HONOLULU -- A firestorm of criticism over the handling of state
money at the Hawaii Visitors & Convention Bureau (HVCB) led to
the resignation last week of the bureau's president and CEO, Tony
Vericella, effective immediately.
"I have decided that it is in the best interests of our island
communities that I resign," Vericella said. With his departure, he
said, the HVCB will be better positioned to market Hawaii
"unimpeded by the issues surrounding the legislative auditor's
Oahu Visitors Bureau executive director Les Enderton will serve
as interim president while a search is conducted to find a
replacement within 90 days.
Vericella faced mounting criticism following an audit report
that, among other things, said he used state funds to pay personal
expenses such as traffic tickets and hotel in-room movies. He has
since reimbursed the HVCB.
The state audit placed the HVCB in a precarious position, as its
contract comes up for renewal at the end of the month.
In one charge of misuse of state funds, the report said money
was spent to research and lobby against a bill dictating that
responsibility for marketing the Hawaii Convention Center -- and
the $4 million contract that went with it -- be taken from the HVCB
and given to SMG, a Philadelphia-based facilities management firm.
The contract was awarded to SMG on Jan. 1.
The Hawaii Tourism Authority (HTA), charged with setting tourism
policy and contracting out work to the HVCB, is sharing the hot
seat. In addition to reporting that contracts were poorly
constructed, state auditor Marion Higa stated in a recent
seven-hour HTA meeting that "the authority's lax monitoring and
enforcement of its contracts with the HVCB left little assurance
that $151.7 million in state funds were effectively spent to
promote Hawaii as a visitor destination."
In an 11-page, item-by-item rebuttal from the HVCB, the bureau
apologized for misuse of funds and pledged to move forward to
The relationship [between the HTA and HVCB] has been "a bit too
close and informal," said HVCB chairman Tony Guerrero, who admitted
this might have caused problems regarding contracts and record
HVCB former board chairman Chris Resich said, "Now, we have
identified some weaknesses, and we are ready to work with everybody
to address them." He added that the HTA needs to decide if the HVCB
will operate as a private or a state entity because there are "huge
differences between the two, and a lot of points in the audit had
to do with those differences."
Accounting anomalies, such as $1 million that accrued in 2001 to
an advertising company for services that were performed the
following year, occurred several times.
The audit also revealed $191,000 in questionable expenditures
that "violated the HVCB's own travel and entertainment policies,"
said Higa, suggesting a culture where "it seemed to be OK to cheat
here and there."
In addition, the bureau lacked a system for formal evaluations
of its subcontractors, relying on personal relationships and oral
communication to determine their effectiveness.
The HVCB paid $2 million for advertising services in 2002, with
no written agreement on the scope of services. Of the 25 contracts
reviewed in the audit, the HVCB documented its evaluation of only
Senate tourism committee chairwoman Donna Mercado Kim said that
she has asked the auditor to retain all records "in case the
legislature wants to pursue an investigation."
A legislative mandate requires the state to audit the HTA's
major contracts every five years.
To contact reporter Katherine Nichols, send e-mail to [email protected].