St. Thomas Tax Beneficiary Lays off 60
One of St. Thomas’s most visible tax beneficiaries has given the pink slip to 60 employees, or roughly a third of its workforce.
The company International Capital & Management Co. LLC is 100 percent owned by Richard Stephenson, according to the company’s tax benefit certificate from the V.I. Economic Development Authority. [ICMC EDC Certificate]
It describes ICMC’s activities as business consulting and management services, construction management and advisory services, investment management and reporting services, accounting and private merchant banking services, and the operation of a corporate university known as The Center for Learning. All of its clients are outside the territory.
With the recent closure of Radio Shack in the territory and bad budgetary news, the layoffs are an unwelcome loss of additional jobs, tax revenue from the employees and of money circulating in the V.I. economy from those wages.
Allison Krivatch, ICMC’s vice president of marketing, issued a statement Monday announcing the layoffs, saying the company “is in the process of aligning our organization and staffing to the changing health care environment impacting our clients,” and that they “have begun the process of workforce reduction with a goal of maintaining a high standard of service.”
Krivatch said the company “remains one of the largest employers in the territory,” and that while “difficult, these changes are part of a longer term plan for ICMC to be a viable employer of choice in the Virgin Islands and a great community partner.”
The financial company’s V.I. entity has received EDC tax breaks for 12 years. The benefits include, but are not limited to, 90 percent reduction in corporate income tax, 90 percent reduction in personal income tax, 100 exemption on excise tax, and 100 percent exemptions on property and gross receipts tax. Stephenson also is exempt from dividend tax withholding and interest tax withholding.
In exchange, the company is required to invest at least $10 million in the U.S.Virgin Islands, including investment in its real property. It has to employ at least 70 full time employees for the first five years of the certificate, then at least 120 employees from the sixth to 15th year and 150 after that. Of those employees, at least 80 percent have to reside in the territory and at least 20 percent of management has to be V.I. residents.
It is required to give $60,000 in charitable contributions, of which $35,000 has to be for school programs. ICMC has made these mandatory payments in part to Head Start and to sponsor the Jazz in the Park concert series in St. Thomas’s Roosevelt Park.
It also paid an application fee and by V.I. statute must pay an annual fee of $7,500.
Stephenson, an investment banker, is the founder of the Cancer Treatment Centers of America, a network of five for-profit hospitals he founded in 1988. He began his foray into hospital ownership at age 35, as part of a group who purchased a hospital in 1975. He is also a major donor to the conservative lobbying group FreedomWorks, which advocates lower taxes for high-income individuals and reduced regulations on industry, among other conservative priorities. In 2012 he agreed to give FreedomWorks $400,000 per year for 20 years in exchange for changes in management personnel. As of Monday, Freedomworks had spent $460,596 in support of candidates for the 2016 election cycle, suggesting Stephenson’s contribution comprises a substantial proportion of the group’s total funds.
The 60 employees to be laid off are a little less than a third of the 197 employees company officials told V.I. senators it had in April of 2016, shortly after receiving a 20-year extension of its tax breaks.
In January of 2015, the EDC board voted to recommend a 20-year extension of the company’s benefits, which had expired in 2013. It also voted to accept “supplemented documentation to confirm its compliance with charitable contributions” and “to forgive ICMC’s noncompliance with the V.I. Economic Development Program’s procurement rules and regulations in 2008,” according to EDC documents. It also voted to require ICMC to pay fines for noncompliance from 2009 to 2012 with EDC rules and regulations.
In March of 2016, the EDC formally granted a 20-year extension of tax breaks, back-dated to 2013.
Part of the EDC agreement requires health insurance for the company’s employees. V.I. law requires some notice prior to termination and an option to extend insurance benefits for up to 90 days. Company officials could not be reached for clarification of what will happen to the health benefits of those laid off or what sort of severance package they may receive.
Calls to Krivatch and ICMC VI President Cornel Williams had not been returned as of 11 p.m. Tuesday.