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The Honolulu Advertiser
Posted on: Tuesday, January 24, 2006

Governor defends state trade missions

By Sean Hao
Advertiser Staff Writer

Gov. Linda Lingle yesterday defended her administration's practice of giving special benefits to businesses willing to pay up to $50,000 to help fund state trade missions.

"I think sometimes when you're successful, there are certain people who will look for any way to try to diminish that success," Lingle said at a news conference after her State of the State address yesterday.

In a Dec. 5 letter, Lingle's top economic aide offered to arrange meetings between a local company and foreign government officials if the company agreed to pay $50,000 to become a "title sponsor" of future overseas trade missions.

Some Democratic lawmakers yesterday called for a halt to such solicitations until potential state ethics issues are resolved. The Democrats want Lingle, a Republican, to disclose details about which companies have sponsored Lingle trade missions including a trip to China and South Korea last year and how much each company gave.

Lingle said the trips were a success and the aide who wrote the letter was worthy of praise. "I want to give Ted Liu, our Department of Business, Economic Development and Tourism director, all the credit for the success that we had in our trip to China and to Korea. The business community felt it was an extremely worthwhile trip."

So far Lingle has raised more than $827,000 in cash and in-kind contributions from Hawai'i businesses and organizations to defray the cost of trade missions.

"When the director of a state department asks a business or individual to donate $50,000, it's very important that the public perception is that there is not a quid pro quo," said state Sen. Will Espero D-20th ('Ewa Beach, Waipahu). "This episode has certainly shown that we must look at this practice more carefully and possibly set up some transparency so the public is fully aware of how much money is changing hands and who's giving it."

The Lingle administration has declined to disclose who gave how much, arguing that such details are not public because the donations are funneled through nonprofit organizations.

Liu said yesterday he will consider seeking approval of the state Ethics Commission before offering or accepting large sponsorships. He also said he will consider disclosing more details about trade mission sponsors.

"It will be transparent, just be patient," Liu said. "This is not a slush fund. Every cent is accounted for."

Administration officials also said that all previous administrations sought similar private sector support for trade missions in some form or another. The major difference under the Lingle administration is in the larger scope of the trade missions and the level of business sponsorships, Liu said. Sponsorships are one way to save the state money, he said.

"It is a different way of doing things, but just because it's different, doesn't mean it's bad," Liu said. "I think the results have been positive."

Lingle and Liu yesterday said last year's trade mission to China is expected to generate more than $100 million for businesses that went on the trip. That figure came from an anonymous survey and discussions with the businesses involved, including DFS Hawaii, Simple Green and Alexander & Baldwin, Liu said.

A&B's Matson subsidiary is launching a new shipping service between Guam and China. That service may eventually generate $100 million in business for the ocean shipper, said A&B spokeswoman Linda Howe. However, plans to start the new service were announced before the trade mission to China.

Still, the trip to China "did help with a very significant business initiative that has a potential to generate that kind of revenue when it's fully developed," Howe said.

The mission also helped A&B's Kauai Coffee and Maui Brand Sugar subsidiaries explore market opportunities for Hawai'i-grown food products, Howe said. A&B spent $37,500 in 2004 and 2005 sponsoring state trade missions.

As many as 200 people from Hawai'i went on the trade mission with Lingle to China and South Korea. The state raised more than $377,000 in cash, in-kind contributions and other fees, which was used to help defray the cost of bringing along Hawai'i entertainers, putting on shows and other activities.

The nonprofit Pacific and Asian Affairs Council, which handled a portion of that money, would not disclose the identities and contribution levels of trip sponsors.

Lisa Maruyama, executive director for the council, was unavailable for comment yesterday. However, in an interview with The Advertiser last summer, she said the arrangement with the Department of Business, Economic Development and Tourism helped the nonprofit build relationships with local businesses while at the same time supported the council's mission to promote awareness and understanding of international issues.

The Pacific and Asian Affairs Council was reassured by the Department of Business, Economic Development and Tourism that all corporate sponsorships were made with the intent of enhancing the trade mission to China and South Korea, Maruyama said.

Lingle said the state Ethics Commission approved the use of nonprofit groups to help the state raise money for foreign trade missions.

Ethics Commission Director Dan Mollway said his agency gave Lingle officials some guidance, but never approved of the administration's offer to allow a local business to become a sponsor for five trade missions planned for this year in exchange for special benefits.

"When we found out it was a package for five trips for $50,000, we were in a different world," he said. "We were in a world we've never seen. We called them up and said, 'Look, everything we said, forget about it.' "

Senate Vice President Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), called for a halt to big-dollar sponsorships. Kim raised the issue at a committee hearing last week after an unnamed constituent sent her a copy of the Dec. 5 letter from Liu seeking a $50,000 contribution.

"I don't think it's right to continue this way," she said. "It just reeks with ethical problems."

Advertiser staff writer Derrick DePledge contributed to this report.

Reach Sean Hao at shao@honoluluadvertiser.com.