President of the Hawaii CVB resigns

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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 report."

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 correct shortcomings.

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 keeping.

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 two.

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].

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