Sen. Adlah "Foncie" Donastorg this week finally made good on his threats to take the Industrial Development Commission to court to obtain documents on the V.I. Telephone Corp.’s compliance with the tax benefit program.
Additionally, an IDC preliminary report on Vitelco’s employee consolidation effort raises questions about the company’s use of workers from its sister companies.
Donastorg filed a petition in Territorial Court late Tuesday for a Writ of Mandamus for the release of the IDC documents.
According to the court documents, Donastorg maintains that the V.I. Code and case law support his request for the information.
That is despite IDC Executive Director Frandelle Gerard’s assertions that much of the information sought is confidential in nature and not for public review. Gerard didn’t return a message left at her office Thursday to comment on Donastorg’s lawsuit.
For more than a year, Donastorg has asked for information regarding Vitelco’s use of employees from its sister companies, all owned by Innovative Communication Corp. Vitelco is an IDC tax beneficiary and receives almost 100 percent tax breaks.
Donastorg has asserted that by placing subsidiary employees on Vitelco’s payroll, ICC is forcing telephone rate payers to subsidize its other enterprises. Both ICC and Gerard say the transfer of employees is legal and part of a consolidation process.
A preliminary report by an IDC compliance officer showed that for the four quarters prior to March 31, Vitelco had more than the 421 full-time employees required in its IDC contract. However, between March 31 and June 30, 2000, of the 452 employees in the company, 52 were found to be ineligible.
"By adding additional employees of other ICC subsidiaries to the Vitelco payroll, the employee deductions increase, causing an effect in Vitelco’s profit," the preliminary report says. "The significance of this effect will reflect on the income tax deductions and possibly on (the Public Services Commission's) assessment for rate increases."
The report says that last April, Gerard met with ICC executives who said that Vitelco payroll expenses had been reported to the Federal Communication Commission and the PSC, but that documentation on whether employee costs were charged to the proper subsidiary was never submitted to the IDC.
According to the report, "Based upon the functions and assignment of several of the employees transferred to Vitelco, these employees should be reported as and maintain employment under the other subsidiaries. This should be reflected on the employees’ W2 forms and Vitelco should reimburse that subsidiary for payroll expenses for employees who actually perform work for Vitelco."
The report recommends that in the absence of Vitelco providing information to the IDC, an independent audit of personnel and payroll practices should be done at the company's expense.
