Feb. 15, 2007 — The V.I. government's pension system voted Thursday not to explore buying parts of Jeffrey Prosser's bankrupt telecommunications company, saying turmoil in the bankruptcy proceedings made spending money on the project too risky.
The Government Employees Retirement System's board of trustees voted 3-1, with three members absent, to not spend up to $14,000 investigating buying Innovative Communications Corporation Virgin Islands, operator of all the territory's land telephone lines.
Chairman Vincent Ligar said it was wise to exercise "caution," seeing as a U.S. Bankruptcy court had ordered Tuesday that Prosser's Innovative Communications Corporation, LLC, should be run by a third-party trustee.
"I don't think a pension fund should get in that right now," said GERS board member Leona Smith.
Outside a bankruptcy hearing in St. Thomas last week, Prosser said he hoped to sell the telephone company to the government for $650 million.
However, GERS is currently facing its own financial problems: a $1 billion shortfall.
"Of course, everyone is concerned about the unfunded liability," Ligar said. "I met with Gov. John deJongh Jr. and he assured me he is working on plans, and he should be in contact with the board in the near future to submit his proposal."
GERS administrator Willis Todmann said that, in the month of January alone, the pension system came up more than $1.7 million short.
The system collected more than $13 million, but paid out more than $15 million, Todmann said.
To date, this fiscal year (from October 2006 to January 2007) the system collected about $43 million and paid out more than $73 million — more than $30 million short, Todmann said.
In opposition to former Gov. Charles Turnbull's plan, deJongh said he would not float up to $600 million in bonds to fund the retirement system — a scheme that would have doubled the territory's long-term debt.
GERS cannot continue to bleed money, however, and Todmann has previously said it could collapse in less than 20 years if something isn't done.
Prosser and two of his companies — Emerging Communications and Innovative Communications Corporation LLC, which are parent companies of TV2, Vitelco and the Daily News newspaper — declared bankruptcy July 31 after defaulting on loans to investors.
Prosser and the lenders have been in heated debate about how the debt should be repaid ever since.
During last week's hearings, lawyers for the two sides traded verbal jabs — both in the courtroom and in the corridors of the federal building in St. Thomas.
Bankruptcy Judge Judith K. Fitzgerald noted the tension and asked both sides to work toward common goals lest the case drag on forever.
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