they volunteer for the program, would be able to rehabilitate "involuntary clients." Included in this "involuntary" group would be many of the 115 juveniles presently incarcerated at Koolau. The DSSH administers the program at Koolau, which is located on Kalanianaole Highway near Kailua. The officials' recommendation is contained in a study sent to legislators and to Marino, who founded the Habilitat program now centered in three locations in Kaneohe and Kahaluu. MARINO yesterday labeled the DSSH recommendation a "very sloppy stall that's just a bunch of rhetoric." "Either they are going to give us Koolau or they are not. They should stop horsing around with these Studies," Marino said.

"The State has obviously fallen down and proved its inability to conduct a rehabilitation program for juveniles or even for adults. All I'm asking for is a pilot program. If we can't produce, we'll admit it. "But the State knows we can come in and do it and this (recommendation) is just a face-saving device." Since March, Marino has advocated contracting with the State to merge his program into the Koolau program. HE SAYS HIS organization can do a better job of rehabilitating juvenile delinquents than the State can.

He also says his organization can do it Yanagisawa Defended in Stadium Job .1 V' Dear Abby E-2 Editorials A-22 Kokua Line A-3 Obituaries E-14 Pulse E-13 Sports G-l Today E-l TV Logs E-8 Weather E-3 Amusements E-10 Astrology E-8 Bridge E-8 Business F-l Stock List F-2 Classified E-1S Comics E-8 Crossword E-8 Donnelly E-2 iter- The chairman of the Aloha Stadium Authority, Sabu Fujisaki, yesterday defended stadium manager Mackay Yanagisawa against charges of conflict of interest. The charges were leveled against Yanagisawa earlier yesterday by Mayor Frank F. Fasi, who said Gov. George R. Ariyoshi should fire him.

Fasi said that Yanagisawa, as a consultant to the Gannett Foundation, is paid $25,000 a year and that the Gannett Foundation sponsors the annual Hula Bowl. He said this is a conflict of interest because Yanagisawa is acting as both tenant and landlord. Fujisaki, however, said Yanagisawa was cleared by the State Ethics Board when he took over as stadium manager. "We are 100 per cent behind Mr. Yanagisawa; we know he is very competent in handling the affairs of the stadium.

We have found nothing wrong with the manner in which he is operating the stadium," Fujisaki said. i 1 1 -kV i Candidates report final campaign expenses. A-13 Lincoln, the most religious president. A-10 Air transport developments on E-24, F-l, F-3. More defense spending urged.

D-10 IT'S GONEI Honolulu Stadium is no more. Demolition crews this week cleared away the remaining walls from the stadium. Honolulu Stadium was the scene of professional and amateur sporting events for almost 50 years. A psrk will be built on the spot. Star-Bulletin Photo by Warren R.

Roll..