The State Senate Hydrogen Special Fund Investigative Committee (HIC) concluded on Tuesday, October 14 that the Director of the State Dept. of Business, Economic Development & Tourism violated the State's procurement code by awarding a nearly $9 million contract to the lowest qualified ranked bidder of three finalists.

The 33 page report (complete with many pages of supplemental material) states among other things that State DBEDT Director Ted Liu "sought to manipulate the procurement process and bypass procurement laws and rules" to steer the Hydrogen Fund Management Contract to his favored bidder, Barry Weinman founder and director of HiBEAM, a firm which partnered with Sennet Capital to form H2 Energy who was chosen to manage the fund by DBEDT.

H2 Energy was chosen by the DBEDT director in August 2007 even though they were the least qualified of the 3 bidders for the special fund contract. The top qualifying firm, Kolohala Holdings, LLP filed a protest that led to hearings in the Senate's Tourism and Government Affairs Committee resulting in the creation of the Special Investigative Committee early this year.

Months of hearings followed with 56 hours of public televised testimony that saw more than 20 subpoenaed witnesses and more than 22,000 documents.

On September 10, 2008 the Senate's HIC committee issued a draft report of their findings to which all parties involved had a chance to view and comment. The DBEDT director restated his previous position and denied the committee's allegations.

In conclusion, the report recommends that the Attorney General's office conduct its own investigations based on the findings of the committee to see if the parties have violated procurement laws and rules. The report also recommends that the Hawaii State Ethics Commission look into whether or not ethics rules were broken.

The penalties for violation of the law can range from removal from office to a civil fine.

The report was approved by the HIC committee with a 5 to 0 vote. I voted yes "with reservations".

The entire report can be found online at the State Capitol website:

http://www.capitol.hawaii.gov/site1/studies/commhic.asp