The Public Accounts Committee said Department of Tourism's Permanent Secretary Cherie Whitter was "fully responsible" for failing to follow Government's financial rules when it came to a contract with overseas agency GlobalHue.

But the Department said Cabinet approved the contract and was "unclear why the PAC would conclude that the PS was responsible for the award".

Last week the Public Accounts Committee tabled their report on Government's finances, they examined the Government's relationship with advertising firm GlobalHue as part of the report.

GlobalHue came under close scrutiny last year when former Auditor General Larry Dennis said the taxpayer had shelled out around $1.8 million in overpayments to US advertising agency GlobalHue.

In a special report he also said when Tourism's Director of Sales and Marketing began to investigate he was given a massive $440,000 pay-off more than three times the going rate.

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.

Soon after Mr. Dennis's report Government decided to renew the contract with GlobalHue without offering others a chance to bid on it.

Last week's PAC report questioned why the contract was renewed and recommended all contracts above $50,000 should be tendered.

In a written response the Department stated: "The rollover of the agreement followed an internal agency review; historically agency contracts have remained in place for many years in an effort to preserve the integrity of the brand and product positioning.

"The same principle was applied in this instance. Additionally, the learning curve effect of a new vendor in a recessionary context would have only served to exacerbate the situation by introducing a time lag to the tourism market."

It also touched on the lack of invoices kept by Bermuda's two advertising firms.

The PAC report stated: "Documentation for billings was not kept, contrary to Financial Instructions. The action of the Auditor General in demanding documentation for billings and repeatedly being refused until a denial of opinion was posed as a real possibility, plus the unusually high markups that were discovered, cast a pall of suspicion over that whole arrangement. All of this could have been avoided if Financial Instructions were followed by the Department at the outset.

The Department replied: "[The Department] acknowledges the administrative oversight in processing media invoices without the required backup, a process that was not in compliance with financial instructions. This situation has been rectified."

The report continued: "Tourism remains a critical industry for Bermuda and the handling of multimillion dollar advertising budgets requires an approach that is professional and compliant with Financial Instructions. The actions of the Department failed to live up to these standards in these instances and failed to give Bermuda its best value for money.

"The Department Permanent Secretary confirmed that she had not received any pressure from anyone with respect to the decisions that were taken within the Ministry regarding contract placements or rollovers, and as such, is fully responsible for the failure to follow Financial instructions."

However the Department said that was not the case: "The GlobalHue contract was approved by Cabinet, therefore it is unclear why the PAC would conclude that the PS was responsible for the award. Cabinet approves all contracts in excess of $50,000; Technical Officers simply make recommendations in accordance with policy."