Brand USA Charged With Mismanagement, Waste, Cronyism

Six Republican senators have accused Brand USA of overspending, inappropriate lobbying activity and corporate cronyism. The accusations are contained in a report of the senators’ initial investigation into Brand USA, a federal-private partnership created two years ago to promote inbound tourism.

The report represents the first findings in an ongoing investigation spearheaded last June by Sen. Jim DeMint (S. Carol.), Sen. Tom Coburn (Ariz.) and four other senators: Jeff Sessions (Ala.), Mike Lee (Utah), Chuck Grassley (Iowa) and Rand Paul (Ky.). The report was released last week by Sens. DeMint and Coburn.

Brand USA and the Department of Commerce have provided “only a small cross section” of requested documents, according to the report. Those documents that were provided “paint a picture of mismanagement, waste and cronyism,” the report said.

Costly launch party
The senators fault Brand USA for the allegedly exorbitant costs of its London launch party. They also charged that several Brand USA board members were appointed because they are heavy Democratic campaign contributors.
 
Among their other charges: “questionable” donations to the organization; board members counting their luxury expenses as in-kind donations, and Brand USA and its attorneys spending time and money formulating a strategy for lobbying Congress. The Travel Promotion Act that created the organization states it should not engage in lobbying activities.

Brand USA defends its actions
In a statement, Brand USA said it enjoys strong industry support, is working with more than 260 partners and has received about $59 million in cash and in-kind contributions from private businesses and organizations.

“In-kind donations are vetted scrupulously, first by Brand USA then by an independent accounting firm before receiving a final review by the government,” the statement said.

“Brand USA has been committed to holding administrative and overhead expenses to under 15% – ensuring that at least 85% of spending goes directly toward attracting international visitors.”

It said the private sector, including its board members, have donated “countless hours, dollars and other resources because of their commitment to creating jobs and economic growth for America. We have and will continue to work with the Senator and his staff to address any further concerns they have.”

Travel industry reaction
A travel industry source called DeMint’s conclusions “fair.”

“But that doesn’t mean you throw the baby out with the bath water,” the source said. “You clean things up; that’s what the board has done by getting rid of Jim Evans and Chris Perkins, the people that put Brand USA in this situation.” (See sidebar.)

Geoff Freeman, COO and executive vice president of U.S. Travel Association, said, “An organization moving at 100 miles an hour will have growing pains.” U.S. Travel, the operator of the annual International Pow Wow, promotes inbound travel.

“We have to make sure this organization operates the way destinations operate in terms of transparency,” he said.” But we have to look ahead. This will be a different and highly functional organization. No doubt past experiences are leading Brand USA to put in place many tighter policies and protocols to insurance transparency.”

NTA: Int’l marketing is critical
NTA said it was not in a position to address the senators’ issues. But, “We support openness and transparency in operating within the Travel Promotion Act,” said Lisa Simon, NTA president.

“Marketing the U.S. as a travel destination is critical,” Simon said. “It’s good for our members, the industry and jobs creation. You know, the industry worked hard to establish a nationally coordinated marketing organization, and we have consistently supported the Brand USA mission.”