HVCB answers audit
There is no evidence of
intentional wrongdoing,
the visitors bureau says
Hawaii Visitors & Convention Bureau leaders faced the hard task yesterday of explaining an eye-opening state audit that criticizes the bureau's spending practices.
During a press conference at the bureau's headquarters in Waikiki, HVCB officials admitted fault in some instances, disagreed with the audit in other areas, and said the bureau is making changes in how it does business.
They also said there's no evidence of intentional wrongdoing, and that no bureau managers will lose their positions as a result of the audit.
"Hawaii is our only client. Hawaii is our only product," said Tony Guerrero, chairman of the visitors bureau and executive vice president of First Hawaiian Bank.
"We welcome further investigations," he said, flanked by bureau Chief Executive Tony Vericella and Chris Resich, the previous HVCB chairman and president of destination management company MC&A Inc.
The audit has prompted inquiries by the Attorney General's Office and Hawaii Tourism Authority, which was criticized in the audit for lax oversight of the bureau.
The bureau said the faults in the audit should be weighed along with the HVCB's work to boost Hawaii tourism in hard times. "During the period covered by the final report up to the present, from global economic crises, through the impact of 9/11, wars and health epidemics, HVCB has continued to establish an enviable global positioning for Hawaii amid increasingly aggressive competition," the bureau said.
At times during the press conference, Guerrero was defensive. "Everyone can be a Monday-morning quarterback," Guerrero said. He noted the bureau, a private nonprofit trade organization for the tourism industry, is not a state agency.
Still, the HVCB has received most of its funding from taxpayers, through contracts with the Hawaii Tourism Authority, a $61 million state agency.
During the press conference, bureau officials said:
>> The bureau never should have paid for invoices received from Joe Blanco, former Gov. Ben Cayetano's tech czar, submissions the audit questioned as a way of evading the state procurement code. Blanco denies wrongdoing.
>> Vericella should not have used state funds to pay $670 in personal expenses including parking and speeding tickets, hotel room movies and travel expenses.
It was an error in judgment and Vericella has reimbursed the funds. The bureau's chief financial officer, Terry Hee, is going through the past three years of Vericella's personal expenses to check for any other problems. A top bureau director must approve every expense from now on.
>> The bureau should have put a Taiwan promotional contract out to bid, rather than awarding it outright to a company run by Wei-Wei Ojiri, a bureau vice president at the time. Ojiri technically resigned before the contract was awarded, but she stayed on temporarily while the bureau searched for a replacement. Guerrero said the bottom line is that the HVCB is paying less to market to Taiwan than it did previously.
>> The HVCB will no longer allow Japan Airlines to pay the benefits of Kiyoshi Mukumoto, the bureau's vice president for marketing Japan. When the bureau hired Mukumoto from Japan Airlines in 1997, the bureau couldn't match his salary, so it let JAL pay Mukumoto, posing a potential conflict of interest, the audit said.
The bureau agreed the arrangement could lead to a negative perception among other airlines and tour wholesalers. The bureau only had the state's best interest at heart, and there was no evidence of favoritism toward JAL, Resich said.
"We hired Mukumoto and we can fire Mukumoto, not JAL," Guerrero said.
The bureau is not apologizing for paying $141,000 in state funds as severance to Sandra Moreno, its former vice president of meetings, conventions, and incentives.
In 2001, Moreno's state-funded compensation was $218,793. Moreno's severance was specified in her contract. Moreno joined the bureau in 1997 after 14 years at the San Diego Convention and Visitors Bureau. She left after the bureau was forced out of marketing the Hawaii Convention Center.
Resich said Vericella has the full support of the bureau's 38-member board of directors, as well as the Hawaii tourism industry.
Bureau officials plan to respond more fully to the audit in a July 16 public meeting with the Hawaii Tourism Authority.