Tourism bureau
funds in disputeSome officials say $1.5 million
in refunds from Japan should
be returned to the state
The Honolulu Visitors & Convention Bureau received $1.5 million in Japanese tax refunds for Hawaii taxpayer money it spent in Japan, according to a state agency's audit.
"It should be returned to the state," said Senate Tourism Chairwoman Donna Kim (D, Kalihi Valley-Halawa).
According to the audit commissioned by the state Hawaii Tourism Authority, the nonprofit visitors bureau received the refunds of Japanese sales tax on funds spent for tourism promotion in 2000, 2001 and 2002, under contract with the tourism authority. The HTA paid the bureau a total of $151.7 million to market Hawaii over those three years.
HTA Executive Director Rex Johnson, who also believes the HVCB should return the money, said, "The attorney general wants to take a look-see at it, and I don't know how my board is going to feel about that."
HVCB President and Chief Executive John Monahan, who was not in charge of the bureau at the time of the refunds, said he received the audit Thursday and needs to take a closer look at it before forming an opinion on who should get the money.
Monahan took the job in October, after Tony Vericella resigned following a state auditor's report critical of HVCB spending and lack of oversight by the HTA.
The HTA contracted Nishihama & Kishida, CPAs, Inc. to do a financial audit of the bureau in response to the state auditor's report. The HTA released its audit yesterday.
The audit confirmed the state auditor's findings of questionable spending and accounting practices.
However, state Attorney General Mark Bennett said yesterday that the HTA cannot sue the visitors bureau because the actions the state auditor pointed out in her report were not covered in the contract between the two agencies.
The Nishihama & Kishida audit also found that the HVCB paid more than $500,000 for services in 2002 for which the bureau had no invoices or supporting documents. In one instance a vendor was paid twice for the same invoice.
The audit lists 57 invoices totaling $1.2 million for which the HVCB did not provide adequate supporting documents to substantiate the amounts and descriptions of the contractors' work.
Monahan said he is reorganizing the bureau to address the findings and recommendations of the state auditor's report. He said he found the findings of the recent audit "alarming and disturbing."
Monahan pledged to immediately address the findings and problems detailed in the recent audit. He said any surplus funds the HVCB has at the end of the 2003 contract will be returned to the HTA.
Following a 2002 state auditor's report critical of the tourism authority's promotion spending oversight practices, Johnson said the HTA included tighter controls in its 2003 contract with the HVCB. He said the controls are even tighter in the 2004 contract.