Dear Source,
I read your story on the ongoing Tobacco Settlement hearings currently underway in the territory.
As stated, as part of the nationwide tobacco settlement the Virgin Islands stands to collect $49.5 million over the next 25 years starting in April 2000. People have been using tobacco products since they settled Jamestown, but one wonders, are some of these tobacco companies gong to be around in the next 20-25 years? Could the VI Government be taking a risk with this payout taking 25 years? The tobacco industry is facing continuing pressure from smoking lawsuits. The most recent, coming from flight attendants seeking relief for exposure to second hand smoke. The industry will, in all probability, continue to be vulnerable for years to come, from the continuing pressure of these lawsuits.
Maybe the territory ought to consider cashing in their tobacco settlement by selling their rights to their payments to Wall Street investors–in exchange for all the cash up front. A lot of other cities and states are awaiting payments from this multi billion dollar tobacco settlement. I noted recently in a business magazine, some of the lawyers who negotiated the settlement are now thinking about selling their rights to payments for their legal fees. Do they know something? It seems to me that perhaps the VI might consider trading their claim to their share of the proceeds for a one time payment thereby transferring the risk and investing some of the proceeds in a more reliable stream of income.
New York City, Nassau, and Westchester counties in New York recently sold $1.1 billion in bonds backed by its tobacco payments to Wall Street last fall. Other states may be considering doing the same thing. When that happens, there may be a limit to how much tobacco money the market will bear.
One thing to keep in mind, the boys on Wall Street don't do anything for free.
Perhaps most important though, can we trust the VI Government to invest and spend a $49 million windfall wisely?
Rick Ricardo
West Palm Beach, FL
