Under-fire advertising agency GlobalHue has described the doubt cast on its relationship with the Department of Tourism by Auditor General Larry Dennis as "libellous".

Jacqueline Reynolds, GlobalHue's executive vice president, said in a statement issued through the Premier's press secretary that the US-based firm derived its profits from accounts other than its small contract with the Department.

She added that its continued work with Bermuda was "a testament to the vision of the Premier and our desire to be part of a country that has a majority of citizens of colour and a black government".

Ms Reynolds said: "We feel that any innuendo of impropriety is slanderous, libellous and has absolutely no place in business."

The statement addresses several areas of concern raised by Mr. Dennis in his hard-hitting special report presented to Parliament last Wednesday.

The Auditor General said that following an audit of Government's finances for the year 200? he had "misgivings about the appropriateness of some payments to GlobalHue" and that the Department of Tourism may have paid $1.8 million too much to the company.

The Department pays GlobalHue to place television, radio and advertisements through media-buying agencies in the States, particularly a company called Cornerstone Media.

Mr. Dennis criticised GlobalHue's pre-billing of the Department — a practice not allowed under Government's financial rules — as well as it and Cornerstone's failure to provide invoices for services provided.

His report claims that Cornerstone's markups — the amounts it adds to the cost of adverts in order to make a profit — were way above the industry norm.

And Mr. Dennis said the Department did not always get a refund when prepaid advertising was cancelled — such as when two 30-second slots failed to be shown during a Department-sponsored televised basketball game in New York.

Ms Reynolds said pre-billing was essential in order to ensure that Cornerstone was able to pay the media on time.

"Often, GlobalHue has not received payment by the BDOT in time to pay media vendors and has advanced funds to prevent a problem with vendors not accepting BDOT advertising without payment upfront," she said.

She added that "highly respected, established" Cornerstone made its money from "media vendors", not the Department of Tourism. " GlobalHue hired Cornerstone to purchase BDOT media with no commission charge to the BDOT.

"Moreover, hiring Cornerstone saved Bermuda the required additional fees the BDOT would have paid GlobalHue for staffing four to five media people at an annual cost of $1.02 million."

Ms Reynolds said the allegation that the Department didn't always get a refund when prepaid advertising was cancelled was "completely inaccurate" and insisted that the two 30-second slots did run during the New York basketball game, "as confirmed by affidavits from the media vendors that ran them as purchased".

She said GlobalHue — which has offices in Detroit, New York and California — had an annual revenue of $800 million and Bermuda was its smallest account. "Our profits are derived from accounts other than the contract with Bermuda," she said.

Mr. Dennis said his findings combined to "cast considerable doubt on the relationship between the Department of Tourism and GlobalHue and the value for money obtained by the Department of Tourism for its advertising dollar".