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LITTLE LEARNED ABOUT PHONE COMPANY COMPLIANCE

Nov. 7, 2002 – The Economic Development Authority failed to bring requested information and subpoenaed witnesses failed to appear at Thursday's meeting of the Senate Economic Development, Agriculture and Consumer Protection Committee.
Sen. Adelbert Bryan, the committee chair, had directed EDA officials at an Oct. 30 hearing to supply the panel with documentation as to whether Innovative Telephone — formerly V.I. Telephone Corp., or Vitelco — is in compliance with the provisions of its Economic Development Commission tax-benefits certificate.
The St. Thomas legislative chambers were filled to overflowing Thursday with members of the United Steelworkers of America, currently in their sixth week of a strike against the phone company and Innovative Cable-TV.
But noticeably absent were Public Services Commission and Innovative Telephone personnel that Bryan had subpoenaed to appear at the meeting.
Bryan was incensed at Territorial Court Judge Audrey Thomas, who had quashed the subpoenaes issued for the PSC members because of a conflict of interest — the commission also had a meeting scheduled on Thursday. Bryan said he learned of Thomas's action Thursday morning and called the judge a "judicial scamp." Later in the day, Sens. Donald "Ducks" Cole and Roosevelt David took Bryan to task for his remarks, defending Thomas's reputation and praising her judicial abilities.
Bryan started the meeting off by playing a 1960s tape of a speech by the Rev. Martin Luther King Jr., instructing the assembled union members to listen carefully to see that what King said still applies today. "Do you relate?" Bryan asked. The speech makes reference to things done under the cover of midnight, a theme Bryan used repeatedly in the course of the day.
The committee came up with little new information in the Innovative-EDC investigation. Nadine Marchena, EDA assistant chief executive officer, provided essentially the same response she had offered on Oct. 30.
At that time, Marchena had said that the lack of compliance officers made a comprehensive investigation into the matter difficult, but that it should be completed by December. She said the probe covers the phone company's compliance history since 1997, when it was granted full exemption from property, gross receipts and excise taxes and 90 percent exemption from corporate income taxes in a controversial move of the Schneider administration. The tax-exemption certificate was granted on June 30, 1997, and will expire on Sept. 30, 2003.
No one has looked into the phone company's compliance until now, Marchena said. "I feel it's going to take another month and a half, provided all the information we need is there," she said last week.
Marchena and Margarita Benjamin, EDA director of compliance, were thoroughly grilled by the committee on Thursday. Under continual questioning by Sen. Celestino A. White Sr., Benjamin said, "We are in the process of a compliance review. We must follow our rules and regulations." Benjamin and Marchena stuck to their explanation that the EDA rules don't allow them to release information until a review is completed.
By law, the EDC is supposed to submit annual compliance reports on all tax beneficiaries to the governor and the Legislature. Under questioning by White, Benjamin said such a report was issued last year but it didn't include a compliance component.
Election returns questioned
Throughout the day, Bryan made references to his likely absence from the 25th Legislature. Unless absentee ballots change the Senate lineup, Bryan will have finished in eighth place in the seven-seat district race. He said he hoped the senator taking over his committee would pursue the telephone company compliance issue.
He questioned the reported election figures, suggesting the computers tabulating the voting machine ballots were rigged. He said the reported showing of gubernatorial candidate Alicia "Chucky" Hansen, 2,633 votes, was low, and that the reported returns for senatorial candidate Wayne "Facts Man" Adams, 1,701, were high. Adams has run often for the Senate but received far fewer votes.
White quoted Labor Commissioner Cecil Benjamin as having reported instances of the phone company being in violation of its compliance agreement, but Marchena and Margarita Benjamin said the commissioner had not discussed such a thing with them.
One provision of Innovative Telephone's tax certificate is that it provide 10 college scholarships of $1,000 each year. Acting Education Commissioner Noreen Michael testified that Innovative contributed a total of $62,000 in scholarships from 1997 through 2002 to the public high schools. But, she added, sometimes scholarship funds go directly to a college or university, and private schools might have received funding of which she had no knowledge.
Questions about, comments on 1997 issues
Also testifying were Planning and Natural Resources Commissioner Dean Plaskett, who chairs the EDA board; Frank Schulterbrandt, EDA executive director; and Frederick Handleman, EDA board attorney. Plaskett and Handleman have been on the board for about a year.
However, many of the senators' questions went back to 1997, when the phone company was granted benefits and when Claudette Farrington was director of the then-Industrial Development Commission, now the EDC.
Bryan fought the tax breaks for Vitelco from the start, saying they would wind up costing the government millions of dollars. In a 1997 issue of The Avis supplied by Bryan Thursday, former Internal Revenue Bureau director Joanne Bozzuto called the tax breaks a "major step backwards for the government." She added, "I think that it's time Vitelco compete on equal footing with other companies in the community."
Bozzuto suggested that the Public Services Commission oversee Vitelco's exemptions. "The PSC goes into great depth into the analysis of the Vitelco revenue and expenses, and they have set by agreement a return for this company at 11.5 percent," she said. "I do not believe that the IDC should grant a third extension of benefits to a company that is now a mature, established utility."
The committee broke for lunch, after which it was to hear from Steelworker union representatives, Attorney General Iver Stridiron and J'Ada Finch-Sheen, subpoenaed vice president of Innovative Communication Corp., the parent company of Innovative Telephone.
Committee members present were Sens. Bryan, Norman Jn Baptiste, Cole, David, Emmett Hansen II, Vargrave Richards and White. Also present were Sens. Douglas Canton and Adlah "Foncie" Donastorg.

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