HONOLULU -- There will be no criminal charges against state business director Ted Liu after a state Senate panel accused him of steering a $9 million contract to a bidder he favored.

City Prosecutor Peter Carlisle said his office will not prosecute the Department of Business, Economic Development and Tourism Director Liu.

The controversy stemmed from Liu's decision to pick the company H-2 Energy to manage a fund to attract investors to Hawaii to develop hydrogen energy. The company was not the highest bidder.

"Hey he selected No. 3, No. 1 was not his choice, that's got to be a violation. That's the way we approached it until we started looking at the law," Carlisle said.

Carlisle said procurement law shows that awards do not have to go to the highest bidder, but the one that is the most advantageous.

"There is no probable cause that a crime was committed," Carlisle said.

Eventually Liu picked the No. 1 bidder Kolohala after complaints to the state procurement office.

In a hearing last year, senators claimed Liu tried to conceal a special relationship with H-2 Energy. Liu denied that.

Sen. Donna Kim who led a committee to investigate Liu said state procurement law should be clarified.

"I believe the prosecutor's findings confirm what we stated from the very beginning: I mad an unintentional mistake and I corrected the mistake when the State Procurement Office notified me of it," Liu said in a written statement.

Carlisle said DBEDT systematically did not comply with procurement procedures and there was ignorance of the law.

However, why Liu chose one company over another is irrelevant, he said. What matters to prosecutors is that the law was not broken, Carlisle said.