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The Honolulu Advertiser

Posted at 11:43 a.m., Thursday, July 24, 2003

HTA approves audit of HVCB

By Kelly Yamanouchi
Advertiser Staff Writer

The Hawai‘i Tourism Authority today approved its own audit of the Hawai‘i Visitors & Convention Bureau and the appointment of a special master to review the bureau’s operations.

The reviews, which could cost as much as $500,000, will follow a critical report by state Auditor Marion Higa of the authority’s current contract with HVCB. Higa sharply questioned the bureau’s accounting practices and use of public funds.

The tourism authority is also meeting in closed session today to decide on who will receive $25 million in state money to market Hawai‘i to tourists worldwide beginning next year.

The Hawai‘i Visitors & Convention Bureau has been selling the Islands to visitors for a century and always has received the entire leisure-marketing contract from the tourism authority.

This year, it faces competition from nine other bidders for the whole contract or parts of it, and the tourism authority could decide to split up the marketing agreement for the first time.

Gov. Linda Lingle and others in the industry have said it is likely HVCB will not get the entire contract.

For its part, the authority plans to hire the accounting firm of Nishihama & Kishida to conduct a $150,000 financicial and contract compliance audit. The firm worked on Higa’s audit of HVCB. An additional $150,000 could also be used for the authority’s audit.

The authority further approved $200,000 for the special master.

All $500,000 would come from excess funds from the authority’s budget.

For the fiscal year beginning July 1, the authority reduced its budget from $69 million to $61 million after Gov. Linda Lingle’s veto of an additional $8 million for tourism promotion. To cope with an anticipated shortfall, the authority plans to end the year in a deficit and seek additional state funding to make up the difference.

If HVCB loses its hold on the marketing contract, it would be the second blow to the marketing agency this week. On Tuesday, Tony Vericella, HVCB’s chief executive officer and president, resigned.

Vericella had become the center of controversy after a state auditor’s report accused HVCB of misusing state money and violating sound accounting principles. Among the problems cited was Vericella’s use of about $600 in public money for parking tickets, hotel room movies and other personal uses. He later repaid the money.

The authority board will be voting on a recommendation from its marketing committee on who should get the state’s lucrative marketing contract.

The committee completed most of its deliberations before the audit’s findings were released.

“We didn’t consider the audit into the decision (recommendation),” said Kyoko Kimura, a member of the marketing committee. “It’s for the board to decide whether we’re going to consider the results of the audit.

“I don’t think we should sacrifice by choosing the second best because of the audit.”

However, Kimura said the audit findings should play a role after the contractor is selected. The authority could impose restrictions on its contractors allowing it to better monitor their use of state money, for example.

Meanwhile, Marsha Wienert, Lingle’s tourism liaison and former executive director of HVCB arm Maui Visitors Bureau, said she was advised yesterday by the state Ethics Commission that there is no conflict in her voting on the contract “because I have no financial interest vested in HVCB.”

Wiener had asked for the advisory because of her ties with the Maui bureau, an arm of HVCB.