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Senators Looking at EDC Secret Deal With Innovative

March 18, 2005 – Upset with a recent decision by the Economic Development Commission to renew a benefit package for Innovative Telephone, Sen. Adlah "Foncie" Donastorg, chairman of the Senate Government Operations and Consumer Protection Committee, will hold a hearing on the matter Tuesday.
On March 3, the EDC voted to renew the telephone company's tax benefits, despite the urgings of Donastorg and other legislators and public officials. The decision was made with a 3-1 vote with one member abstaining, according to EDC Chairman Dean Plaskett. However, Plaskett would not say how he or any of the other commission members voted. (See "More Tax Breaks For Innovative Anger Senators").
Donastorg has since written to Gov. Charles W. Turnbull urging him to reject the EDC's decision.
"You are the sole individual that can put an end to this travesty," Donastorg wrote in his March 11 letter to Turnbull, adding that Innovative Telephone – formerly Vitelco – had violated the terms of its previous contract and for this reason alone should not be given more tax breaks.
Donastorg said Thursday he has not received any response from the governor, who has been attending a Sea Trade Conference in Miami.
"This company is already guaranteed a profit," Donastorg said of Innovative Telephone. "It's unfair to the hardworking ratepayers of the Virgin Islands to give them another tax break."
Donastorg said the EDC's decision to renew the phone company's benefit package "gives the impression that they are rewarding one of the biggest violators of the EDC program."
He said all the EDC members knew Innovative Telephone had been in violation and had publicly announced that, yet they turned around to give the same company a renewal of its benefits. (See " Senators Oppose EDC's Settlement with Innovative ").
Donastorg said the EDC has been "pretty much tight-lipped" about the new package that Innovative would receive.
Frank Schulterbrandt, executive director of the Economic Development Commission, which oversees the EDC, said Thursday evening that Innovative's package is a modified benefit package, and would not entail all the benefits received in the first package.
Schulterbrandt would not say exactly what the new benefit package entails, but he did provide a transcript to the Source of the December 2004 public hearing where Innovative Telephone made its bid for the renewal.
According to the transcript, Innovative Telephone President David Sharp said the benefits the company was seeking represented a "substantial decrease" from the benefits received under the phone company's previous package.
"Specifically, this application is seeking benefits that represent about a 59 percent decrease in the benefits from the previous benefit period," Sharp was quoted in the transcript as saying. "We are not seeking any benefits for income taxes. We are seeking benefits for real property taxes, gross receipts, excise and custom duties."
Innovative Telephone also requested that the benefits be retroactive to Oct. 1, 2003, the first day after its previous benefits expired. This means, that the company, hoping to gain the retroactive benefits, has not been paying any of the requested taxes since its benefits expired Sept. 30, 2003. The company is due to pay its income taxes in April.
The transcript was not clear whether Innovative was asking for 100 percent exemptions from the requested taxes as part of its new benefit package. Sen. Louis Hill, who was the sole senator testifying at the December hearing, also could not verify Friday whether the company had requested 100 percent exemptions.
Hill said he too was upset at the EDC's decision to vote on the EDC package during an executive session, which he claims is a violation of the territory's Sunshine Laws.
"That is absolutely wrong, and it doesn't serve the public's interest," Hill said of the EDC's vote. "I'm going to challenge them in court on that."
Hill, who is also a member of the Government Operations and Consumer Protection Committee, said he would also be attending the hearing Tuesday.
A long list of individuals is scheduled to testify at the 3 p.m. hearing, which will take place at the Earle B. Ottley Legislative Hall on St. Thomas.
Besides receiving testimony on the EDC's recent decision, the committee will also take testimony on the overall operations of the EDA and whether it has enough resources to properly monitor large beneficiaries such as Innovative Telephone.
Donastorg said several members of the EDC indicated they would not attend the hearing because the matter was not in the Senate's jurisdiction. Donastorg disagreed, saying the Legislature has the right to conduct "investigative hearings" if it is in the best interest of the community.
The invited testifiers for Tuesday's hearing are: Keithley Joseph, executive director of the Public Services Commission; Valencio Jackson, PSC chairman; Cecil Benjamin, Labor Commissioner; Louis Willis, Internal Revenue Bureau director; Samuel Ebbesen, representative for Innovative Telephone; Schulterbrandt; Plaskett; Kent Bernier, EDC member; Willis Todman, EDC member; Randolph Allen, EDC member; Mary Ann Pickard; EDC member; Jose Penn, EDC member; Frederick Joseph of the United Steelworkers of America; Luis "Tito" Morales, United Steelworkers of America president; Ludvig Sealey of the United Steelworkers of America; Juanita Rabsatt of the United Steelworkers of America; Eugene Irish of the Seafarers International Union; attorney Maria Hodge; and Cornelius Prior of Choice Communication.
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