HVCB chief
to be disciplinedTony Vericella will not
be forced to resign
after a critical audit
A committee of the Hawaii Visitors & Convention Bureau board has discussed at length whether its chief executive, Tony Vericella, should resign over a critical state audit, and rejected the idea.
The executive committee decided that Vericella had not personally benefited from mistakes that were made by the bureau, said Tony Guerrero, chairman of the bureau's 38-member board. The committee believes that Vericella was not paying attention to details when he paid $670 in personal expenses with state funds.
The audit said Vericella used state funds to pay $137 in parking and speeding tickets. Vericella got the parking tickets when he was at the state Capitol for legislative hearings, and the speeding ticket was from racing to the Big Island airport from a marketing event.
The committee plans to discipline Vericella but will not disclose the action, Guerrero said. He noted that there was no question about Vericella's integrity.
The bureau's board has not been kept completely informed by management, Guerrero said. The board did not know that the Kiyoshi Mukumoto, the bureau's vice president in Japan, was being paid partly by Japan Airlines, a potential conflict of interest.
Vericella and other bureau officials responded point by point yesterday to the audit at a board meeting of the state Hawaii Tourism Authority, which contracts with the bureau. The audit criticized the authority's oversight of the bureau's $151.7 million in state contracts between 2000 and 2002.
The authority is reviewing bids for the state tourism marketing contract. The bureau currently has the contract, which expires at the end of this year. The authority plans to meet next week to take action on the bids.
The bureau said it delivered on its goals for marketing Hawaii effectively to tourists and business travelers. Chris Resich, former chairman of the bureau, said there is a larger issue of whether the bureau is going to be treated like a business or like another state agency.
Authority board members probed to see if the bureau violated its contract, and spent lots of time discussing how the bureau accounted for certain marketing expenses. The audit said the bureau violated generally accepted accounting principles by committing funds for future services as a way of spending all of its state funds for a given year.
The bureau accrued $1,011,456 -- an amount that happened to exactly tap out its state funds in 2001 -- to the firm Travel Related Marketing in November 2001 for services that occurred in 2002.
The bureau also entered contracts with McNeil Wilson Communications and Milici Valenti Ng Pack in December, totaling nearly $900,000, for services to be done in 2003.
Resich said the bureau's entire marketing plan changed after Sept. 11, 2001, and that world events have to be considered. He said it was possible that the bureau violated the terms of its contract by not notifying the authority about the invoices.
"Perhaps there was a violation, but look at the circumstances," Resich said.
Stephen Yamashiro, a board member and former Big Island mayor, said the concern should be whether the state is getting its money's worth from the bureau, not the small details of how the bureau did business.
Board member Lorrie Lee Stone expressed dismay over how the bureau gave a contract to a public relations company headed by former bureau Vice President Wei-Wei Ojiri.
Ojiri joined the HVCB in May 1999 and announced in January 2002 that she was stepping down to start her own marketing firm. At the time, Federal Transportation Co. was working as the bureau's representative in Taiwan. Hsin Lee, a Federal Transportation employee who was the bureau's account executive, quit in May 2002 and joined Ojiri's public relations company.
Ojiri left the bureau at the end of April 2002. Three days later the bureau signed a contract with Ojiri's firm. The bureau said it selected her company because of Ojiri's qualifications and the fact that Lee now worked for Ojiri.
Stone criticized the timing of the events, which the audit questioned as possible self-dealing by a bureau executive. "There's just a terrible perception," Stone said.
Vericella agreed that the arrangement raised questions. The bureau said Ojiri helped to establish a critical foothold for Hawaii in China, which could pay big benefits for tourism in the future.
The bureau noted it created a new contract approval process last year. Its board must review any contract with a former employee.
The bureau said it is also forming an audit committee, to be headed by its incoming Chairman Donn Takaki, in response to the audit.