The state auditor should look into the Lingle administration's financing of overseas trade missions, including the governor's trip to China last year, according to a measure advancing through the Legislature.

The House Committee on Legislative Management yesterday unanimously approved a resolution requesting the state auditor examine the trade mission funding.

Among questions lawmakers raised was whether Lingle aides violated state procurement laws by selecting, without a bidding process, a nonprofit to provide financial services for the governor's trip to China.

The vote came after a nearly two-hour hearing with Gov. Linda Lingle's top economic aide Ted Liu, head of the Department of Business, Economic Development and Tourism and organizer of the trade missions.

House Majority Leader Marcus Oshiro, D-39th (Wahiawa), said he was troubled by Liu's admission that nearly all trade mission vendors were hired without contracts or letters of agreement. Liu said it was impractical to secure such agreements under the tight deadlines involved while traveling abroad.

"When state procurement laws are circumvented, or at the very least manipulated under the guise of broad discretionary authority for the sake of expediency," Oshiro said, "the public's confidence in our government is shaken. In my view there should have been contracts or letters of agreement, or something in writing to show how $250,000 was spent on this mission."

Committee members also questioned whether it was appropriate for Liu last December to seek $50,000 in sponsorship money from a local business to offset the cost of upcoming state trade missions, and whether the state should appear to offer big sponsors special access to foreign dignitaries.

Liu acknowledges that his use of such public-private partnerships is a break from how past administrations financed overseas business development missions. He defended his fundraising and spending methods and said he would cooperate with any audit.

"To the extent the Legislature wants to give the department some direction as to how these private-public partnerships should be done in the future, we would be more than happy to accept that direction," Liu said. "To the extent that the objective of having the auditor or anybody else review what we have done is to establish those types of parameters, we ... would cooperate fully."

The governor has raised more than $827,000 in cash and in-kind contributions from Hawai'i businesses and organizations since 2003 to cover costs related to the trade missions. The donations were used to pay for trip extras such as the travel expenses and honorariums for local entertainers who accompanied the governor. In addition to any donations, business participants were required to pay their own travel expenses and a fee for joining the mission.

For Lingle's trip to China in June, the state tapped the nonprofit Pacific and Asian Affairs Council to assist with processing donations and payments to vendors. The nonprofit acted at the direction of DBEDT and received nearly $7,000 for its work.

No other organizations were allowed to bid on the work.

State Procurement Office administrator Aaron Fujioka is looking into whether DBEDT violated procurement law by not taking bids on the project.

Rep. K. Mark Takai, D-34th (Pearl City, Newtown, Royal Summit), told Liu at yesterday's hearing that he should have known the contract with the Pacific and Asian Affairs Council needed to be competitively bid. Liu already had been warned by the state Procurement Office that a similar deal needed to be competitively bid, Takai said.

Liu responded that both the state Attorney General and the procurement office administrator at the time cleared the selection of the nonprofit without a bidding process.

State Rep. Chris Halford, R-11th (S. Maui), the only Republican on the committee, agreed to pass the resolution calling for an audit, but expressed reservations.

"What this looks like to me is that the administration got very energetic and bright and put together a lot of elements that were beyond the comprehension of how we as a Legislature are used to business being done in Hawai'i," he said. "So this is probably a very good thing. But it's also good for us to come to understand what it is."

House Concurrent Resolution 38 now goes to the House Finance Committee. The resolution does not carry the weight of law. However the state auditor said she would begin a review of the trip finances this fall if both houses of the Legislature pass the resolution.

Reach Sean Hao at shao@honoluluadvertiser.com.