Updated 11:11 a.m. Eastern Daylight Time, 13 July 2012
REPORT FROM THE U.S.—Brand USA released this week an annual report for its first fiscal year, detailing expenses and in-kind donations.
For the fiscal year ending 30 September, the organization reported total revenue at $3.75 million and total expenses at $3.46 million. Of Brand USA’s expenses, $2.18 million was attributed to “program services–travel promotion activities” and $1.27 million was attributed to “supporting services–management and general.”
The organization’s spending was called into question in June when six Republican senators wrote an open letter saying they were concerned about its progress. In the letter, the senators requested detailed spending information and noted the annual report was due 15 May and had yet to be released.
Brand USA, a public-private partnership, establishes a budget by matching private donations with funds drawn from the Electronic System for Travel Authorization, administered by the Department of Homeland Security. The ESTA system assesses a $14 fee per international visitor registering for travel from visa waiver countries.
At least 20% of private sector donations must be in cash, and the rest may be in the form of in-kind contributions.
Posted 3:22 p.m. Eastern Daylight Time, 22 June 2012
REPORT FROM THE U.S.—Brand USA is working to fulfill requests made last week by six Republican senators who said they are concerned about the organization’s progress and spending. Brand USA’s chief communications officer said the organization believes “concerns raised there will easily be put to rest once the facts are known.”
Anne Madison, chief communications officer for Brand USA, also said the recent resignation of Brand USA CEO Jim Evans was unrelated to the senators’ inquiries and that the board and Evans began discussing his departure before the letter was received.
“Conversations between Jim and the board pre-date the letter,” she said. “The two events are completely separate.”
Evans’ decision to step down after one year on the job was announced Friday. It comes one week after six senators sent a letter to the Corporation for Travel Promotion, which does business as Brand USA, with concerns over lavish spending, asking the public-private entity to submit documents detailing its progress and spending.
In the letter—authored by sens. Jim DeMint (South Carolina); Tom Coburn (Oklahoma); Rand Paul (Kentucky); Jeff Sessions (Alabama); Mike Lee (Utah); and Chuck Grassley (Iowa) and addressed to John Edgar Bryson, secretary of the U.S. Department of Commerce—the senators said they are requesting information to ensure that Brand USA’s administrative and financial matters are fully transparent.
“We are concerned about reports of potentially significant waste and misuse of funds at the Corporation,” the senators wrote.
For example, one allegation by the senators is that a media consultant was hired by Brand USA without the proper due diligence.
“It is our understanding that the corporation awarded a media consultant, JWT of New York City, an initial 90-day contract. According to a recent (Government Accountability Office) report, the corporation negotiated a subsequent master service agreement with JWT without first going through the bidding process,” the letter reads.
The senators also noted Brand USA’s first annual report was due 15 May and has yet to be released.
They requested a litany of paperwork, including all documents associated with the production of a Brand USA launch party held during World Travel Market 2011, the salaries and benefits of the top five most highly compensated individuals employed by Brand USA and an itemized listing of all expenses incurred by Brand USA since its founding, among other documents.
Brand USA staff is working to fulfill all of the Senators’ requests quickly and transparently, Madison said, and Evans’ interim replacement Caroline Beteta submitted a written response to the Senators on Wednesday.
“As a public-private, nonprofit entity set up by Congress to promote the United States abroad, we take our mission and fiduciary responsibilities seriously, and we ensure the highest standards of transparency, performance and accountability,” Beteta wrote. “We share your belief that we must ensure that the highest standards of performance and accountability are met.”
Beteta said the Corporation for Travel Promotion is completing its IRS Form 990 and will deliver it by the 15 August deadline. Form 990 is also called the “Return of Organization Exempt From Income Tax.”
“The Annual Report to Congress is at the Commerce Department pending transmittal to Capitol Hill,” she wrote.
Madison said members of the Brand USA board are proud of the progress the organization has made thus far. In just more than a year, the organization has evolved into a fully functioning organization with a marketing presence in three countries and millions of dollars in private-sector funding, she said.
“Brand USA has achieved important milestones, including establishing the organization and its offices; recruiting and developing a highly talented executive team, creating the BUSA brand and launching the marketing program; and securing millions of dollars in industry commitments and partnerships,” she said.
Allegations
One of the senators’ main concerns centers around travel to the Brand USA launch party in November during World Travel Market in London. Outside a meeting in London to discuss marketing strategies and efforts to lobby Congress, the organization threw a Brand USA launch party held at the British National Maritime Museum in Greenwich, London.
“The entire corporation board traveled to London to attend the World Travel Market, a trade show for the travel industry. … Despite the fact that board members traveled all the way to London for the meeting, it was a brief event, beginning at 1:30 p.m. U.K. time and ended at 3:30 p.m. U.K. time,” the senators wrote.
The senators point to a video from the party, showing members of the board “enjoying themselves.”
“The video … shows it was a high-end affair held at the Maritime Museum covered in light art projections displaying the Brand USA logo. Brand USA also provided guests, over 500 VIPs, sushi, champagne and petit fours,” the letter states.
In her response, Beteta wrote members of the Brand USA board never accepted reimbursement of any kind for any travel or other expense.
“In fact, we have directed millions of dollars in contributions from our organizations to Brand USA even as our duties as volunteer directors took us ever farther from our day jobs. We are proud of the time and resources we have contributed because Brand USA is a cause the travel industry believes in,” she wrote.
In addition to receipts from the launch party, the senators request the number of “webpage hits” to www.discoveramerica.com, identified by country of origin, as well as an itemized breakdown of all the costs associated with the contract with JWT and copies of print advertisements placed overseas by Brand USA.
“I have instructed the staff to begin the process of developing answers and will keep you updated on our timing and progress,” Beteta wrote.
Evans out
Evans’ departure was a mutual agreement between himself and the board, the Brand USA Madison said. She said Brand USA has reached critical milestones in its development and “now is at an important transition point.”
“The organization’s focus is changing, and all parties agreed this was the most appropriate time for a leadership change,” she said.
The organization has begun searching for Evans’ permanent replacement. Beteta, the CEO of Visit California, also is in line to succeed Stephen Cloobeck as board chair.
"As I reflect on the accomplishments of the last year, I am gratified in how much progress we have made," Evans said in a news release. "I know I leave Brand USA with a great foundation and a strong team that will take the organization forward."
Evans was formerly senior VP for marketing at Hyatt Hotels & Resorts and CEO of Best Western International. He was Brand USA’s first CEO.
