Audit faults tourism agency
By Katherine Nichols
Advertiser Staff Writer
The Hawai'i Tourism Authority has mismanaged its $61 million annual budget and failed to report to lawmakers details about how the money was used, according to a report issued yesterday by the state auditor.
The 52-page analysis concludes that the authority is "fraught with serious management problems. As a result, significant sums of public funds are administered poorly and with unknown benefit to the state."
This is the first audit of the authority, which was formed in 1998 in an effort to increase accountability in the state's tourism marketing.
The state Legislature requested the audit last year, saying the tourism authority's expenditures need to be more carefully monitored.
Richard Humphreys, executive director of the authority, said he welcomed the criticism.
"As a relatively new agency, the HTA recognizes the challenges pointed out by the audit and looks forward to implementing many of the recommendations suggested by the auditor," Humphreys said.
The audit by Marion Higa criticized the authority for:
• Awarding contracts after events took place;
• Ethical conflicts resulting from contracts given to tourism authority board members' companies without proper documentation;
• Paying millions of dollars to the Hawai'i Visitors and Convention Bureau for marketing without knowing the services rendered or the impact;
• Not keeping minutes at executive sessions and other committee meetings where major decisions were made;
• Paying former authority executive director Robert Fishman $182,000 a year as a consultant when the governor had set the salary for that position at $120,000.
"The authority's responsibility is to make sure the money is spent to yield results," said Higa. "And the authority cannot prove that the money that was spent has yielded results. We couldn't find records even when millions of dollars were involved."
The tourism authority defended its actions in a nine-page, point-by-point response. It said it was focused on executing an aggressive marketing campaign to bring in more tourism dollars in its first three years and can now take the time needed to provide more public accountability.
"The audit ... gives us a good roadmap," Humphreys said in the authority's written response.
Sen. Donna Mercado Kim (D-15th, Kalihi Valley and 'Aiea), who has long pushed for more detailed information on tourism authority spending, said she will hold a hearing on the audit within the next two weeks.
Higa's report made several recommendations including that the authority evaluate itself annually, comply with state laws governing public meetings, develop a comprehensive strategic plan and ensure payment of contractors is tied to measurable results.
Humphreys said he accepted all the recommendations except the one about contract pay being tied to measurable results. The time lag between a marketing campaign and the results make that suggestion unworkable, Humphreys said.
Since its inception, the authority has awarded close to 390 contracts totaling more than $137 million, the audit said. Yet insufficient monitoring of these contracts "has resulted in serious deficiencies in the contracting process and opens the authority to waste and fraud," according to the audit.
Examples cited by the audit were limited to inadequate documentation.
The audit also said the two contracts with the Hawai'i Visitors and Convention Bureau, which gets the bulk of the authority's money, "contain provisions disadvantageous to the state." Millions of dollars were paid to the bureau "with little justification," Higa said in the audit.
The audit says the authority is paying the visitors' bureau without detailed invoices of how that money is being used.
Tourism authority chair Roy Tokujo defended the agency's actions, saying its job was to improve the state's No. 1 industry, and therefore the economy.
"And we were successful — Hawai'i's tourism industry reached a banner year in 2000 and was well on its way to another good year in 2001 until the events of of Sept. 11," Tokujo said in a statement.
However, it is difficult to assess how much of the success of 2000 was due to an improving U.S. economy, and tourism spending was slowing in 2001 well before Sept. 11.
Authority members are unpaid — with the exception of the executive director.
But the auditor sided with the Legislature, which has been examining the authority for more than a year.
"Our audit revealed that the Legislature's concerns were well-founded," said Higa. "The management problems at the Hawaii Tourism Authority are both troubling and alarming."
