Criminal probe could threaten HVCB contract

By Kelly Yamanouchi
Advertiser Staff Writer

Hawai'i Tourism Authority executive director Rex Johnson said that any criminal investigation into the Hawai'i Visitors & Convention Bureau by the state attorney general's office would affect whether the visitors bureau continues as the state's marketing agency next year.

Johnson said the authority's board is set to decide at a July 24 meeting who to award a $25 million contract or contracts for tourism marketing. He said the board can make a decision "given the full context of what's going on."

"But it'll certainly have some effect if the investigatory process ... starts to show shaky things," Johnson said. "If there's a criminal investigation, yeah, it's going to bring up a whole different set of questions that need answers."

Johnson made his remarks in a telephone interview from Japan, where he and other tourism leaders have joined Gov. Linda Lingle on a mission to revive Japanese tourism to Hawai'i and promote business in the Islands.

The attorney general's investigation was sparked by a highly critical report issued officially last week by state auditor Marion Higa. The audit questioned HVCB's accounting practices and use of state money, including HVCB President and Chief Executive Tony Vericella's payment of $137 in parking and speeding tickets, $174 for family travel and $359 for hotel room movies.

Both Vericella and Lingle's tourism liaison Marsha Wienert said that they do not believe HVCB risks facing criminal charges.

"I just can't imagine that," said Wienert, who took on the Cabinet-level tourism liaison position this month after resigning as executive director of the Maui Visitors Bureau, a branch of HVCB.

Vericella said he has not been contacted by the attorney general's office about the investigation.

Attorney General Mark Bennett said last week that "if there are issues that we ought to pursue either criminally or civilly, we're going to do that."

Linden Joesting, deputy attorney general, said yesterday that the probe would cover both criminal and civil matters.

HVCB board Chairman Tony Guerrero said he welcomes an investigation by the attorney general's office.

"We have nothing to hide," Guerrero said. "I looked at the people — the management of HVCB — I looked them in the eye and they told me they didn't do anything wrong, and that's all I can say."

He said that although evidence of criminal activity is always a big concern, "I still feel that HVCB continues to have Hawai'i at heart."

Sharon Weiner, chair of the tourism authority's marketing committee, said the panel has decided on its confidential recommendation to the authority's board on who should be granted the $25 million state tourism marketing contract or contracts. Most of the deliberations took place before the audit results were made public, and the committee will not reopen deliberations. Weiner said the final decision on the contract rests with the full board.

Johnson said the investigation by the attorney general's office is worrisome, but on the other hand, the information that may emerge is "exactly what we need to know."

The tourism authority and state Sen. Donna Mercado Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), requested the attorney general's investigation after HVCB accounting procedures were questioned in the audit. HVCB has said its procedures were standard.

Johnson also asked the attorney general's office to investigate possibly questionable use of money involving former Gov. Ben Cayetano's office, the state Department of Business, Economic Development and Tourism and former technology czar Joseph Blanco.

HVCB entered into high-tech development agreements with Blanco under the direction of Cayetano's office. Those agreements raised questions about whether the governor's office used HVCB to circumvent the state procurement code, the audit said.

The auditor "is way off base," Cayetano said in an e-mail when asked for a response. "There is nothing wrong in the manner in which the funds were spent. It was authorized by law."

Despite criticism directed at HVCB by Lingle and the tourism authority, Johnson and Vericella said that cooperation prevails among delegates on the Japan trip.

"I think everybody puts on their suits and ties in the morning and goes out and shows a united front to market Hawai'i, so I haven't seen any tension whatsoever," Johnson said.

Wienert said Lingle told HVCB staff they "have done a phenomenal job, and she wanted to thank them so much for pulling it together and making this happen."

The Japan mission delegates also said:

Lingle has been well-received in Japan. "They are warming up to her, maybe not as visibly as they did with Gov. Cayetano," Wienert said. Vericella said Lingle has put "a lot more focus on the whole 'open for business' approach" than Cayetano did.

Japanese tour wholesaler representatives said Japanese travel to Hawai'i appears to be recovering this summer.

"They believe that they pretty much hit bottom (in May), and things are starting to move on the upswing," Johnson said.

Vericella said there is still some "psychological impact and uncertainty" because of lingering SARS and economic concerns, but said he expects to see some recovery later in the year.

HVCB's Osaka and Tokyo offices are helping the delegation on its mission in Japan, but HVCB's proposal for a contract starting Jan. 1 would eliminate the Osaka office as well as offices in Latin America and Chicago, Vericella said. The moves are intended to cut costs and would involve staff reductions. HVCB has almost 100 employees worldwide.

Reach Kelly Yamanouchi at 535-2470 or kyamanouchi@honoluluadvertiser.com.