Feb. 13, 2008 — The Minority Caucus of the V.I. Legislature issued a statement Wednesday questioning whether the Public Services Commission was "sound asleep when Jeffrey Prosser was transferring millions of dollars from his company for his personal use."
"Why was he allowed to squander million of dollars, when millions in employees' pension contributions were not paid?" Sen. Ronald Russell asks in the statement.
Before filing bankruptcy in 2006, Prosser's company ICC laid off many workers who went on strike in a desperate attempt to negotiate fairer work standards and better benefits, the statement says. Prosser responded by hiring hundreds of new employees to replace those who walked the picket line.
Noting that a recent civil complaint alleges that Jeffrey Prosser made more than $60 million in "fraudulent and unauthorized" transfers from his corporate properties for the benefit of himself and his family (see "Trustee Finds $60M in 'Fraudulent' Transfers to Prossers — and 6th Mercedes"), members of the minority caucus question how the PSC could have approved rate increases, rubber stamped Vitelco's access to Universal Service Fund monies and otherwise stood by, allowing Vitelco's ratepayers to foot Prosser's bill.
"The more that is unearthed by the court-appointed trustee, Stan Springel, the more we realize how derelict the Public Service Commission was in their duty to regulate Jeffrey Prosser and the telephone company," said Sen. Neville James in the caucus' statement. "It appears that it is not a matter of 'if' but rather 'when' some type of criminal action is filed as a result of blatant disregard for the utility company's financial stability."
According to their statement, minority senators have repeatedly asked the PSC for emergency meetings to address the bankruptcy issue, but without success.
"What happened to the PSC?" Russell asked. "Their mandate is to regulate utilities and protect our residents. However, because they failed to do their job, some Virgin Islanders are suffering,"
Sen. Juan Figueroa-Serville raised the issue of Innovative's broad tax breaks granted by the Economic Development Commission.
"Prosser was given a large tax break, yet little or no investments were made in the infrastructure of the telephone, cable or any of the companies that he had exclusive right to operate," he said.
In 2003, the PSC approved a 17-percent rate hike by Vitelco. That rate allowed the parent companies owned by Prosser to siphon off six percent of gross earnings in the form of an "advisory fee," the statement says. At the time, Sen. Adlah "Foncie" Donastorg objected, saying the cost of those fees totaled more than $3 million a year.
"The PSC is supposed to look out for the interest of this territory's consumers, and yet 99 percent of its actions favor the utility companies," he said in a news release at the time.
Donastorg then said the phone company "includes in its operating costs a 6-percent advisory fee on gross earnings" and the fee "this year totaled more than $3 million." (See "PSC Approves 17 Percent Increase in Phone Rates.")
At the time, the PSC calculated the rate increase based on the assumption that Vitelco's EDC tax breaks, amounting to near-total tax forgiveness, would expire at the end of 2003. But Vitelco sought and received renewed EDC tax breaks in 2004, angering members of the PSC (see "PSC Irked by Innovative Bid to Renew Tax Breaks") and some senators (see "More Tax Breaks for Innovative Anger Senators").
Dean Plaskett, then chairman of the EDC, is currently on trial on charges of public corruption relating to his work as Commissioner of the Department of Planning and Natural Resources. (See "Co-Conspirator Explains Fraud Scheme, Says Plaskett Pulled Knife on Him.")
The rates were not lowered and the tax breaks are still in place. As a result, Vitelco operates at a considerable cash surplus, millions of dollars of which have gone upstream to Vitelco parent companies ICC and New ICC, and — according to court filings in the Prosser bankruptcy case — from there into several multiple-million dollar houses, luxury cars, millions of dollars of wine, art, jewelry, travel on Prosser's personal jumbo jet and other creature comforts for Prosser, his family and his close associates.
Attorney Maria Tankenson Hodge filed a suit in 2003 in V.I. Superior Court on behalf of a ratepayer challenging the rate increase. Five years later, the case has yet to be heard. Hodge has also filed suit to see Vitelco's audited financial statements, to no avail. The Source has also tried for several years to get the PSC to release Vitelco's audited financial statements, to no avail. (See "Source Request for Vitelco Financials to Be Considered at Next PSC Meeting.") Meanwhile, Vitelco pension funds and telephone infrastructure have been neglected by ICC and New ICC, according to court filings.
"There is absolutely no excuse for the PSC to watch the lavish spending by the Prossers and do nothing," Sen. Louis Hill said in the statement. "Their job responsibility is clear, but they fell down on their duty in an enormous way."
The minority caucus's statement says the caucus will continue to demand the PSC fulfill its regulatory role, but does not recommend any specific action. Reached by phone Wednesday evening, Hill said many opportunities for action had been missed.
"I think the time for such action has past and we need to look ahead," he said. "It is my hope that as time goes on, some members will complete their terms and the governor will appoint new members. There are several on the board right now who would not be approved if reappointed. … Hopefully we will have some new members before the year is out."
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.
