Attorney general will investigate visitors bureau
By Kelly Yamanouchi
Advertiser Staff Writer
The attorney general's office will investigate the Hawai'i Visitors & Convention Bureau for possible misuse of state money, and Gov. Linda Lingle said there is a "high probability" that the state may award portions of its tourism marketing contract to an organization other than HVCB.
A 69-page audit, released yesterday, said the HVCB has misused state money, including paying parking and speeding tickets for its president, Tony Vericella.
The century-old HVCB — formerly the Hawaii Visitors Bureau — has long held the state's major tourism marketing contract, including the current one worth $33 million.
But momentum is building for the Hawai'i Tourism Authority to award at least part of the next contract to another vendor.
"I think the HTA acted responsibly when they said, well, let's look at whether or not we should continue to award the contract to one organization or perhaps there is another organization with expertise in Japan or Europe or with meetings and conventions," Lingle said.
"We've had people sitting in on presentations and they were quite impressed with presentations from those other than the HVCB."
The tourism authority is to decide at a board meeting July 24 who will market Hawai'i starting Jan. 1. The request for proposals for the contract or parts of the contract attracted 13 bidders.
HVCB competitors include the Tokyo-based advertising agency Dentsu Inc., the Japan tourism public relations and marketing company Marketing Garden, local publisher Tiger Oak Publications and local advertising agency Loomis Inc.
"This audit will obviously be in the back of people's minds when awarding contracts," said Rex Johnson, the tourism authority's executive director.
How much impact the audit will have on the contract is not clear.
The HTA will first get a recommendation from its marketing committee. Sharon Weiner, chairwoman of the three-member panel, said most of the committee's deliberations took place before the audit had been made public.
Vericella said he still expects to win most if not all of the new $25 million contract. "We hope that people would look at the whole picture. We hope that when people look at all the parts and all the pieces ... we're the best choice for that," he said.
In a step to counter the audit's impact, Vericella reimbursed the bureau for about $600 in personal expenses that he had paid for with state money. Those expenses included speeding tickets and in-room hotel movies.
The audit says that in addition to using state money for personal expenses, the HVCB used taxpayer dollars for exorbitant bonuses and unnecessary severance packages; allowed a company to supplement the state-financed salary of a bureau employee; and used state money to pay for legal services that sought to undermine the tourism authority and the state.
State Senate Tourism Committee Chairwoman Donna Mercado Kim said, "Certainly the issues that have been raised in this audit have to be answered, and they need to assure the Legislature at least that we're not going to go down this road again."
Kim said although she has been criticized for legislation that amounts to micromanaging of the tourism authority and the visitors bureau, "micromanaging is needed at this point." She said HVCB's board and the tourism authority should require more accountability from HVCB's staff.
"This may just be the tip of the iceberg,"said Kim, D-14th (Halawa, Moanalua, Kamehameha Heights).
Lingle said Attorney General Mark Bennett will investigate possible abuses, including whether invoices were properly submitted.
State Auditor Marion Higa's report said: "HTA wasn't giving enough attention and control over the contract with HVCB and therefore HVCB was being allowed to spend pretty much as it chose, and no one can assure the public that the funds were effectively spent for tourism marketing."
The tourism authority did not dispute many of the charges of inappropriate use of state money by the HVCB.
Higa recommended that the authority's board of directors and executive director improve oversight of its contracts and asked state administrators and legislators to assess to what extent the HVCB violated generally accepted accounting standards.
The tourism authority said it agrees with Higa's recommendations and will make the changes. Tourism authority chairman Mike McCartney and Johnson said the authority may require restitution from HVCB, call for further audits of HVCB, appoint a special master to review HVCB's operations and seek the advice of the state Ethics Commission and the attorney general.
