An internal investigation released Tuesday said Wayne Sterling, the former chief of staff for Commerce, overlooked questionable purchasing practices by Beth Braswell, another ex-Commerce employee. Both resigned Sept. 17.

A spokeswoman for Hodges said the problems have been addressed.

But Wilkins said questions linger. With the economy stalling, South Carolina can't afford to have the reputation of its chief recruiting arm damaged, he said.

"What I'm afraid of is that this is the tip of the iceberg," said Wilkins, R-Greenville. "I think it's becoming apparent to all of us that there's a scandal at Commerce."

Tuesday's developments came a week after reports that Sterling's $130,000 state salary was supplemented with money from private companies. Some GOP legislators said that was inappropriate. Way helped raise the private money.

Hodges, a Democrat, needs to restore confidence in the state agency, Wilkins said.

"There's a mess at Commerce," Wilkins said. "The governor should take action to clean up the mess. If he doesn't, the Legislature might have to step in."

Cortney Owings, Hodges' spokeswoman, said the governor stands by Way and the Department of Commerce. Way discovered a problem and took care of it, Owings said.

"We have no concerns at this time," she said.

Way said Tuesday he made mistakes in his dealings with Sterling. As Commerce secretary, Way is a political appointee of Hodges and makes $1 a year. Since taking office in 1999, Way, a real estate businessman from Charleston, has remained active in his company, The Beach Co.

Sterling, as chief of staff, ran the day-to-day operations of the Department of Commerce, but Way said he kept close tabs on the organization.

"Wayne and I would talk, but I was not getting all the information, obviously," Way said.

Sterling, an industrial recruiter credited with helping South Carolina land automaker BMW, was allowed too much freedom, Way said. "I gave too much authority to one individual," he said.

Sterling says he did nothing improper.

The Department of Commerce is taking steps to ensure closer oversight, Way said. Since Sterling resigned, Way said he has become more involved in the internal workings of the state agency. The Department of Commerce said it would welcome recommendations by the Legislative Audit Council. The audit council looks into financial issues, usually at the request of lawmakers.

One minor change, concerning golf outings, already has been put in place. The Department of Commerce's investigation said Braswell arranged a personal golf event for Sterling and a group of business executives.

All state-funded golf outings to recruit companies now must be approved by Way or new chief of staff Jim Morris.

Despite recent events, his department is serving the state well, Way said. "I don't think this is a scandal by any stretch of the imagination," he said.

Way said he will serve one term as secretary of Commerce and will step down in January 2003, even if Hodges is reelected.

The move is prompted by his wife and not recent events, Way said. Before accepting the position, he told his wife he'd retire to raise horses after one term.

Other state legislators say they haven't lost faith in Way, but would like more information.

Rep. Harry Cato, R-Greenville and chairman of the House Labor, Commerce and Industry Committee, said Hodges needs to provide further explanation.