More scrutiny
for HVCB

In the wake of a critical audit,
the tourism authority asks the
Attorney General's Office
to get involved

A blistering audit of the Hawaii Visitors & Convention Bureau and the Hawaii Tourism Authority is drawing further inquiry on several fronts.

The authority has contacted the state Attorney General's Office to review the audit's findings, according to a letter from the authority to the state auditor.

The audit, which was to be released publicly today, described the HVCB as "run amok" with taxpayer funds.

While Wei-Wei Ojiri was serving as a vice president for the bureau, she was also president of a Taiwan public relations company that received a $242,000 bureau contract, the audit said.

The audit questioned whether Joe Blanco, state tech czar under former Gov. Ben Cayetano, used HVCB to evade the state procurement code in making $48,000 payments to communications firm Joan Bennet and Associates Inc. Blanco denies wrongdoing.

And the audit pointed out that Kiyoshi Mukumoto, another vice president of the HVCB, had his salary partly paid by Japan Airlines, the company he once worked for, creating a potential conflict of interest.

State Sen. Donna Kim is calling for a legislative investigation into the bureau's spending practices. Kim and Rep. Jerry Chang are holding a joint briefing next week to discuss the audit with state Auditor Marion Higa. Kim plans to haul the authority and the bureau into a separate hearing later.

Kim arranged the audit of the bureau through passage of a new state law last year.

"It's evident that a lot more work needs to be done to determine how the Hawaii Visitors & Convention Bureau is spending the public's money," Kim said.

The authority, in a June 25 letter to Higa, said it generally accepts the findings of the audit, which examined the $151.7 million in state contracts the authority awarded the bureau to market Hawaii to travelers between January 2000 and the end of last year. The audit faulted the HTA for lax oversight.

"Although the HTA has already incorporated stronger control measures into its contract management efforts, the current audit has helped confirm those measures merit our closest scrutiny," the HTA said. "While we have been working diligently to address these issues, the current audit demonstrates the full extent of the challenge. We were surprised by many of the findings. Instances cited by the auditor are serious and will be under investigation."

The HTA is kicking around the idea of seeking a special master to review HVCB's operations, the letter said.

Rex Johnson, president and chief executive of the tourism authority, declined comment yesterday.

The tourism authority has scheduled a special public meeting for July 16 to discuss the audit with HVCB. Not long after that, July 24, the authority's board will meet to discuss the fate of HVCB's contract, which expires at the end of this year. The bureau and other organizations have submitted competing bids for the contract, and the authority is considering breaking up the contract by geographic region.

Tony Vericella, president and chief executive of the bureau, said an executive committee of its board discussed the audit yesterday. The bureau plans to review it thoroughly and answer questions at the HTA meeting July 16.

Vericella was previously chairman of the bureau, a nonprofit private tourism industry organization, in the mid-1990s.

The audit said the state and the Legislature should investigate the extent to which HVCB violated generally accepted accounting principles, something that was not previously reported by the HVCB's independent auditor, KPMG.

The state audit, done by accountants Nishihama & Kishida, said HVCB violated accounting principles by committing funds to pay for future goods or services, so that the bureau could expend all its state funds for a given year.

The authority's letter to Higa said the matter requires further investigation.

The authority's board is considering further audits of HVCB, and may seek restitution from the HVCB for any misappropriated spending.


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