Audit: Tourism authority has 'lax oversight' over contracts, reimbursed lavish expenses

HONOLULU (HawaiiNewsNow) - The Hawaii Tourism Authority can do a lot of things other public agencies can't do.

As a semi-automonous state entity, it's exempt from state procurement code, and it's got a permanent source of funding in the hotel room tax (which brings in about $109 million annually).

But it's a still a public agency, the state auditor says, and it's not operating like one.

The authority's autonomy "has facilitated lax oversight, deficient internal controls, and, ultimately, less accountability," the state auditor concluded in a newly-released financial audit that takes the agency to task for reimbursing lavish contractor expenses, failing to require receipts and disregarding its own policies for how contracts are awarded and evaluated.

The Hawaii Tourism Authority is responsible for marketing Hawaii.

And the state's 87-page audit looked at HTA procurement practices and two contracts valued at $15 million.

It found an agency that was spending money way too freely.

Among the problems found in the audit:

• HTA reimbursed some contractors without receipts and reimbursed one contractor (AEG, which took over management of the Hawaii Convention Center) for about $50,000 in first-class airfare and other lavish expenses that were against the rules.
• Additionally, the auditor said, millions of dollars in contracts were renewed or changed without evaluation for effectiveness. And HTA executives didn't even know the rules they were supposed to follow.
• The authority paid Expedia $3.5 million for a marketing campaign, but never confirmed it was able to do work in Hawaii (it wasn't) and didn't hold Expedia to the contract terms.

In response to the audit, the agency pointed to Hawaii's record-setting tourism to justify its work.

"If HTA was not effective in managing our contracts and our contractors and in working with Hawaii's tourism industry, the numbers would not reflect as they do and Hawaii would not be the beneficiary of six record years of arrivals and expenditures," the agency said.

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