PR Tells Obama: Diageo Deal May Trigger World Trade Backlash
President Is Told The Subsidies To Diageo Are Nearly Double The Cost Of Producing The Rum
Scrutiny of the deal with Diageo, LLC, to produce Captain Morgan Rum in the Virgin Islands has gone international, and President Barack Obama has been cautioned that the $2.7 billion subsidy to the rum producer may result in allegations of unfair trade practices from the global community.
And whatever your opinion of the deal, most would agree that the maintenance of the current cover-over structure, from which Diageo will receive its’ $2.7 billion payout, is a critical factor in the financial future of the US Virgin Islands.
The message was delivered to President Obama by Miguel Lausell, Chairman of the National Puerto Rican Coalition. He told the President that the deal with the Virgin Islands, which will return nearly 50% of the cover over revenues generated from the sale of Captain Morgan Rum in the United States to Diageo, could open the country up to accusations of unfair trade practices from the World Trade Organization (WTO) and create an imbalance in the competitive rum market.
Felix Serralles, president of the family owned Peurto Rico based Serralles distillery that has produced Captain Morgan in the past, added that the size of the subsidy seemed out of proportion to good business practice, stating, “The subsidies will be almost twice the price of the production of the rum.”
Proponents of the deal have dismissed Puerto Rico’s objection to the deal as “sour grapes” at the loss of cover over revenue to their economy. Puerto Rican law restricts the use of more than 10% of carry over revenues to any producer. But as pressure mounts and visibility escalates about the deal, more and more voices are entering the discussion.
In Florida, the deal has become a campaign issue for opposing senators vying for the estimated 750,000 votes in the Puerto Rican community resident in the state.
And no matter what your view on the arrangement, the perception on the mainland is that US taxpayer dollars are being paid to enrich and subsidize the profit of a foreign company, British owned Diageo. The subsidy is separate and apart from the $250 million in bonds floated by the VI Government to finance the construction of the distillery and the molasses subsidy that is also part of the deal.
Throw in the political power of the Puerto Rican community residing in the states (2003 figures showed that more Puerto Ricans live now in the US than in Puerto Rico) and the battle may just have begun.
The discussion will continue…
While Governor deJongh hangs on to hope that he will have something to claim as his legacy, the people of the Virgin Islands will have to hang on to hope that the Diageo fallout won’t be a financial crisis for this territory. God bless the US Virgin Islands.
I see 2.7 million in this article but it’s 2.7 billion, with a B. Make a big difference CIF!
Note from Adminstrator: So right! Thanks.
Perhaps more propperly put…..’God HELP the US Virgin Islands’.
The so called “brilliant” financial mind of Gov. deJongh has carried the Virgin Islands to the brink of bankruptcy. What he found solvent is now unstable and unsecured. How long did he have to struggle to come up with the boring idea to borrowing his way out of debt. Any Fool, Any Fool can borrow. That’s not new or brilliant. It is a pedestrian way out, with no insight and not even a spark of creativity. In fact it is a dangerous, short-sighted solution that must end abruptly when our ability to borrow comes to a halt. NO ONE CAN BORROW INDEFINATELY. We have already indebted our great-grandchildren. If re-elected, from whom will we borrow in 2011?????
the infamous statement comes to mind, “where we use to get nothing, we now can get 55%.” as a matter of fact, it was so nice we did it twice! what happens if congress decides to drastically change the cover over program currently in place; thereby, significantly reducing the amount being returned to the territories? where would that leave us? how would the numbers change? and then we went and borrowed hundreds of millions of dollars on a promise of a piece-of-a-pie-in-the-sky; (please tell me) is it me, or has our so-called top financial minds on the governor’s team some how lost it.
in the face of this so-called new world order/one world government/currency, this seems to be an excellent plan to dis-enfranchise the virgin islands and it’s people. all of our hopes, dreams and aspirations as a proud people, are now balancing on the whims of outside interests. how are we to be able to savor and protect the unigue-ness that makes us who we are from this imminent threat of a global melting pot.
after thought…….maybe it serves us right for fighting for something/somewhere that’s really not ours to begin with, my people of african descent. unspeakable truths exist in testament to the white man’s position on dicovering, claiming and protecting/defending their interest against any indiginous people. while we did not come here of our own accord, there are many amongst our own people who truly and genuinely regard these virgin islands as our home and therefore expect a government that represents our best interest to say the least.
i grew up hearing deh ole people dem complaining about the hess oil deal, and dis damn 2 cents a barrel and it’s long term affects on many generations to come. when the time came to do someting about it, we had gutless, spineless, selective amnesia leaders, negotiating on our behalf. i thought we had learned our lesson; but, to no avail. is it de’javu…….what will our children hear us say? what promise can i offer my own children? lol……………..and you all claim to be educated………in the finest learning institutions “money could buy” in deh land! …………yeah mehson, you have paid good money to sell your soul and perhaps, that of your own people whom you’ve sworn by. let me end in song…..guiltiness, rests on their concience, oh yeah; they would do anything, to materialize, their e-ver-ry wish……….
The more I read about Diageo, I keep asking myself ” Lord what did we get ourselves into”.
I don’t blame Puerto Rico but Lord….
This is the plan to bring down the VI, so that his frinds can take over, and make most of us leave the island, people are going to lose thier homes when he make us pay 3 years of tax, and his friends will buy them up, look what is coming next, why you think that these people are coming to look at some of the homes and buying up right next to them?
From the first time I see the governor talked about how great Diageo is, I knew something was seriously wrong. The thing is that he didn’t even tell us about the specifics with the deal until after the fact. On top of that, he tied up our future budgets based on how much money HE CLAIMS the VI would receive from the distillery. WHAT DID WE DO TO DESERVE THIS?!! LORD, HAVE MERCY ON OUR ISLANDS!!!!! PLEASE!!!!
I would love to know how we could demand an investigation into the private negotiations that took place between the governor, the majority senators, and Diagio. Our financial future is at stake. If kickbacks were involved in the negotiations, the whold deal would become illegal!
The investigation would be on the behalf of the Virgin Islands people, the people of Pueto Rico, and the international rum producers. I don’t see it as “loyalty” to support deJongh et al in wrongdoing that hurts us as well as others.
The federal gov. should also want this investigation. It would be a huge embarassment to Pres. Obama’s administration if the republicans are the ones to persue this and expose a black, Democratic governor in curruption. The only way we, Virgin Islanders, can look good in all this is if we are the ones to initiate an investigation.
@ PNG
Ditto the Alpine fiasco which is currently before the senate in another meeting today on STX. It is obvious AEG is the worst solution we could have chosen.
Sammy S. is clearly in the tank for the admin on this one, or he got paid handsomely. Interesting who among the committee members are not in attendance. Nelville, Hill, Turdland. Malone ‘says’ he will be coming this afternoon. Mathes even gave up a day of golf to attend! Scores of consultants were flown in at the taxpayers expense. Too bad we don’t have head’s of WAPA and VIWMA who can answer the questions. They apparently don’t understand the deal either!
Nellie, Sanes, Usie and Barshinger are the only ones who give a &*%$ to show up.
…………and this is the future source of revenue from which MILLIONS of dollars have either been pledged,or being asked to be pledged, to plug the defifcit in this year’s operating budget?
Asking for and getting an advance from an uncertain kitty? What manner of budgetary practices and procedures are we seeing here?
OOOOPS,one ‘f’ in ‘deficit’.
@ Soldier,
No – there was ANOTHER $250 million in bonds floated last year to cover the budget deficit and we are told the administration plans to ask for $100 million MORE to get through FY 2010.
It’s insane.
@ ‘CLOCK’:Thanks for the reminder.Completely forgot about the $250 million ‘floater’.Seem to have gotten another article (story) mixed up.
Good Grief is another ‘website’ name for the cowardly senator that is Senator Foncita.
Oh, please. His grammar is not that good!
Take a look at this article! They might as well have added the Virgin Islands.
http://blogs.forbes.com/streettalk/2010/02/23/why-the-lessons-of-new-york-citys-debt-crisis-wont-help-greece/
I wonder if there were a few of these dinners leading up to the giveaway:
http://www.businessweek.com/ap/financialnews/D9DURFIG0.htm
http://www.businessweek.com/news/2010-02-23/diageo-says-bacardi-tries-to-sabotage-rum-tax-subsidy-update1-.html
Have we yet realized that many of these deals have chained us to our Status as an unincorporated Territory? The rum cover over as well as the gasoline excise taxes are tied to our status quo status. We must and I mean must start paying attention to these all or nothing deals and truly examine the long term effect of these decisions on our descendants.
We supposed to be in charge of our own destiny and yet we continue to squabble with each other over petty issues. Can’t we see as long as we continue to be distracted with what one district gets over another, the spellbinders win because we have no unity. This is intentional.
We have access to all this technology & yet are we any better off than our ancestors?
http://www.bloomberg.com/apps/news?pid=20601103&sid=adeoLO1uVi00
Are we paying attention to what is happening in the Caribbean around us and what role will be be allowed to play of any? Wake up!!!!! Decisions are being made on our behalf without our consent…..Does that mean we approve? All I hear is complacency coming through my radio. When are we going to gather ourselves together and come up with a plan to rescue ourselves from being screwed without KY jelly in every opening we have.
http://www.brisbanetimes.com.au/world/we-dont-need-us-says-latin-america-20100224-p16g.html
Personally, as a Virgin Islander I am ashamed of our easily satisfied nature. We are being quietly lolled to sleep with materialistic comforts which our great grand children will forced to pay back either with their lives or their property. You pick.
1. We must first seek candidates who we know demonstrate integrity and are interested in public service.
2. We must support (by any means necessary) those people so the can be elected.
3. We must vote for these people en masse using the paper ballot.
4. We must continue to hold this person accountable for the decisions they make on our behalf.