Nov. 28, 2002 – Innovative Telephone has asked for a meeting to discuss terminating its participation in the Economic Development Authority program that gives it nearly 100-percent tax exemptions, but Sen. Adelbert Bryan is urging the EDA not to make any "premature" decisions.
Bryan chairs the Senate Economic Development, Agriculture and Consumer Protection Committee, which recently held two hearings on the telephone company's compliance with the terms of its Economic Development Commission certificate. He wrote this week to the authority's executive director, Frank Schulterbrandt, asking that no Innovative requests be considered until the completion of the EDA's own investigation of the company's compliance with its tax-benefit requirements.
Innovative Telephone made two overtures to the EDA in the midst of a two-month strike by some 310 Innovative Telephone/Innovative Cable TV employees.
The first, a letter from the company president, Samuel Ebbesen, dated Nov. 6 — the day before the second Senate hearing — requested a waiver from its requirement to maintain a minimum of 421 full-time employees, pending the outcome of the strike.
The second, a letter from Innovative Telephone attorney Joel Holt dated Nov. 19, requested a meeting to discuss terminating the company's participation in the EDC benefits program.
The tax-exemption certificate was granted on June 30, 1997, by what was then called the Industrial Development Commission to what was then called V.I. Telephone Corp. — or Vitelco — and will expire on Sept. 30, 2003.
At Bryan's committee meetings on Oct. 31 and Nov. 7 concerning allegations of noncompliance with the agreement, few answers were forthcoming. Prior to the first hearing, Innovative counsel wrote Bryan to say the company would not take part, calling it a "thinly disguised" attempt at getting involved in the ongoing labor dispute.
At that first hearing, the EDA's assistant chief executive officer, Nadine Marchena, provided little information about Innovative's compliance record. She said a lack of EDC compliance officers had hindered a comprehensive investigation into the matter but that a report should be completed by December.
She said the review will cover the company's compliance history since 1997, when, in a controversial move in the Schneider administration, it was granted full exemption from property, gross receipts and excise taxes and 90 percent exemption from corporate income taxes.
The EDC, by law, is supposed to issue compliance reports yearly on all beneficiary companies.
Innovative Telephone's benefits package requires the company to:
– Offer a capital investment of $100 million, excluding inventory.
– Employ a minimum of 421 full-time employees, of which no fewer than 80 percent are V.I. residents.
– Provide employees with medical, dental, life and accidental insurance; and 401(k) retirement, savings and employee stock ownership plans.
– Provide ten $1,000 scholarships per year.
– Assist V.I. schools to gain Internet access.
– Contribute $40,000 yearly to the Boys and Girls Club.
– Sponsor youth programs.
– Contribute $5,000 yearly to the St. Croix and St. Thomas Little League Baseball programs.
If Innovative is found deficient in any of those areas, Marchena said, it could face fines or suspension, modification or revocation of its benefits.
The EDA should hold off considering Innovative's waiver request until the compliance investigation is completed, Bryan wrote Schulterbrandt. "To not do so would also undoubtedly jeopardize the benefits to the treasury of the V.I. government and the children's educational benefits as it relates to information technology for the future."
Bryan also said the government's ability to hold Innovative accountable for its commitments would be endangered if the EDA were to terminate the company's tax certificate before penalties are assessed.
Bryan urged the authority to "follow the letter of the law" in making decisions on both Innovative requests. "We must not allow loopholes to be used to exploit the masses, and most importantly the children of the Virgin Islands' future," he wrote.
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