In a conference call with reporters Tuesday, Gov. John deJongh Jr. said the government did not sufficiently vet its partners in the proposed Frederiksted sports complex. The governor promised improvements to the process and pledged to quickly issue a new request for proposals.
"There is no denying that in this particular case we did not do the due diligence we should have," deJongh said in his opening remarks. "With that being said and the due diligence not being done on all the principals … the government of the Virgin Islands was never at any risk of losing money or not being in control of disbursing funds," deJongh continued.
The acknowledgment comes in the wake of the recent cancelation of stadium plans after revelations in the news about the financial woes and exaggerated credentials of some of the project’s partners.
Earlier this year, the administration presented the Legislature with a Memorandum of Agreement between the V.I. government and GlobeVest V.I. outlining plans for a $55 million multi-sport arena at the location of Paul E. Joseph Stadium in Frederiksted.
Under the terms of the agreement, the territory would have invested $30 million, most of which would have been funded with bonds financed through the Communities Facilities Trust account, a fund established in Diageo’s operating agreement with the V.I. Government. The agreement states that Diageo’s new distillery will deposit “3 percent of the annual gross cover over receipts” into the fund, administered by the PFA.
But the legislation was withdrawn after reporter Joy Blackburn wrote in the V.I. Daily News about a number of troubling financial and personal issues with some of the partners. Blackburn reported GlobeVest President and Chief Executive Officer James Sutherland recently lost his home to foreclosure and owes $287,000 in child support.
The author also checked into Sutherland’s claims of advising former Florida Gov. Jeb Bush and found that and other Sutherland claims to be false or greatly exaggerated.
The Daily News also alleged that another partner in the project, Network Sports Marketing President John Lehman, is also facing foreclosure on his home and has a separate, unrelated $130,000 judgment against him.
Property and Procurement Commissioner Lynn Millin-Maduro said one of the partners in the joint venture – GEC LLC – was a well known local contractor with a long and well-regarded track record in the community, and her department did not do enough to check out the off-island partners.
Going forward the government will change the way it performs due diligence on potential partners and vet not just the business but the individual principals in the business that is proposing to enter a government contract, Maduro said.
“I still remain committed to seeing a baseball stadium at the Paul E. Joseph site,” deJongh said. “It’s critical, it’s important, and we have the ability to finance it,” he added, recalling that the rum tax revenues that would have funded part of the GlobeVest project remain available.
The new vision for the project involves tearing down and rebuilding the Frederiksted ballpark, with the possibility of a larger athletic development for other sports down the road, deJongh said.
Asked when a new RFP might be issued and a new project begun, deJongh was unsure, but said it would be as soon as possible. "We are in the process of canceling the last contract. … Once that is done, we will look at a new RFP," deJongh said.