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The Honolulu Advertiser
Posted on: Tuesday, February 28, 2006

Dems call for probes into trade missions

By Sean Hao
Advertiser Staff Writer

Democratic lawmakers yesterday called for separate probes into how Republican Gov. Linda Lingle finances overseas trade missions.

Nine senators introduced a resolution requesting the attorney general investigate whether the Department of Business, Economic Development and Tourism violated state procurement laws when it selected, without a bidding process, a nonprofit to provide financial services for the governor's trip to China last year.

A separate House resolution requested the state auditor look into whether it was appropriate for DBEDT to promise special treatment to private companies in exchange for donating money toward the trips.

DBEDT Director Ted Liu said in a written statement yesterday that his agency did no wrong and would cooperate with any investigation.

"Should there be any investigation, DBEDT will fully cooperate," Liu wrote. "Based on discussions at that time with the Office of the Attorney General and the State's Chief Procurement Officer, no competitive selection process was required."

Senate Vice President Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights) raised concerns about trade mission finances last month after a company sent her a copy of a letter in which Liu asked a local business to give $50,000 toward future trips. The letter promised "title sponsor benefits," including invitations to certain meetings with foreign government officials and "VIP events (such as backstage or after-show parties)."

The governor 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.

"While the concept of businesses sponsoring government trade missions is not objectionable in itself and saves taxpayer dollars, the method of soliciting funds, including promising special benefits in exchange for large contributions, is very troubling," said the House resolution introduced by Rep. Brian Schatz, D-25th (Makiki, Tantalus).

The House and Senate resolutions, which haven't been assigned numbers, call for a report to be given to lawmakers before next year's legislative session. The resolutions now go through the hearing process. If passed, they don't have the force of law. However, resolutions are an expression of legislative will, which can spur agencies into action.

In a related move, House Majority Leader Marcus Oshiro, D-39th (Wahiawa), asked the attorney general this month to summarize the steps the agency will take to investigate possible procurement violations by DBEDT. Oshiro requested a response by March 7.

Some lawmakers appear to be concerned that the state tapped the nonprofit Pacific and Asian Affairs Council to provide financial services for Lingle's trip to China last year without asking other organizations if they would like to bid on the $268,637 project.

The Pacific and Asian Affairs Council paid several companies as subcontractors under the direction of DBEDT. The nonprofit received nearly $7,000 for its involvement.

"This may or may not be violating the procurement code, but to use the power of the government without the rules to control that power is troubling," Schatz said. "I think the question is whether the code was violated but also whether the spirit of the code was violated. Those rules are there for the protection of taxpayers and the public."

The nine Democrat senators who sponsored the senate resolution were Kim, Colleen Hanabusa, Shan Tsutsui, Gary Hooser, Kalani English, Clarence Nishihara, Norman Sakamoto, Will Espero and Suzanne Chun Oakland.

Reach Sean Hao at shao@honoluluadvertiser.com.