HONOLULU -- The Hawaii Visitors and Convention Bureau is under fire
after a state audit released yesterday charged misuse of funds,
informal or nonexistent evaluations of subcontractors, and
conflicts of interest, leaving the century-old organization in an
uncertain position as its contract comes up for renewal at the end
of the month.
The Hawaii Tourism Authority, charged with setting tourism
policy and contracting services to the HVCB, shares the hot seat.
In addition to poorly constructed contracts, state auditor Marion
Higa reported, "We also found that the authority's lax monitoring
and enforcement of its contracts with HVCB left little assurance
that $151.7 million in state funds were effectively spent."
A swift response -- with the help of a newly hired Honolulu
public relations firm -- came from the tourism authority.
"While we have been working diligently to address these issues,
many of the instances cited in the current audit were shocking and
demonstrate the full extent of the challenge we face in managing
this contract," HTA president and CEO Rex Johnson said of the HVCB.
"The auditor cited several examples which indicated serious abuse
of state funds and policies, and we will be taking immediate action
beginning with an internal investigation. If our investigation
confirms the findings of the audit, we will do whatever is
necessary to hold HVCB accountable and require comprehensive
The report concluded that HVCB president and CEO Tony Vericella
used state funds to pay for traffic tickets and hotel in-room
movies, that one employee received severance pay of $141,000,
nearly equal to the employee's annual salary, and that an airline
representative who earned part of his salary from HVCB and part
from Japan Airlines -- when he was supposed to be an advocate for
all airlines -- created the appearance of a conflict of
In addition, the bureau lacked a system for formal evaluations
of its subcontractors. Instead, it relied on personal relationships
and oral communication to determine their effectiveness.
In response, the HTA may seek to involve the attorney general,
hold a public board meeting to discuss the issues, review internal
records to improve HTA's business dealings and implement the
auditor's recommendations. HTA also plans to enlist the support of
the Ethics Commission in dealing with the audit findings.
HVCB is planning a formal response to the audit, scheduled for
release in about a week.
As HTA moves forward in its selection of contractors to market
Hawaii, Johnson said, "HTA takes its fiduciary responsibility very
seriously and, to that end, we will take every measure necessary to
correct any misuse of state funds and to ensure that future abuse
does not occur."