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The Honolulu Advertiser

Posted on: Friday, July 25, 2003

HVCB audit, master OK'd

By Kelly Yamanouchi
Advertiser Staff Writer

Mike McCartney, chairman of the Hawai'i Tourism Authority; and Rex Johnson, its president, helped decide how to distribute $25 million in tourism marketing contracts. The Hawai'i Visitors & Convention Bureau previously held the entire contract.

Bruce Asato • The Honolulu Advertiser

The Hawai'i Tourism Authority yesterday approved its 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 highly critical report by state auditor Marion Higa that questioned the bureau's accounting practices and use of public money.

HVCB could face another blow today, as the tourism authority is scheduled to announce who it selected to receive $25 million in contracts.

The authority board voted on the contracts during a three-hour closed meeting yesterday.

Chairman Mike McCartney characterized the meeting as "a very healthy discussion."

Ten organizations were in the running for contracts starting Jan. 1 and lasting at least four years.

Earlier indications were that the contract, which had been held solely by HVCB, was being parceled out, and that the bureau would not get the entire amount.

At the same time, HVCB, which has been selling the Islands to visitors for years, has long experience in the trade, especially in promoting the state in domestic markets.

HVCB could maintain at least the largest part of the contract, worth about $15.2 million for tourism marketing to North America, but it stood to lose smaller parts of the contract, such as marketing to Japan or other parts of the world.

The Japan marketing contract is worth about $6.3 million.

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

The authority board based its contract decision on a recommendation from its marketing committee, which completed most of its deliberations before Higa's audit findings were released.

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

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

For its audit, the authority plans to negotiate with the accounting firm of Nishihama & Kishida to conduct a $150,000 financial and contract compliance review. The firm worked on Higa's audit of HVCB. The authority also said an additional $150,000 could be used for the audit.

The authority further approved $200,000 for the special master, who would review HVCB's operations and recommend improvements.

All $500,000 would come from excess money from the authority's budget.

"I'm glad to see that they're taking the lead and that they're moving in a timely manner," said Donna Mercado Kim, chairwoman of the Senate tourism committee.

HVCB's loss of portions of its contract would be a significant setback, coming after Tony Vericella, its chief executive officer and president, resigned Monday.

Vericella was criticized after the state auditor's report revealed HVCB's misuse of state money.

The inappropriate expenditures included about $600 used for Vericella's parking tickets, hotel room movies and other personal items. He later repaid the money, and has been asked to repay an additional $400 for hotel room movies ordered in the past three years.

Vericella will receive a departure package including half a year's severance pay, or about $126,000, and other benefits, according to HVCB Chairman Tony Guerrero.

Also yesterday, the authority reduced its budget for the fiscal year beginning July 1 from $69 million to $61 million after Lingle's veto of an additional $8 million for tourism promotion.

Johnson said $61 million for the authority comes from healthy transient accommodations tax collections that left enough surplus for $1 million to go toward the Department of Land and Natural Resources.

"We had a fairly good year," Johnson said.

The tourism authority also deferred a vote on a new chair and vice-chair because of the addition of new board members and ongoing issues in awarding its marketing contracts.

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