Economics nominee gets committees' OK

By Sean Hao
Advertiser Staff Writer

After delaying a decision for nearly three weeks, two key Senate committees recommended approval yesterday of Ted Liu to head the state's economic development department.

LIU

The Senate committees on economic development and tourism renewed a discussion begun in February about Liu's former investment business, PacifiCap Group, and whether he would recuse himself from any HSDC business involving the company.

Honolulu-based PacifiCap is one of seven HSDC money managers.

Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights) suggested that Liu should not be involved in any HSDC decisions involving PacifiCap.

But Liu said recusing himself would severely restrict his ability to apply his years of business expertise in helping companies access needed capital.

"I expected that that would be an issue," Liu said, and that he resigned from PacifiCap and divested his partnership interest to avoid a conflict of interest. However, he retains an interest in PacifiCap investments made before his resignation.

Legislators proposed a series of hypothetical ethical dilemmas involving Liu, HSDC and PacifiCap.

They asked, for example, what Liu would do if PacifiCap sought to manage more HSDC funds.

"I believe in that case I could contribute to that decision," Liu said, noting that state ethics laws did not require him to divest his interest in PacifiCap. "I think I have a lot to contribute to this board.

"I don't believe that would be a situation where there would be a conflict either actual or perceived," he said.

However, Liu said he would offer to excuse himself from decisions solely involving PacifiCap.

Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), sought to end the 45-minute or so debate over Liu's relationship with PacifiCap by noting that HSDC represents a small portion of Liu's overall responsibilities as department head.

"Can you assure this committee that in any situation, you will use your best judgment?" Slom asked Liu.

Liu answered, "Yes."

"Okay, then let's move on," Slom said.

In addition to increasing access to capital for Hawai'i businesses, Liu discussed several priorities he is focusing on during his term, which would expire in late 2006 if he is confirmed by the full Senate.

Those tasks include improving Hawai'i's image through better marketing of its business climate, as well as business and tax regulatory reforms.

After the hearing, Liu said he has no second thoughts about taking on the job of DBEDT director despite the effect on his privacy, personal time and salary. Liu, who makes $85,302 a year in his current job, previously earned between $151,000 and $251,000 a year as a consultant, according to his state financial disclosures.

"I have a good team and it's truly a joy working with them," he said. "That's what it's about is the people."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.