Oct. 31, 2002 – The intended star witnesses sent their regrets at the 11th hour, but that didn't stop the Senate Economic Development, Agriculture and Consumer Protection Committee from spending Thursday taking testimony on and discussing Innovative Telephone and its status as a tax-break beneficiary.
Among other things, the senators voted to subpoena officials of the phone company and of its parent company, Innovative Communication Corp., to appear at another hearing, which was set for Nov. 7. However, they decided to call off a session with an agenda identical to Thursday's that was scheduled for Friday on St. Thomas.
Members of the United Steelworkers of America, currently on strike against the phone company and Innovative Cable-TV, turned out en masse for the meeting. Its purpose was variously billed as being to look into the causes of the strike and the impasse in contract negotiations and/or to determine whether the phone company is in compliance with Economic Development Commission conditions of its tax-benefits certificate.
The committee had numerous questions about the company's tax-benefits status. But few answers were to be had, with Innovative counsel having sent the committee chair, Sen. Adelbert Bryan, a letter calling the hearing a "thinly disguised" attempt at getting involved in the labor dispute and stating that Innovative would not take part. (See "Innovative says Senate probe inappropriate".)
The EDC falls within the Economic Development Authority, and the authority's assistant chief executive officer, Nadine Marchena, upset both senators and Steelworkers throughout the hearing, as she could shed little light on Innovative's compliance record.
She said the lack of compliance officers made a comprehensive investigation into the matter difficult, but it should be completed by December. She said the probe covers the phone company's compliance history since 1997, when it was granted full exemption from property, gross receipts and excise taxes and 90 percent exemption from corporate income taxes in a controversial move of the Schneider administration. The tax exemption certificate was granted on June 30, 1997, and will expire on Sept. 30, 2003.
"I feel it's going to take another month and a half, provided all the information we need is there," Marchena said.
By law, the EDC is supposed to issue such reports yearly on all beneficiaries.
Innovative Telephone, formerly the V.I. Telephone Corp., or Vitelco, was given the tax breaks subject to its complying with the following conditions:
– Offer a capital investment of $100 million, excluding inventory.
– Employ at least 421 persons full-time, at least 80 percent of them Virgin Islanders.
– Provide employees health care, dental, life and accidental insurance; a 401k retirement plan; savings and employee stock-ownership plan.
– Provide ten $1,000 scholarships per year.
– Assist schools in the territory in gaining Internet access.
– Contribute $40,000 yearly to the Boys and Girls Club.
– Sponsor youth programs.
– Contribute $5,000 yearly to Little League Baseball on both St. Croix and St. Thomas.
Despite much talk about the company's alleged failure to comply with its provisions, Marchena said, only four formal complaints were filed with the EDC, and three of them are "under investigation."
Marchena testified that she could not discuss the specifics of the ongoing investigation. She said later that she was not sure which, if any, of the stipulations have been met.
This prompted Bryan to threaten legal action: The EDC "might be able to tell a judge in December why they failed to enforce these criteria," he said, adding that "the evidence is clear" that the phone company doesn't have 421 employees at present.
If Innovative Telephone is found to be in violation of tax-break conditions, the company could face fines or revocation, modification or suspension of its benefits, Marchena said.
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