Hawai‘i Tourism Authority chair recommends putting audit probe ‘to bed’

Hawai‘i Tourism Authority board Chair Todd Apo told the HTA Administrative and Audit Standing Committee on Monday that he did not “see an abuse of discretion” regarding Hawai‘i Convention Center discounts received by two nonprofits affiliated with the previous HTA board chair, Mufi Hannemann, and recommended putting the matter “to bed.”

The committee was expected to take action on issues raised in the fiscal year 2024 HTA Independent Financial Audit, which was presented at HTA board meetings on March 25 and 27 and led Hannemann to resign his position as board chair, though he remains on the board. State Auditor Leslie H. Kondo, who was expected to speak at the committee meeting, did not show up.

The financial audit of HTA’s fiscal year 2024 by Accuity LLP, a firm contracted by the state auditor’s office, determined that there were procedural deficiencies that allowed for free food and rent for events at the convention center, but did not issue a finding of fraud.

The main audit document did not name the events in question, but they were the Hawai‘i Lodging &Tourism Association’s public-safety conference, which was held at the convention center on Dec. 6, 2023, and a meeting of the Pacific Century Fellows, which was held May 15 in an HTA boardroom at the convention center.

The two organizations were not originally billed by the convention center as the events were reserved under HTA’s space form, and food and beverage costs for events on those forms are later reconciled with HTA. However, HLTA and PCF were presented with a bill for nearly $14,000 prior to the March 27 HTA board meeting.

Apo told HTA’s Administrative Audit and Standing Committee, “I believe the CEO had the authority and discretion to identify HTA events and use the HTA request form in order to do those which happened here. I understand that there can be a difference of opinion as to whether these two events should have been HTA events, but I don’t see an abuse of discretion in what was done in deciding to use these forms. Therefore, two entities were not charged.”

Hannemann said he resigned as board chair to avoid distractions and to focus on repairing damage to the reputations of HLTA and PCF. He said that he did not ask for special use and that the meetings were approved by HTA staff leadership and charged in accordance with the normal HTA and center practices.

He said Monday in a statement to the Honolulu Star-Advertiser, “I would like to thank the Hawai‘i Tourism Authority Chair Todd Apo for correcting the record and clarifying the unfortunate chain of events regarding the use of the Convention Center. I am especially pleased that his recent statement clears me and the two nonprofits, the HLTA and Pacific Century Fellows, of wrongdoing. The integrity of these non-profit organizations — one of which has raised millions of dollars for Hawaii’s charities and the other a premier leadership mentoring program — should have never had their reputations damaged or impugned.”

Daniel Naho‘opi‘i, who resigned as interim HTA president and CEO effective March 21, told the Star-^­Advertiser that he invited PCF to the convention center and had administrative staff fill out an HTA space request.

Naho‘opi‘i said he did not make a request for the HLTA event, which fell under destination stewardship. However, he said that both events qualified as HTA activities based on past practices.

“They were typical of many other events that we had done,” Naho‘opi‘i said. “We’ve had many requests. This is not unusual.”

Apo noted that since the audit report, HTA has made changes to how it reserves convention center space and is working to determine whether adopting additional policy or procedures is warranted.

“To me this should put to bed the questions of these two events that we were dealing with at Tuesday’s and Thursday’s special and regular board meetings,” he said. “I’d really like us to be able to focus on correcting going forward, learning from what happened, and to move on.”

The HTA board has not taken a vote related to the issues, nor have members of the HTA Administrative and Audit Standing Committee. Not all details about the procedural deficiencies that allowed for free food and rent for events at the convention center have been addressed, nor have all of the billing issues been resolved.

Hannemann said the organizations were surprised to receive a bill over 10 months after the last event given that there were numerous indications that the two events were being co-­sponsored by HTA or even comped by the center.

HTA board Member Stephanie Iona, who previously managed Koloa Ballrooms, Hemmeter Corp. events and many hotel operations for large conventions, said she is among the board members who requested that a full list of discounted and comped events be shared and compared with what was submitted to the auditor.

Iona said based on her past experiences, final paperwork should include key information such as the date, time of the event, number of guests, menu and services along with the payment requirement and a customer signature agreeing to the services.

“No services are provided without payments. But should a concession be provided after the services, any balance is sent with a bill for payment,” she said. “If not paid, delinquent notices, etc., are followed up, leading to harsher measures of collection if needed.”

Since receiving invoices, HLTA and PCF have sent money to the center. However, both organizations are asking for a clarification of the costs, which they say are inconsistent with the number of attendees and their recollection of the food and beverages that were served.

State Business, Economic Development and Tourism Director James Kunane Tokioka, who is a voting member of the HTA board, told the Star-Advertiser that to his knowledge no additional organizations have been billed.

Apo told the Star-­Advertiser after the committee meeting that he was satisfied the issues raised by the financial audit were examined and that corrective action has been taken.

“Whether anything else comes up in regard to these transactions, we will address them if that happens,” he said.“I thank Mufi for having stepped out of the chair position so that we could get this look and understanding of the situation objectively, and appreciate the patience of the two organizations, who do really good things for our state.”

While Monday’s meeting was about moving on, it stopped short of full resolution, leaving some questioning the thoroughness of the HTA board’s inquiry. It also left others questioning whether the call-out was targeted since only the HLTA and the PCF were released as examples, and Naho‘opi‘i said other organizations received similar discounts. To be sure, there have been many public instances of board infighting, especially between Hannemann and Tokioka, who is also a voting member of the board.

HTA board member Mahi­na Paishon said at the committee meeting, “I remain concerned on how this will unfold in terms of possible perception in the way that HTA is handling communications. The possible perception (is) that perhaps there could be concerns of possible defamation or things of that nature and possible targeting of certain individuals, whether it be at the staff level or the board level.”

Tokioka told the committee that he was ready to move on, though he had previously been among the most critical HTA board members who were reviewing the allegations against Hannemann that were brought forward during the audit by HTA Vice President of Finance Isaac Choy.

“I agree with Chair Apo’s assessment of all of this, and obviously, I was one of the vocal people in the last two meetings. I think the best thing for us to do now is to move forward,” Tokioka said during the committee meeting. “I think that we can all agree that it should not have happened and we should have had better safeguards in place, and that’s on HTA. We’ve fixed that and we’ve moved forward.”

Tokioka added, “I’m sure that the auditor is going to be watching this or hearing about this, and I’m sure he will respond to what Chair Apo said, and that’s his prerogative.”

HTA board member David Arakawa questioned Apo’s recommendation during the committee meeting and expressed concerns about lingering issues.

“I take issue with the chair making a finding that there was no abuse of discretion. I think the audit speaks for itself,” Arakawa said. “If that’s our position, that there was no abuse of discretion, then we should formally challenge the audit.”

Following the audit discussion, the committee also went into executive session for an agenda item listed as “Discussion, Evaluation, and Action Relating to the Resignation of Interim President &CEO Daniel Naho‘opi‘i and the Proposed Interim President &CEO, Chief Administrative Officer, Caroline Anderson.”

After the lengthy closed-door meeting, John Cole, state deputy attorney general, said there were a motion and a second on a recommendation for an interim HTA president and CEO but that the motion did not pass, so no action was taken. Even if the committee had voted to support a new interim president and CEO, the full HTA board would have had to approve its recommendation.

Anderson has been serving as HTA interim president and CEO since Naho‘opi‘i’s departure.