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July 7, 2008
STATEMENT OF GOVERNOR JOHN P. DEJONGH, JR. ON THE PROPOSED AGREEMENT BETWEEN THE USVI GOVERNMENT AND DIAGEO 7/7/08 - Today, Governor John P. deJongh, Jr. released a statement regarding the landmark agreement with Diageo, plc that was announced on June 25th. Below is the text of Gov. deJongh's statement. You may listen to the statement here. ============================= GOV. DEJONGH: This is Governor deJongh. In the two weeks since I announced that I had signed an Agreement with Diageo for the construction of a new distillery on St. Croix, we in 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. In announcing the Agreement, 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. Everyone — no matter how petty or partisan — is entitled to his or her own opinion. But you are not entitled to your own facts. And now it is time for some facts. First, Diageo is committed to making all the rum it needs for its Captain Morgan products sold in the U.S. on St. Croix for the next thirty years. That brand is a very large brand. It is the second largest selling brand in the country. Its sales are many times more than sales of Cruzan Rum which is why we can estimate how much revenue they can produce in the future. These sales are estimated to return excise taxes totaling just under three billion dollars to the Virgin Islands treasury over the term of the Agreement. That is about $100 million a year. Second, only the bond holders of the debt issued to build the plant are legally responsible for the cost of the plant unless Diageo does not meet its contract obligations in which case they — Diageo — must pay off the bonds. Those who say otherwise are simply wrong. Those who continue to repeat this are worse than wrong, they are dishonest. Next, this Agreement does not harm Cruzan Rum. I have said this before and I say it again. Cruzan knows this. Indeed, it helps Cruzan which is at serious business risk for its continuing environmental problems which our government is working with them to fix. If the money that is left over every year after debt service from the Cruzan tax cover over is to still get to our General Fund, then we need another source of new money to pay the over $20 million dollars needed to clean-up the Cruzan Rum environmental problems. So, in a very real way, it can be said that Diageo will be providing that money for Cruzan. More than this, the Diageo Agreement is a road map that shows the path that Cruzan can follow to get a similar deal if it makes similar commitments for future production that will return future tax revenues. I have committed to this in writing. Cruzan understands full well that to lobby our Senators to postpone approval of the Diageo Agreement is to greatly increase the chances that other locations will offer a better deal to Diageo, and we will end up with less than we now have. Cruzan is not required to look after any interest but its own. However, I am required to consider the public interest, the interest of the Virgin Islands. I have fully briefed this with our Senators. And I have made this known to Cruzan and its present and its future foreign owners. Let me be very clear: anyone who says that they oppose the Diageo Agreement in order to help or protect Cruzan Rum either does not know what they are talking about — or is simply being dishonest for political or business reasons. Period. The opposition raised at the last minute by Cruzan is for its own gains, it does not keep Cruzan Rum on St. Croix. But that is my goal which I shall seek to achieve in the next agreement we make with Cruzan and its new owners. Finally, I would like to say something to those who say they oppose this deal because they could have gotten a better deal, those who say we have given away too much. I would first say that one cannot give away what one does not have. And second, that we could have also gotten no deal at all. Diageo was not coming to the Virgin Islands when they decided not to renew their rum supply contract with a private company in Puerto Rico and build their own distillery. No, they were going somewhere else until we offered them the incentives to come here. Incentives that are good for Diageo and even better for us. I was not prepared to lose the chance to move St. Croix rum production from 4% to 30% of the U.S. total. I was not prepared to lose $100 million a year for thirty years. Money that I know that I and future governors will desperately need to pay down debt, build schools, build sports and recreational centers, build senior centers. Maybe there are politicians and former politicians in the Virgin Islands who are so overconfident that they feel they can do without these revenues, but I am not one of those politicians. I believe we must invest to grow. One must give a little to get a little, or in this case, to get a lot. 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. Diageo and the government have a binding agreement that requires the Legislature's approval. But keep in mind that Diageo is a publicly traded for-profit company. If they conclude they are not welcome here and can get a better deal elsewhere, they can pay the price to walk away. Securing the best deal possible is the duty that Diageo management owes their shareholders. This is just what I believe we owe our residents. This is not a game of chicken. This is not a game at all. This is a very good business deal for them and a very good business deal for us. The Senators have had time to meet with us and to meet with Diageo. They will conduct hearings at the Special Session on Tuesday. I urge all residents to listen to these proceedings so you can hear the answers to the questions that your representatives will ask on your behalf. But before Tuesday, I urge you to make your voices heard and call your senators and urge them to vote yes on this important piece of legislation. If we move ahead together, if we work together, if we apply common sense and honesty, we can be assured of a better future. We must put an end to the bickering and nay-saying. It is time for collective action, for positive action, it is time to move forward together. The next step towards our future is the approval of the Diageo deal by our Legislature on Tuesday. I am confident in what we can do together, and confident that our Senators will rise above politics and do the right thing on Tuesday. This is Governor deJongh, thanking you for listening. |
