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The Honolulu Advertiser
Posted on: Friday, March 10, 2006

Attorney general: no crime in bid process

By Sean Hao
Advertiser Staff Writer

The state attorney general said Gov. Linda Lingle's aides did not violate criminal law when they selected a nonprofit, without a bidding process, to help with the governor's trip to China last year.

Attorney General Mark Bennett added that it is the responsibility of the state Procurement Office and other agencies to determine if Lingle's aides violated rules that don't rise to a criminal level. Bennett also said, because of a potential conflict, his office would not pursue a criminal investigation if one was warranted.

The state tapped the nonprofit Pacific and Asian Affairs Council last year to provide financial services for Lingle's trip, and the nonprofit was paid $7,000 from corporate donations controlled by the state.

House Majority Leader Marcus Oshiro, D-39th (Wahiawa) asked the attorney general last month to respond to potential procurement law violations involving the China trip. Procurement laws require the state to solicit competitive bids before hiring most vendors.

Bennett said in a March 3 letter to Oshiro that he saw no evidence of a criminal violation in the way the state raised and spent money for Lingle's China trip.

The state Department of Business, Economic Development and Tourism organized the June trip and asked private companies to donate money to cover extras such as the travel expenses and honorariums for local entertainers who accompanied the governor.

The donations were sent to the Pacific and Asian Affairs Council which then paid vendors based on instructions from DBEDT.

"If there were allegations of a criminal violation, or evidence of a criminal violation, then our office would look into it," Bennett said in an interview yesterday. "I haven't seen any evidence that this is even in the ballpark."

Bennett said it is the responsibility of the state Procurement Policy Board, the state Procurement Office and the Office of the Auditor to determine whether DBEDT completely followed state procurement code.


The Attorney General's Office likely would have to recuse itself from any criminal investigation into the matter because it gave DBEDT advice on the financial issues prior to the trip, Bennett said in his letter to Oshiro.

"Were we to receive a complaint as to criminal conduct (and we have not), I would refer such a complaint to the Honolulu Prosecutor," Bennett wrote.

Oshiro said Bennett's latest letter appears to contradict advice the attorney general's office provided DBEDT Director Ted Liu last year. In an April 5 letter, Deputy Attorney General John Chang warned Liu about funneling money for the trip through a nonprofit. The letter said that if Liu or someone from his department helped make decisions about how money is spent at a nonprofit organizing a state trade mission, it may violate procurement law.

Despite the warning, DBEDT made all decisions about how to spend the donations that were given to the Pacific and Asian Affairs Council to fund the trip.

"I have serious concerns regarding the inconsistent positions of the attorney general's office," Oshiro said yesterday.

Bennett said the agency's opinions are not inconsistent. However, he declined to comment on the April 5 letter, citing attorney-client privacy rights.

Oshiro said he will request that the state Procurement Office investigate the matter.

The Lingle administration 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 several trade missions.


The attorney general's opinion appears to differ from the Procurement Office's stance. The Procurement Office has said it cannot comment on the China trip specifically. In general, a competitive bidding process is required even if a contractor isn't paid by the state, the office has said. If the contractor gets other benefits, such as enhanced reputation or increased access to government officials, competitive bidding is required.

"As an office we haven't changed our position on that," state Procurement Office Administrator Aaron Fujioka said yesterday.

In addition to Oshiro's probe, nine Democrat senators have introduced a resolution requesting the attorney general investigate whether DBEDT violated procurement law. A separate Democrat resolution in the House requests 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.

Oshiro said the Legislature should push ahead with both resolutions.

"I'm trying to work cooperatively with the department (DBEDT) and not make it a federal case, but given the inconsistency of the opinions (from the attorney general), the conflict of interest and the disagreement with the chief procurement officer, I believe we need to move forward with a formal process of legislative hearings in both chambers," Oshiro said.

Reach Sean Hao at shao@honoluluadvertiser.com.