Audit: Visit KC board member’s firm got big contract in possible conflict of interest
Visit KC, a nonprofit that attracts conventions and tourism to Kansas City, awarded millions of dollars in contracts to a local advertising firm whose president was sitting on Visit KC’s board, according to an audit of the organization released Wednesday.
Visit KC received about $11 million in city funds last year, including a significant portion of the convention and tourism tax. The audit, performed by the city auditor’s office, highlighted problems with some of the group’s contracting procedures and warned of potential conflicts of interest.
According to the audit, which was presented to the City Council’s Finance and Governance Committee on Wednesday, Visit KC issued a request for proposals for a six-month, $160,000 contract, only to expand the scope of that contract to a years-long multimillion deal that made MMGY the organization’s advertising agency of record. MMGY’s CEO was sitting on the Visit KC board when the firm won that contract.
According to the audit, the individual may not have recused himself as the meeting minutes didn’t mention it. And the audit said Visit KC should have issued a new, competitive request for proposals rather than adding on to the original six-month scope.
In addition, the audit said, Visit KC failed to report or reported incorrect or confusing metrics regarding its performance, “making it difficult for the city to assess Visit KC’s use of city resources.” Many of its board members failed to submit required financial disclosures, and the organization lacks a conflict of interest policy. Unauthorized staff, according to the audit, signed off on compensation increases for a board member’s company.
A response from Visit KC Chair Cici Rojas, included in the audit report, said the board is revising its handbook and will “directly address ethics policy and procedures.” Rojas also said the board chair and staff will ensure disclosures are completed and submitted annually.
Last year, only seven of the board’s 30 members filed financial disclosures, which can flag potential conflicts of interest.
The audit also found that in 2017, Visit KC reported few of the 12 required performance measures, which include hotel night bookings and convention center bookings. In 2018, it reported those on a quarterly basis, but it did not compare those measures to the goals, as is required by its contract with the city.
Despite the issues, the city has little enforcement aside from terminating the group’s contract, which expires in April. The audit suggested that in future contracts, the city clearly define performance measures it wants Visit KC to report and penalties for failure to do so.
The city’s director of convention and entertainment facilities, Oscar McGaskey, and Visit KC’s president and CEO, Jason Fulvi, largely agreed with the recommendations, according to their responses included in the audit.
In committee, Fulvi said the audit process had been “fair and equitable.”
Fulvi, who took the helm of the group last year, said Visit KC had been making substantial changes, and the audit presented an opportunity to make other improvements.
This story was originally published November 13, 2019 at 1:38 PM.
