July 21, 2003 – At a Senate Finance Committee hearing Monday morning, Sen. Adlah "Foncie" Donastorg asked the Economic Development Authority's top official about charges concerning an EDC beneficiary company that were published in a local newspaper last week.
Frank Schulterbrandt, EDA chief executive officer, assured Donastorg that the company's papers are in order and that "inaccurate information" had been reported. Schulterbrandt and his office staff were appearing before the committee with the EDA's Fiscal Year 2004 budget request.
The report, in Friday's V.I. Daily News, charged that the company — Communications Technologies Inc., also known as COMtek — was receiving EDC tax benefits without a Virgin Islands business license or incorporation papers. It stated: "The V.I. government quietly awarded a no-bid contract worth up to $5 million to a stateside company that has no V.I. business license, no V.I. incorporation papers and no direct experience in the work that the government will pay it to do." The contract was issued by the Public Finance Authority, according to the account.
Schulterbrandt noted that he had issued an EDA press release on Friday seeking to clarify the matter. "We have documents and we have their business license," he said. Donastorg, who chairs the Finance Committee, asked to see a copy of the license. Schulterbrandt said he hadn't brought one with him but would, at the senator's request, send for it.
Donastorg told Schulterbrandt that since the EDA prides itself on its reputation, "You wouldn't want the appearance that you are not doing what you are supposed to do." Schulterbrandt repeated that his office has all the documents. The newspaper story "painted a terrible, terrible picture," Donastorg said, adding that the Attorney General's Office should investigate the claims and "provide a report on their findings."
In the Friday release, Schulterbrandt stated: "Communications Technologies Inc. filed an application with the EDA on Oct. 9, 2002, and [the company] was granted EDC tax benefits to conduct the operation of a designated service business providing information technology services focused on telecommunication, information systems networks, information security and training for client located outside the U.S.V.I. We received the proper documents certifying the registration and licensing of this business."
He further stated that the company "is presently negotiating a lease for space of their main office at the EDA office building at #4 King Street, Frederiksted, on St. Croix, and at 80 Kronprindsens Gade on St. Thomas, as listed on the EDC certificate."
At the time the company made the application, Schulterbrandt said, its address of record was Chantilly, Virginia, "as the applicant had not yet determined its business location(s) … and a physical address would be provided to the EDC once a location was selected."
The release said that the EDA through its application process must verify that the applicant is legally authorized to do business in the territory. "In addition," it said, "to verify licensing procedures, the EDC and the Department of Licensing and Consumer Affairs [have] initiated an ongoing reporting procedure on verifying the type of business licenses issued to beneficiaries and eligible V.I. suppliers, and the status of compliance with licensing procedures."
The newspaper report stated that "COMtek, a Virginia company, has no V.I. business location and listed false addresses on its successful application for Economic Development Commission tax breaks …"
The story also stated that "COMtek is neither incorporated nor registered as a limited partnership in the Virgin Islands." It said that employees of the Lieutenant Governor's Office — which files incorporation papers — found no articles of incorporation for the firm last week during two searches of their files.
Toward the end of the Monday hearing, Donastorg held up two business licenses for Communication Technologies Inc. which had just been delivered to him by the EDA office. One was the original license issued Oct. 24, 2002, and the other was a renewal license issued April 8, 2003.
Donastorg asked Schulterbrandt and Nadine Marchena, EDA assistant CEO, when the licenses were received by the EDA. Neither was able to cite that date but said it could be supplied later. Schulterbrandt said most applicants for benefits submit their licenses as part of their application, but they could wait and do so after benefits were approved.
Donastorg also asked about the articles of incorporation, which Marchena said the agency had received with the company's application. She suggested there may have been confusion over the licenses because the company calls itself by two different names. Donastorg said it appeared to him that the company had been done a "serious disservice" and said its officials should be given an opportunity to comment on the application in some sort of public forum.
Later Monday, Andrew Rutnik, Licensing and Consumer Affairs commissioner, said in reference to the business license: "It was a misunderstanding. When the reporter called, we went through the system, and found nothing on COMtek. When we looked it up, it didn't show up that they have a license. They don't even have a d.b.a., ("doing business as"); I don't know why."
Rutnik continued: "We can usually reference by name and d.b.a.. There would be no way for us to know [that Communications Technologies] was COMtek, unless we had a d.b.a. That's a huge difference."
Grace Fahie, DLCA assistant commissioner, confirmed that the company had an initial license and a renewal, confirming the dates Donastorg had read. The first license was issued Oct. 24, 2002, for the period from Oct. 21, 2002, to Jan. 1, 2003. The renewal license was issued April 8, 2003, for the period from Feb.1, 2003, through Jan. 1, 2004.
Fahie said the license covers three business categories:
– Common carrier installation, telecommunication.
– Installation of equipment.
– Development of computer programs.
Fahie said a certificate of the articles of incorporation was issued on Sept. 13, 2002, but she suggested the Lieutenant Governor's Office be called to verify the date. A spokeswoman at the Lieutenant Governor's Office said Communications Technologies was registered as a Virgin Islands corporation on Sept. 13, 2002.
The Source does not have a copy of the company's contract with the Public Finance Authority.
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