Innovative Communication Corp. officials Thursday tried to lay to rest claims that the company is trying to take advantage of the V.I. Telephone Corp.’s tax breaks by placing employees of its subsidiary companies on Vitelco’s payroll.
Thomas Minnich, ICC’s chief operating officer, and Holland Redfield, ICC’s vice president of corporate affairs, were responding to allegations by Sen. Adlah "Foncie" Donastorg that ICC was padding Vitelco’s payroll with workers from its subsidiaries to meet Industrial Development Commission tax benefits and to subsidize ICC’s other enterprises.
The phone company was granted the tax benefits in a controversial move made during former Gov. Roy Schneider’s administration three years ago. The breaks exempt Vitelco from property taxes, gross receipts and excise taxes, and from 90 percent of income taxes.
Minnich did say that over the last year, ICC had consolidated several subsidiary functions under Vitelco, including accounting, computer specialists, managers and installers in engineering, administrative assistants, security and customer service. But he said Vitelco closely monitors work done for it by the subsidiary employees and then charges the sister companies accordingly.
Minnich said the shuffling of employees among ICC’s companies — which include Vitelco, Vitelcellular, Vitelcom, the Virgin Islands Daily News, St. Thomas-St. John Cable TV, St. Croix Cable TV, ICC TV and V.I. Powernet — is allowed under federal communications law and audited by several entities, including the IDC’s review of quarterly employee headcount reports.
"It’s not an unusual move to consolidate positions in the company," Minnich said. "These consolidations are reasonable because they bring about savings. The big thing to understand is costs are allocated across the board."
Minnich said ICC and Vitelco are "audited by too many people" to try to take advantage of the phone company’s tax breaks.
"Plus it would just be foolish to do so," he said.
According to Redfield, Vitelco has 466 employees, which exceeds the IDC mandate of 421. He said it is the phone company’s responsibility to determine what work is performed by its employees.
In addition to his payroll-padding allegations, Donastorg said Vitelco was purchasing supplies for its sister companies in order to avoid paying taxes, a claim Redfield also disputed Thursday. He said ICC subsidiaries don’t purchase goods and materials from Vitelco. Each company has its own budget for such purchases and pays the appropriate taxes.
As for a list of Vitelco employees that Donastorg said was padded with workers from ICC’s subsidiary companies, Minnich said he hadn’t seen it and therefore couldn’t comment.
Donastorg, meanwhile, said he would forward the list of names on Vitelco's payroll to the attorney general. He also said he would contact the Federal Communications Commission because Vitelco is a public utility.
Donastorg also recalled Redfield’s stint in the Senate, which included an effort to restructure the IDC program.
"He created legislation to get two new tax categories in the IDC benefits — telecommunications and banking. What does that say?" Donastorg asked.
Donastorg said shuffling around subsidiary employees could create chaos, making it difficult for anyone to monitor what was happening.
"How about the Marriott hotels doing that?" he asked.
