The Premier says he is unconcerned at allegations the Department of Tourism's advertising agency shortchanged its business partners.

GlobalHue has reportedly "quietly settled" a lawsuit by the late Carlos Montemayor and his wife, of Montemayor y Asociados.

According to the international business management website BNET.com, the couple accused GlobalHue of failing to give them an earnout payment of $1 million.

Court documents reportedly state GlobalHue "engaged in a conspiracy to cause Montemayor y Associados Inc. (the 'agency') to show a loss or, at least, no profit by denying Mr. and Mrs. Montemayor financial reports and by concealing assets and revenue and misstating expenses".

Allegedly, "the defendants took profitable divisions and moved the work, including production and print ads, to a third-party contractor, thereby causing the clients to be billed more for the total advertising services and reducing revenue".

The couple also claimed GlobalHue credited other divisions with revenue earned by them and had staff do uncredited work for other departments.

But GlobalHue refuted this, saying it was the Montemayors who refused to hand over information needed to calculate the earnout payment.

The case has now been dismissed after the parties came to a settlement on May 8.

Despite air arrivals to Bermuda falling almost 14 percent last year, the Department of Tourism's $28 million two-year contract with GlobalHue was recently renewed without being put out to tender.

The US agency was also kept on despite a report by Auditor General Larry Dennis finding it may have overbilled Tourism by up to $1.8 million.

GlobalHue is paid to place television and radio advertisements in the US through media-buying agencies, one of which is Cornerstone Media.

Mr. Dennis however, said GlobalHue and Cornerstone Media had both failed to provide some invoices for services.

Premier Ewart Brown defended Cabinet's decision to renew the contract on his Facebook page, saying: "I believe that unless there are strong reasons to discontinue an agency's work, at least four to five years are needed to determine fairly the impact of an ad agency.

"There was an internal review of the performance and adjustments were made."

But Shadow Tourism Minister Michael Dunkley said: "In the absence of openness, suspicions grow about what is going on, particularly given reports of the Premier's friendship with the owner of GlobalHue (Don Coleman)."

Saying the partnership had "clearly not succeeded", Senator Dunkley added: "There are big questions within the advertising community about the thinking behind GlobalHue's media buys, whether they are hitting Bermuda's traditional customers or diverting into new, unproven and, to date, inappropriate markets.

"Bermuda Tourism not inviting competitive bids is simply bad business, especially in these tough times when a significant amount of money is in play."

Yesterday, when The Royal Gazette asked Dr. Brown why the GlobalHue contract wasn't put out to tender, he said: "The GlobalHue contract was renewed. There was an internal review that was done.

"The review team included the Permanent Secretary, Director, and the management of communications and it was their opinion the best move to make would be to renew that contract."

Regarding the questioning of Dr. Brown's friendship with Mr. Coleman, the Premier said: "I've known Senator Michael Dunkley far longer than Don Coleman, and he did not go to Howard (University)."

When asked if he was concerned about the allegations made by Montemayor y Associados, Dr. Brown said: "I'm not aware of it and no, because it is not relevant to Bermuda."

Commenting on the GlobalHue review, he said: "There were a number of recommendations, such as adjustments in reporting and in the way media buys were done and reported, and how we will walk forward together."

GlobalHue is paid $1.6 million a year to promote Bermuda as a tourist destination, and is contracted to spend $14 million in both 2009 and 2010 on advertising and marketing.

Yesterday, as Dr. Brown revealed air arrivals for the first quarter of 2009 dropped by 22.75 percent on last year, and total visitors were down 27.84 percent, he still praised GlobalHue.

"I have (also) heard from our private sector partners up at Pompano," the Premier told a press conference.

"They tell me they have booked a few guests as a result of seeing Bermuda Tourism ads on New England Sports Network. I couldn't be more pleased with the feedback... our thanks to GlobalHue for landing this deal. It is a difference maker."