ST. CROIX — Senator Kurt Vialet is calling for a full inquiry into Diageo USVI, stating in a press release issued this afternoon that he is disturbed that the rum producer has been under investigation by local authorities that questioned whether containers imported as molasses actually contained rum or some type of distillate. Mr. Vialet is requesting that the inquiry investigate whether Diageo has violated sections of the operating agreement with the Government of the Virgin Islands as it relates to the molasses subsidy.<\/p>\n
The investigation was brought to the fore after a Consortium report<\/a><\/span> revealed that Department of Justice and Department of Licensing and Consumer Affairs officials had on Monday morning descended on the\u00a0Gordon A. Finch Molasses Pier, located on the south shore of this island, to take samples from 12 tanks of what\u2019s supposed to be molasses used to produce rum at Diageo USVI\u2019s Captain Morgan Rum Distillery.<\/p>\n Part of Diageo\u2019s agreement with the government is that the GVI subsidizes the molasses imported to make the rum here. But the samples collected on all 14 tankers (two at Diageo’s facility) did not appear to be molasses, which\u00a0is dark in color<\/a><\/span>\u00a0and has a strong, distinct smell, a suspicion Diageo later confirmed when it revealed that the substance was actually a\u00a0sugar cane distillate.<\/p>\n Mr. Vialet is requesting that\u00a0Acting Attorney General Claude Walker subpoena all bill of ladings in reference to molasses shipments to determine the contents of containers shipped for the past five years. The first-term Democrat is also requesting that the DOJ d<\/span>etermine if Diageo was paid a molasses subsidy for what the company says is a sugar cane distillate but appears to be semi-processed rum. And lastly, Mr. Vialet wants the DOJ to d<\/span>etermine the amount of molasses subsidy received that was paid for the sugar cane distillate.<\/span><\/p>\n Following The Consortium report, Diageo USVI issued a statement<\/a><\/span> attempting to explain the situation, contending that it was testing new means of distilling as it seeks to become more proficient.<\/p>\n \u201cNow in our fifth year of rum distillation on St. Croix, Diageo USVI is proud to have achieved a number of milestones in our production. From record water recovery and conservation, to the creation of new rum products, we continue to innovate and test distilling processes and techniques.\u00a0 Some of these distilling techniques are used throughout the Caribbean, and may help improve plant efficiency, our environmental footprint, and productivity,\u201d wrote\u00a0Erica J. Johnson, communications and corporate relations head at Diageo USVI.<\/p>\n \u201cAs part of this, we\u00a0have been testing a new distilling process using sugar cane intermediate, in which a minority amount of this ingredient, which we would be bringing from outside the territory, would be added into our distilling process along with molasses. \u00a0Some tankers of this ingredient are now being questioned by the VI Department of Justice officials. \u00a0As with all our distilling methods, the use of sugar cane intermediate is not only legal and meets federal and local standards, it is also within the boundaries of our agreement with the Government of the Virgin Islands,\u201d she added.<\/p>\n But Mr. Vialet contends that the community, whose tax dollars continue to fund the Diageo agreement, has a right to know the truth and whether there was any\u00a0breach of sections of the operating agreement and if any subsidy was paid in error based on misinformation. He is urging Governor Kenneth Mapp to be vigilant in the pursuit of this information and is encouraging Diageo to cooperate fully.<\/p>\n In 2008 the GVI subsidized Diageo\u2019s move to the island, totaling an estimated $2.7 billion over 30 years. Some of the subsidies include: a new $165 million distillery,\u00a0\u201cmarket support payments\u201d<\/a><\/span>\u00a0to keep prices low for molasses, 35 percent of what Diageo spends on advertising, a 90 percent income tax break, exemption from property taxes, environmental mitigation supports, and 47.5 percent of all tax revenue collected on Captain Morgan rum. By one estimate, Diageo\u2019s net cost to produce rum is zero<\/a><\/span>, according to Tax Foundation<\/a><\/span>, a\u00a0leading independent tax policy research organization.\u00a0The 30-year agreement received Senate ratification on July 9, 2008, with a 10-5 vote.<\/p>\n However, the rum-cover over funds are supposed to be for rum produced in the territory; not imported from elsewhere and reshipped out as if the products were made here.<\/p>\n According to Ms. Johnson, Diageo informed Mr. Mapp of the new methods being tested. She said these methods were also approved by federal regulators at the Alcohol and Tobacco Tax and Trade Bureau.<\/p>\n \u201cIn January of this year, we informed Governor Mapp and his team that we would be testing this distilling process.\u00a0 In addition, prior to entering into this test, Diageo USVI had the proposed process vetted by federal regulators at the Alcohol and Tobacco Tax and Trade Bureau to ensure the process was legal and that rum produced under it was compliant for purposes of selling rum into the US market and thus triggering Cover Over payments.\u00a0\u00a0We would never have entered into a test of this nature without express confirmation from our regulators that it was compliant,\u201d Ms. Johnson said.<\/p>\n The release also made known that the 14 tankers that were turned over to the Department of Justice has been released to Diageo by Mr. Mapp, and said Diageo continues to put its best foot forward in relation to transparency.<\/p>\n","protected":false},"excerpt":{"rendered":" ST. CROIX — Senator Kurt Vialet is calling for a full inquiry into Diageo USVI, stating in a press release issued this afternoon that he is disturbed that the rum producer has been under investigation by local authorities that questioned whether containers imported as molasses actually contained rum or some type of distillate. Mr. Vialet […]<\/p>\n","protected":false},"author":1,"featured_media":31285,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[228,11,191,2474,147],"tags":[3835,3836,518,3800,3811],"yoast_head":"\n