National Puerto Rican Coalition Seeks Federal Investigation of Rum 'Deal' that Transfers Federal Funds to Foreign Company

WASHINGTON, Sept. 16 /PRNewswire/ -- The Board of Directors of the National Puerto Rican Coalition (NPRC) announced today they have made a formal request to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) to investigate a deal between Diageo, a UK-based liquor conglomerate, and the U.S. Virgin Islands.  (http://www.nprcinc.org/files/NPRC DOJ letter.pdf, http://www.nprcinc.org/files/NPRC SEC letter.pdf)

"Diageo has structured an unusual and highly suspect agreement with the government of the U.S. Virgin Islands," said NPRC Chairman Miguel Lausell. "American taxpayers deserve to know why a British-owned company should receive $6 billion from U.S. taxpayers to create only 40 jobs."

"This is a sweetheart deal of such epic proportions that it should shock the conscience of every Member of Congress," said NPRC President & CEO Rafael Fantauzzi. "The subsidy to Diageo is worth about twice the cost of its rum production. The cost of producing a 'proof gallon' (a measurement of alcohol) of rum in a Puerto Rico distillery is $3.07. Diageo stands to receive $6.38 in direct payments for producing the same rum.

"What's most troubling about this sour deal is that Federal and State officials involved in sanctioning it have close personal ties. That is why we are demanding investigations from the Department of Justice and the Securities and Exchange Commission into whether the activities and actions that led us here directly violate or otherwise seek to circumvent U.S. laws and regulations.

"Investigators should ask: How can a publicly-traded company secure a deal so sweet that it is guaranteed profits that exceed 100 percent annually for up to 60 years? How can a corporate entity guarantee revenue inflows to its shareholders, when the 'rebates' are based on a strictly discretionary federal program that Congress may change or eliminate in any given year? In fact, Congress has modified the 'rum cover-over' formula several times over the last few decades.

"We must question whether those involved have something at stake in this deal. We should demand that every one of them be asked, under oath, if they will be receiving any kind of compensation or future deals from this transaction."

For a copy of the press statement in its entirety and/or additional information, visit www.NPRCINC.org.

SOURCE National Puerto Rican Coalition

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