Wednesday, May 26, 2010

Fanjul family / Big Sugar influence, under the microscope... by gimleteye

The Florida Clarion is a new addition to the emerging online news market. "The Florida Clarion is the new progressive voice of Florida, an online media outlet without partisan slant or corporate bent. We'll bring you a look inside the halls of Tallahassee, the power councils of the political establishment, the unions, the county commissions, and the Washington Congressional delegation. Naming names, stating facts, and laying it out: the Florida Clarion."

Here's an early story on the Fanjul sugar interests well worth reading: "The power and wealth of the Fanjul family is enormous, so much so that they can quietly control their public image. But behind that image lies a family with a reputation for ruthlessness whose riches were made on the backs of migrant laborers and at the expense of America’s public resources and tax dollars. Without the artificial federal price supports of sugar, their industrial advantage and wealth would collapse." Click 'read more'.

Sweet Influence
18 May

Under the current system, individuals like yourself can pilfer America’s natural wealth and heritage, destroy publicly owned resources, garner subsidies in the form of below-cost natural resources and artificial price controls, poison our rivers and streams, mistreat workers, and then protect your place at the public trough by sharing your loot with public officials with payoffs disguised as campaign contributions. – Robert Kennedy Jr. to the Fanjuls

The Fanjul leaders

Gov. Charlie Crist’s efforts to acquire 72,800 acres of land in the Everglades have brought extraordinary scrutiny on U.S. Sugar and its holdings. But what of the other major sugar conglomerate, Flo-Sun Inc., which opposes this deal and has contributed roughly $23,000 to each of Crist’s main opponents for U.S. Senate in retaliation?

Flo-Sun is owned by the Fanjuls, better known as America’s first family of corporate welfare and the face of Big Sugar. They control 40 percent of Florida’s sugar crop, own the world’s biggest sugar mill, and farm over 300,000 acres of sugar cane in Florida and the Dominican Republic.

The Fanjuls produce about a million tons of raw sugar per year. The fourth-generation sugar tycoons owe their existence to the American taxpayer, who subsidizes the industry, and the Florida Everglades, which has absorbed copious farm run-off for decades. They are mega-rich, highly influential, and very savvy.

The Fanjuls are fourth-generation sugar tycoons. On their mother’s side, their great-grandfather was Jose (Pepe) Gomez-Mena, a Spanish émigré to Cuba. Gomez-Mena owned four sugar mills and was purportedly the richest man in Cuba. He was also considered the most ruthless among the sugar families. Today, Castro occupies one of Gomez-Mena’s expropriated mansions in Havana.

On the Fanjul side, according to Forbes magazine, a Spanish ancestor founded sugar-trading houses in New York and Cuba. When Pepe Gomez-Mena’s daughter Lillian married Alfonso Fanjul, Sr., who ran the Cuban trading house, the Fanjul sugar dynasty was born. Sons Alfsono Jr. (Alfy) and Pepe led lives of young sugar princes.

Their parents threw parties for the Duke and Duchess of Windsor. As wealthy industrialists, they flourished under the dictator Batista. Alfonso, Sr. considered himself above politics; an offer of ambassador was politely turned down. Castro changed everything.

In 1958, Castro expropriated the Fanjuls’ sugar empire. They lost 10 mills, 150,000 acres, and 3 distilleries. Alfonso Sr. was arrested and interrogated but eventually let go. He fled to New York where the family already owned apartments on the East Side. The family eventually joined and they settled in Palm Beach where they began to rebuild their sugar kingdom.

They bought 4,000 acres and three defunct Louisiana sugar mills that they transported to their acreage in Florida. The Army Corps of Engineers had finished draining and irrigating the Glades. In 1984, Gulf and Western’s sugar holdings came up for sale and Alfie Jr., who was now in charge after the death of his father, purchased the land. He paid $240 million for 90,000 acres and a sugar mill in Florida and 240,000 acres and a sugar mill in the Dominican Republic. Forbes reports:

When Alfie Jr. took over the Gulf and Western operation, he showed why he is feared and resented in the sugar industry. Since the Florida mill processed more sugar than its own acreage could produce, it had signed contracts with independent farmers in Florida to buy their cane, splitting the proceeds from the raw product on an agreed-upon basis. Yielding to pressure from the independent growers, Alfie raised their take from 60 to 66 % of the gross revenues. But it was not a victory without a price. FORBES was told the new contracts had an attached condition: At least some contracts provided that if the farmers did not deliver the agreed amounts, the Fanjuls would have the right to go in and farm their land for them. That would make much of that land unsalable to anyone but the Fanjuls.

Such a tactic is vintage Fanjul. They are fierce opportunists who make no friends and leave no smoking guns. One executive from Paramount, who witnessed a deal said, “They walked in the room and negotiated with Marty Davis and company and simply stole it. It was like watching Minnesota Fats walking away with the pot.

The development of the farmworkers program made the Fanjul operation take off. Under the H-2 foreign worker program, the Fanjuls could bring in thousands of migrant workers, mostly from Jamaica, to cut their cane. Cane cutting is ferocious, dangerous work.

Cutters swing machetes that routinely inflict serious injury. Only the desperately poor cut cane and, without the farmworkers program, the Fanjuls may not have been able to harvest their fields. In the Fanjul fields, workers who did not cut not fast enough were labeled “Code One,” which means “refused to work – do not rehire.” Code One workers were sent home.

The workers were at the mercy of the Fanjuls – there was no avenue to complain and seek redress for unfair or illegal working conditions. Eventually a dispute broke out, and the Jamaicans claimed they were shorted hours and pay. They alleged that supervisors consistently covered up the scheme. They filed a suit for $100 million in back pay and protracted litigation ensued. The jury eventually found for the defense.

In 1986, an episode known as “the dog war” erupted on the grounds of Okeelanta. Fanjul cane cutters refused to accept the family’s pay conditions. Police were called in and things got ugly. Workers were forcibly rounded up and taken back to the islands, without time to gather their things.

Their protest was quashed swiftly, efficiently, and quietly. In the end, the Fanjuls were never held to account for their treatment of cane cutters. By the earlies 90s, cane cutting was mechanized and the problem of dispossessed cane cutters disappeared.

In 1974, the price of sugar soared and sugar farmers overproduced. The government rushed to their aid, and the current sugar program of government subsidies and price supports took hold. The government guaranteed to sugar farmers a price double that of the world market and placed quotas on sugar imports.

Such a policy produces a windfall for the Fanjuls at the expense of American taxpayers. Without the price supports and import restrictions, their sugar would be forced to compete on the world market and the price would bottom out. Instead, they stay afloat and reap the riches of the U.S. sugar program. Hence their nickname: “the first family of corporate welfare.”

The Dominican Republic, where the Fanjuls own the world’s largest sugar mill and 240,000 acres, enjoys the highest U.S. import quota of 17 percent and as such, the Fanjuls are guaranteed a market for their sugar. Their yearly subsidy take has been estimated at $65 million. Working conditions in the Republic are reputedly ghastly.

The Fanjuls wealth enables them to wield enormous political clout. They shrewdly contribute to both parties. The Fanjuls and their companies account for 59 percent of the sugar industry’s soft money donations to both national political committees.

Alfy, a lifelong Democrat, co-chaired Bill Clinton’s Florida campaign. President Clinton invited him to an economic summit in Little Rock, and he was present at a ceremony when Secretary Bruce Babbitt announced an Everglades cleanup plan. In 1999, Alfy hosted a $25,000-a-plate dinner to support the Florida Democratic Party. Bill Clinton was among the 60 attendees.

His brother Pepe is a Republican who served as a vice chairman of the Bush-Quayle finance committee during the 1988 presidential campaign. Pepe achieved membership in “Team 100,” a distinguished club of Republican donors. He has also been a guest in the Bush White House.

Most telling of the Fanjuls’ reach, however, is found in the Ken Starr report. According to Starr, President Clinton took a call from a Fanjul during a Lewinsky meeting. The call lasted twenty two minutes.

In 1998, federal safety regulators reported serious safety lapses at a Fanjul sugar mill after an employee was caught in a conveyor belt and killed. The conveyor belt did not conform to the recommendations of the regulators, but the Fanjuls argued their system was actually safer, even though an employee died.

The Fanjuls also objected to the paltry $10,000 fine. In 2004, the Fanjuls were again cited for safety lapses when a worker lost his forearm in a drill press. The company initially balked at reporting the incident and paying the man his worker’s compensation, until inquiries from local journalists put pressure on the company.

In 1995, the Securities and Exchange Commission accused the Fanjuls of violating a pay-to-play rule through their bond underwriting firm FAIC. The Fanjuls directed campaign contributions to political candidates in Florida and Dade County shortly before they received contracts to sell bonds issued by county agencies.

The SEC contended that FAIC received $224,205 in fees from the sale of $379 million in bonds issued by the boards whose members also received political donations from the Fanjuls.

According to the Miami Herald, the bond issues awarded to FAIC included:

A $240 million offering of Metro-Dade Aviation Revenue Bonds in March 1995.
An $84.2 million offering of Florida Housing Finance Authority bonds in February 1995.
A $54.9 million FHFA bond issue in January 1995.
The Fanjuls paid a $200,000 fine and $240,000 in fees and interest.

In 1985, the EPA brought suit against a Fanjul subsidiary, Osceola Farms, for violation of the federal Clean Air laws. The EPA charged that the company ignored, for two years, notices to take preventive measures to stop the air pollution emitting from one of its boilers. The Fanjuls had been polluting at will.

In 2003, the Florida legislature caved under the weight of the sugar lobby and postponed a 2006 deadline that would have restricted the amount of phosphorous run-off from sugar farms. Phosphorous is lethal to the Everglades because it permits the growth of cattails that choke the native saw grass on which many species depend. Restoration of the Everglades requires massive phosphorous control, which the sugar mills dump into the Glades.

When the EPA approved the compliance delay, a federal district judge blocked the issuance of water-discharge permits that did not comply with the new phosphorous discharge standards. The Fanjuls intervened in the suit on the side of the EPA, but the federal judge found both the EPA and the Florida state legislature remiss in their duties to protect and restore the Everglades by postponing compliance with phosphorous discharge.

In 1999, the Fanjuls again held up Everglades Restoration. The federal government tried to buy the land owned by the Talisman Sugar Corporation, which they then planned to swap for other land that the Army Corps of Engineers needed to filter phosphorous from farm run-off. The Fanjuls sued to block the purchase. In the end, the Fanjuls received $6.5 million for 870 acres and, in return, they dropped their lawsuit.

However, this was not the end of Fanjuls-sponsored litigation. In 2005, they refused to vacate land that they leased from the South Florida Water Management District, which planned a reservoir as a part of the Everglades Restoration. The Fanjuls forced an $8 million pay-off while their competitors in the sugar industry left their lands voluntarily. In essence, the Fanjuls demanded millions from taxpayers as tribute.

In 2000, the Fanjuls ventured into power plants. Investors bought $290 million worth of bonds issued by an affiliate of Flo-Sun. The bonds paid for cogeneration power plants, which were supposed to produce energy from bagasse, a waste product from sugar production, and Florida Power and Light was supposed to buy the energy.

However, faulty equipment and mismanagement in the power plants led to unreliable energy production, and Florida Power and Light backed out of the deal. The plants went bankrupt and Florida Power and Light and Flo-Sun sued each other. The result was a $225 million settlement that Florida Power and Light passed on to its customers in the form of a 67-cent tax on their electric bills. The Fanjuls took refuge from their investors in Chapter 11 Bankruptcy proceedings.

In the sugar industry, cooperatives are grower-owned mills where growers take specified amounts of sugar cane for grinding. The Fanjuls undermined two cooperatives once they gained controlling shares.

S.N. Knight & Sons of Belle Glade filed suit against the Fanjuls and alleged that the Fanjuls acquired a controlling interest in the Atlantic Sugar Association co-op and promptly began moving cane from the co-op mill to their own mill at Osceola Farms. Subsequently, co-op revenue and member profits fell.

Likewise, the Fanjuls owned 51 percent of Closter Farms. Soon after they bought into Closter, they began grinding their cane at Osceola instead of at the Florida Sugar Cane Growers Cooperative. Closter lost $6 million in revenue over eight years. “Essentially, they’ve been feathering their own nest at Closter’s expense,” said Jim Andrassek, executive vice president of C. Brewer, which owns 49 percent of Closter Farms. (Miami Herald, October 7, 1991).

The Fanjuls’ associations are as questionable as their business practices. Frank Bernadino, the Fanjuls’ chief environmental lobbyist, is an unsavory character. In 1993, Bernadino was convicted of one count of sexual assault on a minor under 12 years of age, one count of sexual assault on a minor under 18 years of age, and one count of a lewd act on a victim under 16 years of age. He was held on $30,000 bond and was on parole from 1993-2000. In 2001, the court ordered his name removed from the sex offender list.

But in 2010, the federal government indicted Bernadino on 36 counts stemming from allegations of mail fraud, bribery and money laundering. He faces a maximum penalty of 575 years in prison and $11.5 million in fines. The federal government intends to seek forfeiture of $143,500, an amount alleged to be traceable to proceeds of the offenses.

In the late 70s, Alexander Fanjul fathered an illegitimate child with a woman named Phyllis Good. Phyllis gave birth to a son Orion and she raised him on her own because she did not want to challenge the powerful Fanjul machinery. But then her house burned down and she was forced onto public assistance.

On September 26, 1980, the State of Florida, acting in the name of the Department of Health and Rehabilitative Services, filed a complaint against Alexander Fanjul in the 15th Judicial Circuit Court for Palm Beach County, Florida to determine the paternity of the minor child Orion Paul Good and to seek to recover child support, both retroactive and prospective. Phyllis was joined as plaintiff in the 1980 paternity action.

Alexander Fanjul refused to acknowledge his paternal responsibility or his obligation of support. He forced the paternity issue to an actual jury trial, which he lost. On February 1, 1984, a six-person jury in the 15thJudicial Circuit Court of Palm Beach County, Florida, with Judge Rosemary Barkett presiding, took just 20 minutes to return a verdict declaring that Alexander Fanjul was indeed the father of Orion Paul Good.

Although the paternity of Orion was established, the Fanjuls fought Phyllis’s petition to change the last name of Orion Good to Orion Fanjul. In June 1988, Judge John Wessel barred Phyllis from exercising her statutory right to legitimize her son and change his birth records to reflect the name of his natural and legal father.

Alexander was then ordered to pay $35,600 in support, but rather than compensating Phyllis as required by Florida law for the support she provided for the first 89 months of Orion’s life, the court ordered her to establish a “Guardianship Account” for the future benefit of her child Orion Good when he reached the age of majority.

Orion was never accorded the right to live in accordance with the standard of living enjoyed by his biological father. In typical Fanjul fashion, Alexander escaped relatively unscathed.

The power and wealth of the Fanjul family is enormous, so much so that they can quietly control their public image. But behind that image lies a family with a reputation for ruthlessness whose riches were made on the backs of migrant laborers and at the expense of America’s public resources and tax dollars. Without the artificial federal price supports of sugar, their industrial advantage and wealth would collapse.


Anonymous said...

This a fascinating read and disturbing at the same time. I would suggest Kendrick give back the money but they probably have their hands in every election on every level, so it wouldn't matter!

Anonymous said...

Jose Lambiet/

Florida Crystals’ big gives back — sorta!
Posted by Jose Lambiet | busted, cash, celebrity maps, hookups, latin, politicos, scandals, west palm beach, crash |

Tags: alfy fanjul, bernie madoff, florida crystals, gaston cantens, jose lambiet's page2live, pepe fanjul, ponzi, sec, securities and exchange commission, sugar, west palm beach
| Tuesday 27 April 2010 10:50 am

Cantens in his Florida Crystals West Palm Beach office (Bill Ingram/The Palm Beach Post)
Former State Rep. Gaston Cantens, the high-profile spokesman for the Fanjul family’s West Palm Beach-based sugar empire, has agreed to pay $340,000 to creditors of his parents’ bankrupt company, which the Securities and Exchange Commission says ran a Ponzi scheme.

Cantens, 48, a Florida Crystals vice president, and his brother, Bernardo, according to last month’s SEC filing, received more than $1 million from their 71-year-old father, also named Gaston, and mom Teresita.

The gifts were listed as “consulting fees” even though no work was performed, and came as mom and dad’s Royal West Properties tanked.

For more, look below or click

The money spread around the family, spent on personal business ventures as well as the outlandish salaries that the elder Cantens and his wife paid themselves amounted to more than $20 million in seven years according to the SEC. That earned Sr. the nickname “Miami’s Little Madoff.”

Little Madoff

Cantens Jr., whose job often makes him a lighting-rod for critics of big sugar, bristled at the reference to convicted Palm Beach Ponzi schemer Bernie Madoff.

“That’s an unfair characterization,” said the younger Cantens, a Republican who represented a Miami district in Tallahassee from 1998 to 2006. A lawyer by trade, Jr. lost a bid to become Speaker of the House in 2004. “My dad’s business has been around for 30 years and is a legitimate business.”

Legit or not, Junior has to pay back some of the estimated $900,000-plus he received from Sr. over the past seven years, according to the bankruptcy papers. Cantens’ apparently got a discount for his willingness to work with the bankruptcy trustee and only has to pay back $340,000.

But to make double sure the former politico pays, the SEC has Cantens’ CityPlace apartment as collateral.

“I am going above and beyond in paying back,” said the younger Cantens. “I’m not even fighting it.”

Take from new investors to pay early clients

Pepe and Alfy Fanjul (Taylor Jones/The Palm Beach Post)
The SEC claims Gaston Sr. and Teresita made it appear, like Madoff, that it was a privilege to invest in their business. They networked at church, Miami’s Belen Jesuit Preparatory School, swanky parties at their home and on Spanish-language television. Their investors were mostly elderly and “vulnerable” Cuban Americans, according to the SEC. Some lost their life’s savings.

How did it work? The elder Cantens sold promissory notes at an interest of nine to 16 percent to develop their tracts of land on Florida’s left side. But then, as the real estate business bombed, they allegedly used money from newer investors to pay interest on older notes.

In all, Royal West may have lost $135 million, according to the SEC.

Millions lost

Cantens Jr. says it’s more like $8 million. His parents have denied they committed fraud and say they were just honest business people caught in a bad market.

When asked if the collapse of Royal West would affect his job as spokesman for Florida Crystals, which is owned by another prominent Cuban American family, Palm Beachers Pepe and Alfy Fanjul, Cantens said: “I don’t see why. This has nothing to do with my job. I wasn’t running that company.”

Cantens added that his dad, too, is now financially ruined and that he and his brother are taking care of their parents.

“Isn’t that what family is for?” Cantens said.

Rudy said...

Guys it sucks that anyone that works to hard or has to much money seems to be the devil. Why not try to make it on your own and stop talking crap about the ones that have. I say crap we live in the US let talk about Steve Case and his deals. I never heard of the fanjul family buying out a 50 year old company like time Warner for 45% of an inflated 160 billion market share.

Make it on your own, don't blame the ones that did. And if you do, move to Cuba!

Rudy Rodriguez