USVI governor scores 10-5 victory for Diageo
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| Published on Saturday, July 12, 2008 |
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By Susan Mann
Caribbean Net News US Virgin Islands Correspondent
Email: susan@caribbeannetnews.com
ST CROIX, USVI: Governor John deJongh basked in what is viewed as the crowning achievement of his administration to date on Wednesday night, when the Legislature of the US Virgin Islands voted 10-5 in favor of awarding a 30 year contractual agreement with Diageo PLC .
The international company’s spirit brand portfolio includes eight of the top 20 major spirit brands in the world, and four of the top 10 brands in the United States. Captain Morgan is its number two seller on the mainland. The territory is now poised to receive approximately 100 million annually over a period of 30 years, or the life of the contract. It would seem those USVI citizens who voted for deJongh also scored a victory.
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| (L to R) Lt Governor Gregory Francis, Guy Smith (Diageo), Delegate Christensen, David Gosnell (Diageo) and Governor de Jongh at the press conference on St Croix. |
The Governor’s Director of Communications, Jean Greaux, began heralding to the media that a major announcement was about to be made approximately one week before deJongh made the June 26 formal, televised speech that the deal had been struck.
At that time the Governor announced that on June 17, 2008, he had signed an agreement with Diageo USVI, for the construction of a $165 million, 20 million gallon proof, and state-of-the art distillery to be built on St Croix.
DeJongh informed the public that the United States Virgin Islands had more “red ink” than any other state, commonwealth or territory “under the US flag”. The Chief Executive pointed out that the business agreement would yield a total of $100 million in revenues annually for the next 30 years for the life of the contract.
He said that Diageo was committed to making all the rum it needs for its highly successful, Captain Morgan products sold in the United States on St Croix. The full amount of the estimated return excise taxes will total just under three billion dollars to the US Virgin Islands treasury over the term of rum cover-over revenues which will obviously provide a substantial boost to the General Fund.
The Captain Morgan brand produces in a total of 30 percent of all rum sales in the United States, which will originate from the St Croix distillery starting in 2011.
In a press release on the same date, deJongh further described the far reaching legislation as being “the most significant economic development project in fifty years.” He also drafted a letter to Senate President Usie R. Richards and members of the 27th Legislature, explaining that the Diageo distillery would produce rum for the Captain Morgan rum brand.
The letter to the Legislature stated, “In reaching this agreement, the Virgin Islands has attracted a major international business concern that had looked throughout the Caribbean and beyond for a site to locate this crucial part of its business operations. We have demonstrated that the Virgin Islands is a viable business locale, and we all should be proud.”
At the current time, a copy of the letter and all other documents relating to the Diageo remains posted on the deJongh web site for public review.
To the apparent chagrin of several USVI Legislators; the highly unexpected deal had seemingly been hammered out during a series of secret, year-long meetings between the Governor, members of his administrative team, and high-level Diageo Company heads.
Following the announcement, the USVI Government and Legislative body, along with territory residents then had two weeks to contemplate the pros and cons of the contractual agreement. So did the Commonwealth of Puerto Rico which stood to lose the monies Diageo poured in to its economy for years; in spite of the fact that Diageo had already announced its decision to leave that island.
The Governor followed up the announcement with a press conference on St Croix, which included the members of the Diageo decision makers who had negotiated the business plan.
DeJongh’s next step was to schedule a Special Legislative Session for July 8, 2008, specifically for the Territory’s Senators to formally consider and take action on the agreement. Over the course of the two week interim, the Governor took the previously mentioned, unprecedented action of making all official documents relating to the deal, including the proposed agreement, available on his website.
It quickly became apparent that there was no lack of nay sayers through out the territory regarding the matter. Phones rang off the proverbial hook to local radio talk shows; while “poison pen” correspondence to both on-line and traditional news sources, etc. began appearing. The reported worries and concerns from political foes and others began circulating as statements of fact.
Many were incongruent with the statements in the proposed written agreement, and other supporting documents. Shortly before the Special Session, Government House had apparently tolerated as much of what it refer to as “deceit and dishonesty”.
DeJongh issued a statement about the rumors being circulated: “The Virgin Islands have experienced one of the most shameful displays of political deceit and dishonesty that I have ever witnessed. This has been both a public spectacle on the radio as well as a behind-the-scenes campaign of lobbying our Senators and others. Well, my friends, I have heard enough and sat quiet long enough. .. I invited inquiry and questions, I welcomed debate and discussion. But the personal tirade and political pandering that has washed over the radio waves these past two weeks, and the selfish business lobbying that has fueled it, is unworthy of respect. ..The Senate can lose the Diageo deal two ways. Our Senators can commit financial suicide on our behalf and vote against the Agreement, or they can postpone and delay their approval and open a door for other Caribbean locations to come through and outbid us, to give more to Diageo and take it away from the Virgin Islands. This is not a game of chicken. This is not a game….”
When Senators, USVI Government Heads, Diaego Executives, the press, and public entered the Legislative Building on July 8, they passed by picketers from Puerto Rico carrying signs against the proposed deal. Signage against the deal was also plastered throughout the Charlotte Amalie waterfront.
As would later be revealed during Senate testimony, as word had spread worldwide about the impending business venture, Diaego had quickly begun receiving offers to cut similar deals. It also became clear that the Governor of Puerto Rico, Anibal Acevedo Vila’, was attempting to garner further consideration.
The very cool reception Diaego received from several USVI Senators may have made it an easy choice for one the Diaego executives to leave St Thomas after the first day of testimony ended Tuesday night, and make a quick trip to Puerto Rico to hear what that Executive Branch might counter-offer.
A letter from Anibal Acevedo Vila’, written to deJongh, was then read to the VI Committee of the Whole the following day. The correspondence made it clear that, while the Government Head was not happy about the deep financial blow the Commonwealth would experience, if the agreement were to be approved, he was hopeful that relations between the two island communities would generate financial growth which would be beneficial to both.
When the Special Legislative Session finally ended at 9:30 pm Wednesday night, a total of 10 of the five VI Senators voted in favor of the agreement, yielding a majority vote.
Based on the number of times he expressed his displeasure through out the session, the most incensed of the St Croix Senators seemed to be Senator Nelson. At one point he spoke directly to the Governor, who was not in the Legislative Chamber, stating. "Gov. deJongh, I have no appreciation whatsoever for the way in which you presented this thing -- with such a big spectacle,"
At another point, Nelson demanded to know from one of the USVI Government Attorneys, “why trained negotiators had not been hired to broker the deal.” When that attorney began to answer his query, saying “she had over 26 years of financial…” Nelson interrupted her, telling “not to hand him that…” He then stated that he was experienced in the field of labour, and that he had “sat down with trained negotiators and talked circles around them.”
Senator Louis Hill, who voted in favour of the agreement, took an entirely different philosophical view of the deal. “We are on Wall Street, not Sesame Street,” remarked the Senator, who went on to stress the importance of being competitive in a global market, and how the deal would further facilitate the Territory’s involvement.
“We are extremely fortunate to be sitting here to day discussing this opportunity,” said Hill, who added, “I say ‘yes’ for St Croix and ‘yes’ for the Virgin Islands, and ‘no’ to Puerto Rico.”
Senator Russell, who voted against the deal, said he “was having difficulty abdicating legislative responsibility to the Governor.”
A general concern of many in the USVI was how this agreement would effect relations with the long standing, Cruzan Rum on St Croix. DeJongh said that money generated, about 20 million dollars, would be used to help Cruzan Rum solve its environmental problems. He also indicated that he hoped, “Cruzan can… get a similar deal if it makes similar commitments for future production that will return future tax revenues,” and added,” I have committed to this in writing.”
In recent months deJongh had also traveled to Paris to meet with Cruzan Rum’s parent company, when Cruzan Rum changed hands.
In a press release following Wednesday night’s vote, deJongh said, “There are certain matters that, by reason of their importance, require a higher standard of review, consideration, and care. Our Agreement with Diageo was such a matter. Its importance required a high degree of honesty and openness. It required us to rise above partisanship and above party, and ten members of our Legislature rose to that standard,” deJongh said. “Real change requires looking at things in new ways and working with new people not just doing the same failing things over and over, and always getting the same unsatisfactory results. We have been making progress; we made real progress today with this vote.” Some have tried to hold us back. But I believe that the people of our territory are tired of excuses and empty promises. I believe Virgin Islanders wish to say “YES” to opportunity, progress, and cooperation."
Delegate to Congress Donna Christensen said Thursday that she was pleased at the passage of the deal between the Government of the US Virgin Islands and Diageo, which would move its primary manufacturing facility to St Croix, with the anticipation of $100 million in cover-over rebate to the territory annually once the plant is up and running, many construction jobs and then approximately 40 permanent jobs once operational.
“I believe that the Legislature voted for the economic future of St Croix and the entire territory,” Christensen said on Thursday, “and I congratulate Governor John deJongh and his team for successfully obtaining the ratification of this package.”
Christensen commended the Members of the Legislature, inclusive of those who voted for and against for their thorough vetting of the issue.
“While this is not a perfect agreement, I believe that it is a good one and the perfect must never be the enemy of the good,” she said. “Our territory competes for business in a global marketplace and we should be wise enough to seize upon an opportunity to provide revenue generating projects that can benefit our people into the future in a world that is far more competitive than it used to be,” she said.
Christensen said that the backlash from Puerto Rico is unfortunate, but her support for the agreement was bolstered upon learning that the company planned to leave the Caribbean neighbour anyway. | | | | Reads : 408 | | | |
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