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Governor Orders Investigation of Rum Agreement

June 9, 2005 – In the same week that the Cruzan Rum Distillery announced the sale of its controlling stock, Gov. Charles W. Turnbull has directed Attorney General Alva A. Swan to launch an investigation into the proposed agreement between the government and the rum company to determine if any criminal or ethical violations occurred.
Marvin Pickering, senior vice president, of the Cruzan Rum Distillery said Thursday, "We think this is a good thing. This should clear everything up and prove what we have been saying all along, that the agreement is a win-win situation for the people of the Virgin Islands and for Cruzan Rum."
Pickering said he is not sure what the issues are that the government has, but they should be resolved. He said he has been disappointed with some of the negativity and innuendoes that have been spread concerning the agreement. He said, "There is nothing illegal or immoral proposed in the agreement. We need to do it and then get on with the business of promoting Cruzan Rum."
The proposed agreement is sometimes stated in short that the government will give the Cruzan Rum Company $24 million to promote its product.
Pickering said, "If we don't increase our sales, if we don't increase the amount of money that the V.I. government gets in excise tax. We don't get a penny."
The United States federal government collects $13.50 in excise tax on each proof gallon of Cruzan Rum sold in the United States. The federal government returns $13.25 of that to the V.I. government. The total returned to the V.I. government last year was $78 million.
Pickering said the proposed agreement would not cut into the existing amount of excise tax the V.I. government gets. He said that the $24 million figure being thrown out is probably an accurate figure, but it would cover a five-year period. Cruzan Rum would be receiving for its effort at promoting its rum to the world a proportion of the increase in excise taxes.
Pickering said Cruzan Rum was not releasing a copy of the agreement to the public.
In his letter to Swan June 1, Turnbull wrote, "It is imperative that you use the full resources of this government, including those of the Inspector General's office, to assist you with this important matter, I will not execute any agreement which may negatively impact the people of this territory, our corporate partners or my administration."
He continued, "As long as the appearance of improper conduct permeates a partnership to market Cruzan Rum, our revenues are threatened and our attempt to strengthen VlRIL's (Cruzan Rum's) position in the rum industry is hampered. This can cause severe distress to the Territory."
Turnbull asked Swan to complete a preliminary report within 30 days.
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