The Hawaii Tourism Authority, which manages state tourism marketing funds, cannot demonstrate that these promotional dollars count, according to a scathing state audit released yesterday.

The audit hammers the HTA for failing to have a clear tourism plan, mismanaging tourism contracts and contractors, and implementing programs without considering their effectiveness. It also faults the Hawaii Visitors and Convention Bureau, Hawaii Tourism Japan and SMG, which markets and manages the Hawai'i Convention Center, for misuse of state funds.

While the audit was critical, HTA officials said it shows improvement over previous assessments.

“;We were delighted by the fact that the auditor did recognize the significant improvements that were made and instituted after the last audit,”; said HTA Chairman Kelvin Bloom. “;We were heartened by that, but at the same time the auditor did raise some valid points. We'll take the audit in the nature it was intended and address those areas.”;

The HTA board will discuss the findings at the next board meeting next Thursday, said Bloom.

The most recent audit comes as Hawaii's key visitor industry and HTA itself are struggling for survival.

Former HTA President and Chief Executive Rex Johnson resigned in October after a scandal surfaced regarding his use of a state laptop to forward pornography to friends. The HTA has not named a permanent replacement.

As visitor arrivals and occupancy fall by double digits in many regions of the state, the HTA is under fire from hoteliers who want more money for marketing, and some residents who want funding for nature, art and culture.

The uncertainty has prompted Juergen Steinmetz, owner of E-Turbo News, to launch the Hawaii Tourism Association, a grass-roots organization of visitor industry stakeholders.

“;We've had 735 people sign up in Hawaii and as many as 13,000 globally,”; Steinmetz said. “;Clearly, it's time for a change. I hope that the new organization can assist the HTA and do something for the industry.”;

Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia, said that despite the latest audit, HTA's credibility is intact.

“;I was involved in previous HTA audits and found (state Auditor) Marion Higa's team to really focus on minutia and innuendo,”; Vieira said. “;With the change in leadership over the last few months, some corrections have been made, and I think the HTA is on the right course.”;

A similar state audit conducted in 2002 blasted the HTA for lack of organization, and a 2003 audit accused the HVCB of exploiting state funding without any supervision. The 2003 audit was so damning that it led to the resignation of former HVCB Director Tony Vericella, who had been accused of using bureau funds to pay for in-room movies, speeding tickets and family travel.

Johnson could not be reached for comment; however, interim HTA President and Chief Executive Lloyd Unebasami said that progress was made under his former boss.

“;Since the last audits in 2002 and 2003, HTA has gone through our contract process and procedures,”; Unebasami said. “;Our management is solid.”;

Still, the latest audit identified problems in a $53 million contract to market the Hawai'i Convention Center and a $66 million contract to market Hawaii in Japan. The audit also identified a $33 million discrepancy in the SMG contract, and a three-year $1.5 million retroactive budget increase that was not intended and not paid to SMG.

Minor issues in the Hawaii Visitors and Convention Bureau audit reflected improvements over previous deficiencies; however, a lack of safeguards led to $8,440 in overpayment of bonuses among HVCB employees in an audit sample.

The audit questioned Hawaii Tourism Japan's use of public money to pay for commuting expenses and purchase employee gifts, one of which cost more than $400. Moreover, the audit found that in 2007 the owner of HTJ, in addition to compensation of about $120,000, received a bonus of about $8,700.

In a sample review of 34 SMG transactions, the audit found that half lacked evidence that bid requirements were followed. The audit also questioned several “;potentially extravagant”; purchases made with public funds, including:

» Limousine services for transferring client representatives between hotels and the Honolulu Airport, where government rules would dictate the least expensive mode of transportation.

» Hiring five limousines at more than $1,600 to transport potential clients to and from a promotional dinner event in a mainland city.

» A $1,560 helicopter ride between the airport and the Turtle Bay resort for a meeting planner of an event at the Hawai'i Convention Center.

» A $260 iPod as a gift to a client representative.