Sens. Jim DeMint, R-S.C., and Tom Coburn, R-Okla., released an investigative report of Brand USA, alleging that the little-known taxpayer-funded tourism agency is rife with cronyism and shells out lavish amounts of money for travel and entertainment for its officials.
“It’s sad, but not surprising, to find the government’s newest tourism venture is just as wasteful and mismanaged as we feared,” said DeMint in a statement, adding, “Only Washington could think that taxing tourists will increase tourism.”
The agency replaced the U.S. Travel and Tourism Administration, which had been abolished in 1996. The new agency was created in 2010 by Congress to promote the US as a tourist destination. The agency was funded in part by a tax of $10 on all foreign travelers to America.
The money was put into a fund that the agency could drawn from, up to $100 million, provided that every $2 in public money was matched by $1 in private donations. There was an odd caveat though: the law said that up to 80 percent of the private money could be in the form of “in-kind” i.e., non-monetary, donations.
This apparently created a bad situation where all manner of activities would be “donated” to the agency so as to open the federal funding spigots. The report notes:
Essentially, the set-up allowed the Brand USA officials engage in lavish travel and lodging through their own companies and then submit that to the agency as a contribution. That in turn resulted in federal funding for these same activities. Such activities included: $6,180 for Nationals baseball tickets, $10,037 for travel to London (though the government balked at some of the charges), and $215,106 for a single party at a London museum.
Brand USA even submitted as in-kind contributions time and money they spent on lobbying Congress, despite the fact that the Travel Promotion Act expressly forbids the agency to lobby:
Compounding the problem, these documents were included in an application for federal matching funds submitted to the Department of Commerce. In spite of the clear direction for Congress against lobbying the Department approved Patton Boggs’ donation of work on lobbying. Additionally there is no indication that the Department undertook any effort to address this clear violation of the intent of the legislation or question Brand USA on why they were discussing lobbying.
Brand USA paid Patton Boggs $84,865.75 for their legal work and received an in kind donation of $28,282.62 from the firm.
Perhaps most surprising was that the Brand USA officials submitted as in-kind contributions media coverage for their organization – that is, independent “free media” – and put the value of that at more than $5 million. The chairman of Brand USA also donated his time in speaking to reporters, about five hours total, at $1,290.
Brand USA is governed by an 11-member board, all of whom were picked by the Commerce Secretary. The members were drawn mainly from the hospitality industry and were donating their time. All were major Democratic donors.
The Senators are demanding further documents from Brand USA and the Commerce Department regarding its activities.
“Brand USA has been stonewalling us for months. For the last month at least we’d get a weekly call saying that we promise to get you the documents next week. Staff went to their offices in person to ask for the documents, yet they refused to provide them,” said Wesley Denton, spokesman for Senator DeMint.
UPDATE: A spokesperson for Brand USA released the following statement to The Examiner:
