Brand USA Scandal Deepens

Govt. subsidized corporation had no clear mission, audit finds

Brand USA logo / AP
December 14, 2012

KTS Business Consulting's recent audit of Brand USA—the government-subsidized corporation created by Congress to promote United States tourism that has been dogged by allegations of cronyism and waste—obtained by the Free Beacon shows a company without vision, motivation, or oversight.

The audit found "a majority of the staff did not have any idea what the mission" of Brand USA was and that "all staff was in limbo as to what type of organization the Brand USA is."

The Daily Caller first reported Thursday on new expense reports and business audits that paint a picture of Brand USA as a rudderless organization with a penchant for spending:

Some of the new organization’s recent expenses include $4,139 for 250 holiday cards, $3,592 for a holiday e-card and $2,449 for a ringtone version of the Rosanne Cash song "Land of Dreams," which was created specifically for a sweeping Brand USA promotional campaign.

Also among the expenditures, according to the documents, are $2,700 for 26 sets of business cards and $50,252 for giveaway materials at the International Pow Wow trade show, which was held at the Los Angeles Convention Center earlier this year. The agency spent nearly $35,000 on Chinese-made water bottles for the event.

And Brand USA spent close to $1 million on its posh launch party in London last year, including $69,300 on freebies for attendees. Almost $50,000 went to neck wallets, and the organization dished out a grand total of $13,101 for umbrellas.

Brand USA has also paid out approximately $1 million in severance pay to eight terminated employees, the documents show.

Brand USA, formerly known as the Corporation for Travel Promotion, is a public-private partnership established by Congress to promote the United States abroad. It receives $1 in federal funding for every $2 in private contributions from corporations.

The company’s lavish spending caught the attention of several Republican Senators earlier this year. Sens. Tom Coburn (R., Okla.) and Jim DeMint (R., S.C.) released a report detailing how Brand USA used questionable "in-kind contributions" to qualify for federal funds.

These in-kind contributions included claims of $94.87 taxi fares for 2-mile rides, flights to London costing $6,799.30, and $365 hotel rooms. Corporate executives in one instance counted expenses such as a tip of $1.60 to a hotel doorman and a $14 snack in London as in-kind contributions.

The KTS business audit implies obtaining federal funds is the primary activity at Brand USA.

"Unfortunately, staff highlighted that after the two-to-one match, it was unclear what to do next," the report states.

Furthermore, staff complained of "lack of trust," "lack of strong leadership," and said they were "embarrassed at the lack of professionalism" in the company.

"Staff spends money without any checks and balances or funds tied to a budget," the report states.

The latest reports drew further condemnation from fiscal hawks in Congress.

"Brand USA, which I opposed from the beginning, has turned out to be even worse than feared," Sen. DeMint said in a statement to the Free Beacon. "We previously found it was relying on dubious in-kind contributions to access public money and had broken its lobbying ban. And now, the Daily Caller has uncovered millions in reckless spending, proving again that it should have never been created. The government never had any business getting into travel promotion. Supporters of Brand USA should realize their mistake and work to repeal the misguided program immediately."

As previously reported by the Free Beacon, Brand USA’s 11-member board was appointed by the Obama administration and is filled with high-profile donors to the Obama campaign.

John Connor, director of the Office of White House Liaison at the Department of Commerce, appointed the board members. He led Obama’s LGBT outreach efforts in the northeastern U.S. during the 2008 presidential campaign.

All of the board members Connor has appointed have donated to Democrats and Democratic organizations almost exclusively if they have donated at all.

Brand USA board chairman Stephen Cloobeck is the CEO of the Las Vegas-based Diamond Resorts. Cloobeck gave at least $490,045 in political contributions since 2007, with only $9,700 going to Republicans. Cloobeck gave $100,000 through one of his companies to the Majority PAC, which is run by operatives tied to Senate Majority Leader Harry Reid, in 2011, according to the Las Vegas Sun.

Brand USA board member Randy Garfield is executive vice president of worldwide sales and travel operations for Disney Destinations and the president of the Walt Disney Travel Company.

Garfield donated at least $4,720 to the U.S. Travel Association PAC, which gave $62,000 to Democrats in the 2010 election cycle—almost 40 percent more than on Republicans.

Brand USA board member Daniel Halpern is the president and CEO of Jackmont Hospitality. Halpern bundled at least $500,000 in donations for Obama and personally donated $54,555 to Democrats and Democratic organizations in the 2012 election cycle alone, according to the Center for Responsive Politics.

Brand USA board member David Lim is assistant vice president of Amtrak, which received $1.5 billion in federal appropriations last year in addition to $1.3 billion in stimulus funding in 2009.

Two Brand USA top executives have departed since the organization was formed in 2010, including the CEO.

Brand USA did not immediately respond to a request for comment.