Report: Taxpayer-funded tourism board filled with waste, cronyism

October 4, 2012

The federal government’s latest taxpayer-funded effort to promote U.S. tourism is dogged by lavish spending, cronyism, and questionable accounting, according to a report released Thursday by two U.S. Senators.

The report, issued by Sens. Jim DeMint (R., S.C.) and Tom Coburn (R., Okla.), details questionable practices by Brand USA, a public-private corporation established in 2010 by Congress to promote U.S. tourism.

"It is immoral to ask the federal government to shell out $100 million every year to pay for high ranking executives to enjoy parties in London and luxury suites at major league baseball games in the name of ‘travel promotion,’" Coburn said in a statement. "With millions out of work and our national debt surpassing $16 trillion, this is the kind of indulgence we need to say no to."

To obtain federal funds, Brand USA must obtain matching private donations. But, according to the report, the company has relied heavily on "in-kind" non-cash contributions to qualify for taxpayer money.

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

As previously reported by the Washington Free Beacon, the Brand USA board, appointed by the White House, is stacked with Democrats and fundraisers for President Obama.

In 2011, Brand USA chairman Stephen 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, according to the Las Vegas Sun.

Cloobeck claimed $4,128 for in-kind contributions when he attended a conference in Los Angeles this May, according to the report.

Brand USA drew fire from DeMint for sending its board members to England for a business meeting. That meeting lasted two hours and was followed by a VIP launch party. Video of the party was later put on the organization’s Facebook page.

According to Thursday’s report, "correspondence between Brand USA and its contractor in London indicate that Black Diamond Films, a British company, ‘donated’ $215,106 in services to Brand USA, which was ‘over and above the hours allocated within the $50,000 fee.’ This spending is all before the first petit fours were bought, any of the 38 waiters, 18 chefs, or 9 porters were hired, a single glass of champagne was filled, and before the hall was rented. The room alone lists for £9000 + VAT or roughly $17,000."

"It’s sad, but not surprising, to find the government’s newest tourism venture is just as wasteful and mismanaged as we feared," said Senator DeMint in a statement. "It’s clear that American tourism industry places little faith in another unnecessary Washington agency, which is why Brand USA has relied on dubious in-kind donations and resorted to breaking its lobbying ban. Only Washington could think that taxing tourists will increase tourism or that we need a new bureaucracy to duplicate our vibrant tourism industry’s advertising budgets."

The Brand USA CEO resigned earlier this year shortly after its first annual report was released.

Brand USA did not return requests for comment.