Home News Local news DONASTORG: LOTTERY 'GROSS REVENUES' MISDEFINED

DONASTORG: LOTTERY 'GROSS REVENUES' MISDEFINED

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March 5, 2003 – In letters to the governor and the attorney general made public on Wednesday, Sen. Adlah "Foncie" Donastorg called both to account for having interfered with his efforts to obtain financial records of the V.I. Lottery for an audit being carried out by the Post Audit Division of the 25th Legislature at the direction of the Finance Committee, which he chairs.
Donastorg also raised questions in both letters about provisions concerning "gross revenues" in the government's contract with a lottery games supplier that he identified as "Caribbean Lotto Inc."
In the matter of access to financial records, the senator told Gov. Charles W. Turnbull that being prevented from accessing the documents "is a serious breach of the public trust and a clear effort to violate our territory's laws." He told both the governor and Attorney General Iver Stridiron that by law "it is the duty of the Post Audit Division to conduct audits of government agencies on at least an annual basis, and more often if requested by the Finance Committee."
In the letter to Stridiron, Donastorg said his staff "was actually told they would not be allowed to even enter the lottery offices under the direct orders of yourself and Government House legal counsel Paul Gimenez. How can you justify this under Virgin Islands law?"
It appeared that Donastorg had sent out the letters, dated March 4, before Stridiron in effect responded to the charges of obstructing the audit process.
On Tuesday, Stridiron said that the Turnbull administration had no objection to the Finance Committee auditing the V.I. Lottery. He said he told lottery personnel not to grant the post audit staff member access to the St. Thomas lottery offices on Feb. 24 because Donastorg had not properly given notice of his desire to see the documents. (See "Stridiron:Governor not against lottery audit".)
In his letter to Turnbull, Donastorg gave such notice, but couched it in terms of an ultimatum. He wrote: "I ask that you direct the V.I. Lottery Office to open its records and provide full cooperation to the staff of the Post Audit Division. Failure to comply with this request will result in legal actions being taken against the custodians of these records, to include yourself and [V.I. Lottery executive director] Austin Andrews."

'Gross revenues' defined with deductions
Donastorg said in both letters that under its contract with "Caribbean Lotto," the government is entitled to "10 percent of gross revenues." He described the percentage as "a pittance compared with what governments in other jurisdictions are reaping from lottery games." But he also accused the administration of having allowed the contractor "to wholly redefine the term 'gross revenues.'"
The contract, he said, defines "gross revenues" as the gross sales proceeds "after deducting the cost of free tickets issued as a part of the lottery games and the commissions retained by the selling agents." By this definition, he told both the governor and the attorney general, "the taxpayers of the Virgin Islands are being cheated out of their fair share of these revenues."
Donastorg asked Stridiron for a legal opinion on the language defining "gross revenues" as well as his justification in writing for blocking access to the lottery financial records.
The Source reported last November that while the national average of the proceeds from Powerball ticket sales going into government coffers is 31 percent, the average agreed to by the V.I. government apparently is 2.6 percent, calculated as 20 percent of the 13 percent that the Multi-State Lottery Association, or MUSL, is to pay to the V.I. Lottery. (See "V.I. Powerball percentage far below U.S. average".)

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