Hawaii auditor faults HVCB, HTA biz practices

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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 corrective measures."

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 interest.

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."

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