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Initial Investigative Report: Brand USA Mired in Waste, Mismanagement

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Today, U.S. Senators Jim DeMint (R-South Carolina) and Tom Coburn (R-Oklahoma) released an initial investigative report on Brand USA, the government-sponsored travel promotion agency. The new report examines documents that reveal a history of questionable accounting, lavish spending and inappropriate lobbying activity.

"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. "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."

"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,'" said Senator Coburn. "With millions out of work and our national debt surpassing $16 trillion, this is the kind of indulgence we need to say no to."

Congress abolished the U.S. Travel and Tourism Administration in 1996. However, Congress passed the Travel Promotion Act in 2010 that led to the creation of Brand USA, which is eligible to receive up to $100 million annually generated through a new $10 tax on all foreign travelers to America. That money can only be released through a federal matching program that allows for Brand USA to receive $2 in public money for every $1 of cash and non-cash contributions it raises this year. After 2012, Brand USA will receive $1 in public money for every $1 it raises.

Notably, 80 percent of the money Brand USA generates on its own may be non-cash "in-kind" donations from the tourism industry. The new report details how Brand USA has resorted to questionable accounting methods to report higher in-kind contribution levels.


Seats for Sale: Brand USA's 11 member board has been filled almost exclusively with members who have donated to Democratic campaigns and made direct or in-kind donations to Brand USA. The appointments were all made by White House official and former Obama campaign staffer, John O'Connor.
Executive Perks: Brand USA's top officials have thrown lavish parties in London and enjoyed luxury baseball suites courtesy of taxpayer-funded Amtrak.
Lobbying Ban Violations: Despite clear instructions from Congress against any lobbying activity by Brand USA, the agency worked closely with a registered lobbyist and paid thousands of dollars in fees to develop lobbying strategy. They also paid Patton Boggs, a lobbying firm, over $84,000 in various fees
$95 for Short Taxi Rides, $6800 Flight: Brand USA must have matching private donations before the federal funds are released. As the tourism has shown a lack of interest in funding Brand USA, the government-sponsored agency's executives have take to creative accounting in claiming higher matching funds. These include claims of $94.87 taxi fares for 2 mile rides, flights to London costing $6,799.30, and $365 hotel rooms. It also includes attempts by corporate executives to count a tip of $1.60 to a hotel doorman and a $14 snack in London as an in-kind contribution to U.S. travel promotion.
Brand USA's Chairman Uses Political Rant as Contribution to Brand USA: Stephen Cloobeck, Brand USA's Chairman of the Board, charged $4,128 for in-kind contributions when he attended a conference in Los Angeles this May. During his appearance on a panel, Chairman Cloobeck engaged in long political discussion, President Obama's reelection prospects, and called for the firing of federal employees.

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