Reservoir deal may pay Fanjuls $8 million Thursday, December 15, 2005
By Robert P. King
Palm Beach Post Staff Writer

KEY LARGO - Six years ago, state and federal taxpayers spent $152
million to buy a Cleveland-sized swath of western Palm Beach County
farmland to rescue the Everglades.

But before taxpayers can use that land, Palm Beach's sugar-growing
Fanjul family wants a little something extra.

Make that an extra $8 million.

That's the expected cost of a four-year land management contract that
South Florida water managers tentatively awarded Wednesday to
Fanjul-owned companies including Florida Crystals Corp. The management
contract, plus other goodies in the deal, would persuade the Fanjuls to
drop their fight to keep farming on land where the South Florida Water
Management District wants to start building a 17,000-acre reservoir
next year.

The Fanjuls don't own the land, which the district and the U.S.
Interior Department acquired in a complicated $152 million deal in 1999
after buying out the former Talisman Sugar Corp. But the Fanjuls'
companies and other growers have been farming the land under
inexpensive leases with the district.

Those leases were supposed to end when the district was ready to start
construction. But the two sides can't agree on what "ready" means - and
unlike the other growers, the Fanjuls have refused to walk away
empty-handed.

Both sides called the new deal preferable to tying up the land for
years in court. But neither claimed victory.

"This is not a good deal for Florida Crystals," said engineering
consultant Dan Shalloway, who represented the company at a water
district meeting held in an oceanfront resort in Key Largo. He said the
company would make more money if it kept farming the land, "but the
district has pretty much laid it out that it's either this deal or a
lawsuit."

Meanwhile, district board member Mike Collins said the agency's staff
had assured him six years ago that water managers could take back the
land when they needed it - only to have it turn out, years later, that
the Fanjuls read it differently.

"I am a long way from being happy about it," said Collins, of
Islamorada, who signed the original Talisman agreement when he was the
board's chairman. Still, he said, "The critical issue here is getting
this (reservoir) built on time."

Charles Lee, senior vice president for Audubon of Florida, agreed.

"The important thing is getting the earth moving," he said. "If it
takes $8 million in tribute to do that, that might be unfortunate."

The Talisman deal gave the district more than 45,000 acres in the heart
of western Palm Beach County's sugar-farming region - land so crucial
to the $10.5 billion Everglades restoration that then-Vice President Al
Gore personally announced the purchase in late 1997. Besides holding
water for the Everglades, the reservoir is supposed to lessen the glut
of polluted water plaguing Lake Okeechobee and the St. Lucie River.

But while applauding the original deal, environmentalists long have
fretted that growers were plotting to hold onto the land forever.

The dispute between the district and the Fanjuls is partly a matter of
timing: The district plans to start building the reservoir next year
and finish it in 2009. That's years sooner than the Fanjuls had
expected, Shalloway said, giving them less time to earn money from farming
there.

Meanwhile, Shalloway said, the Fanjuls insist that the lease requires
the district to work out a detailed agreement with the federal
government before it can build the reservoir - a step that first
requires approval from Congress. But Congress has failed to approve
some Everglades projects in recent years, prompting the district to
decide to build the reservoir by itself.

Shalloway said the district refused to pay the Fanjuls outright for
ending the lease. Instead, the deal OK'd Wednesday calls for Florida
Crystals to maintain canals, take care of pumps and perform other
services on the land it's vacating. The district would have had to hire
someone to do that job anyway, Deputy Executive Director Ken Ammon said.

The Fanjuls also would receive a district lease allowing it to farm
2,800 acres nearby.

Information on the Fanjul Family and the internet link to it.

Jose “Pepe” Fanjul and older brother Alfonso “Alfy” Fanjul were watching the 1958 New Year’s Eve fireworks at the Havana Yacht Club when they learned that Batista had fled from Fidel Castro’s advancing troops. The sugar empire that Castro expropriated from the Fanjul family included 10 sugar mills and 150,000 acres. Fleeing to Palm Beach in 1960, their father plowed back into the sugar business. After the elder Fanjul died in 1980, Alfy launched an acquisitions binge, gobbling up the Florida and Dominican sugar holdings of Tate & Lyle and Gulf & Western. Florida Crystals Corp. and subsidiary Flo-Sun yielded the Fanjuls a $500 million fortune, with Jose buying a Palm Beach mansion previously owned by the Nazi arms-merchant Krupp family. A 1998 Time Magazine expose dubbed the Fanjuls “the First Family of Corporate Welfare.” The Fanjuls get about $64 million a year from U.S. taxpayers because Tio Sam guarantees U.S. sugar producers a price that is double the world-market price. Florida’s sugar industry owes its very existence to corporate welfare, since the federal Army Corps of Engineers drained the Everglades in the early 1900s to create farmland. The sugar industry employs an army of lobbyists (see Wayne Berman and Charles Evers) to protect its massive federal subsidies, repel foreign sugar imports and block Everglades restoration schemes. But as huge donors to the Republicans and Democrats, respectively, Jose and Alfy carry the most heft. Hours after then-Vice President Al Gore proposed an Everglades-restoration sugar tax in 1996, an angry Alfy got a call through to the president—during a Monica Lewinsky tryst. Gore’s plan floundered. Led by Pioneer J. Nelson Fairbanks of U.S. Sugar, the industry aborted a similar Florida ballot initiative the same year by spending $24 million--the most expensive political campaign in state history. The industry’s phosphorous runoff is killing the remains of the Everglades. Florida Governor Jeb Bush signed the Everglades Restortation and Investment Act in a 2000 Everglades photo-op with politicians, environmentalists and the sugar industry’s Jose Fanjul, Jr. and Pioneer Robert Coker of U.S. Sugar. “There are certain milestones in our careers and lives where everything comes together and we recognize that we have actually done something of lasting importance,” the governor said. That “lasting importance” lasted three years. Governor Bush signed a new law in 2003 to delay cleanup plans by as much as 10 years. The industry lobby also stalled White House trade negotiations with sugar-producers Austrailia and Central America in 2003 and 2004. While the Fanjuls produce sugar in both Florida and the Dominican Republic, the Dominican Republic enjoys the largest U.S. sugar quota—and the Fanjuls are its top producer.

THE POLITICS OF SUGAR
http://www.opensecrets.org/pubs/cashingin_sugar/sugar08.html

S U G A R ' S
F I R S T   F A M I L Y

With 600,000 acres of sugar cane fields and sugar mills producing 1.8 million tons of raw sugar every year, the state of Florida provides a quarter of the sugar produced in the United States. Louisiana, Hawaii, and Texas are also sugar cane states, but none of them surpasses Florida.

Florida is also home to the Everglades, the wetlands that once stretched for hundreds of miles in a "river of grass," Florida environmentalist Marjory Stoneman Douglas's poetic phrase. Florida loses five acres of wetlands a day, according to the Department of Interior, and at least part of the reason is pollution from sugar cane fields. It is not a huge stretch to argue that the same federal price-support program that bolsters Florida sugar cane growers contributes to the degradation of the Everglades. And it should come as no great surprise that these same sugar magnates have used all the clout their political money brings, both at the national and local levels, first to resist a cleanup and second to avoid paying for it. So far, they have, in large part, succeeded. Federal and state tax money is paying most of the price tag for what Florida environmentalists call a weak cleanup plan. From Tallahassee to Washington, sugar cane knows how to work its connections to get what it wants.
MEET THE FANJUL FAMILY To understand the power of Florida sugar, it is illustrative to look at the very wealthy, very private members of the Fanjul family of Florida. With an enormous sugar empire that dwarfs even the U.S. Sugar Corporation, the Fanjul family's sugar holdings in Florida and the Dominican Republic total more than 400,000 acres, operated by a family of companies under the corporate umbrella of Flo-Sun, Inc. Four brothers -- Alfonso "Alfie," José "Pepe," Alexander, and Andres -- are the principal owners and managers of Flo-Sun. The Fanjuls are Cuban-American descendants of the wealthy Gomez-Mena family of Cuba, which controlled much of the American-dominated sugar industry in Cuba until Fidel Castro seized power, and the New York-based Fanjul family. Matriarch Lillian de Fanjul and her four sons make their home in exclusive Palm Beach, Florida, an hour's drive and a world away from the gritty sugar plantations of western Palm Beach County. Unlike U.S. Sugar Corporation, its Florida rival, whose offices are smack in the middle of Clewiston's sugar fields, Flo-Sun is headquartered in a posh complex in Palm Beach. The Fanjuls themselves live in multimillion-dollar mansions set among the palm-tree-lined streets of the town. With their wealth conservatively estimated at several hundred million dollars (Forbes magazine puts the figure at $500 million), the Fanjuls can afford to spread around lots of political money. And they do. Family members, corporate executives, the corporations themselves, and the Florida Sugar Cane League PAC have contributed $2.6 million to political candidates and committees since 1979. (Until mid-1994, the Fanjuls and executives for Fanjul companies accounted for an increasing share of the Florida Sugar Cane League PAC's funds, from 20 percent in 1980 to 62 percent in 1992. While the PAC is still filing reports with the FEC, there has been little actual activity, with only $38 listed as receipts since October 1994.) Fanjul family members alone gave direct contributions of $359,505 to more than 172 congressional candidates of both parties. That is just the "hard" money. The Fanjuls also give substantial "soft money" contributions to political parties. In fact, the Fanjul family and its companies account for 59 percent of all the soft money given by the sugar industry to the national party committees since 1991. The Democratic and Republican parties alike are beneficiaries of Fanjul largesse. Alfie Fanjul, one of the four Fanjul brothers who controls Flo-Sun, is a lifelong Democrat. He served as co-chairman of Bill Clinton's Florida campaign, and co-sponsored a Cuban-American fund-raiser at Victor's Cafe in Miami that reportedly raised more than $100,000 for Clinton's 1992 presidential campaign, according to The Wall Street Journal.¹ In addition, Fanjul-controlled companies have contributed $131,000 to the Democratic National Committee and the Democratic Congressional Campaign Committee since 1991. After Clinton won, Fanjul was invited to attend the president-elect's "economic summit" in Little Rock, where he occupied a place three seats away from Clinton and Vice President-elect Al Gore and next to future Treasury Secretary Lloyd Bentsen. Alfie Fanjul later appeared with Interior Secretary Bruce Babbitt at a ceremony announcing an Everglades cleanup plan. His brother, José "Pepe" Fanjul, is a Republican activist who served as a vice chairman of the Bush-Quayle finance committee during the 1988 presidential campaign. In 1988, Pepe Fanjul was also a member of "Team 100," the group of people giving $100,000 or more to the Republican Party. In 1990, he was a guest in the Bush White House. Since 1991, Fanjul-controlled companies have contributed more than $186,500 in soft money to Republican national committees. More recently, Pepe Fanjul joined the finance committee of Sen. Bob Dole's (R-Kan.) presidential campaign. There's nothing unusual about the Fanjul family's extensive political contributions, according to Jorge Dominicis, a vice president of Flo-Sun, Inc. Dominicis was interviewed by a researcher for the Center for Responsive Politics in August 1994. "People who are powerful contribute and have access to political leaders," Dominicis said. "You contribute to people with whom you've had a relationship in the past. It's not hard to figure out who to give money to. Tom Lewis [R-Fla.] has been very helpful. And it doesn't take much to realize that Charlie Rose [D-N] is chairman of the subcommittee that handles your issues. It's all part of the process. It keeps you from being forgotten or not having access to that office. If you're a large company and you don't contribute, you have a tough time. Members conclude that you don't support them." Over the years, the Fanjuls have enjoyed high-level contacts with the Reagan, Bush and Clinton Administrations, key members of Congress, and most of Florida's political establishment. Former Commerce Secretary Robert Mosbacher is a family friend, and during the Bush Administration, the Fanjuls and Mosbacher spent a lot of time together, including vacations at a Fanjul-owned resort in the Dominican Republic. In February 1994, according to the Palm Beach Post, Alfie Fanjul paid $5,000 to attend a fund-raising dinner organized by the Democratic Senatorial Campaign Committee for Sen. Bob Graham (D-Fla.), and even offered the use of his yacht Crili to attendees. The Fanjul sugar operation is spread out over a number of large farms in the Everglades Agricultural Area around the southern edge of Lake Okeechobee. It includes Okeelanta Corporation, Osceola Farms, the Atlantic Sugar Association, King Sugar Corporation, New Hope Sugar Company, Closter Farms, and more. The company also grows rice and corn, and this year Flo-Sun began building a $200 million cogeneration power plant that will burn waste products of sugar cane and sell electricity to Florida Power & Light Company. Flo-Sun operates both sugar mills and a sugar refinery that turns out ready-to-eat sugar that's sold directly to consumers. At the company's Okeelanta facility, tens of thousands of 100-pound bags of sugar are stacked to the ceiling, awaiting shipment to supermarkets. Still more of the refined sugar is packed into sacks bearing the label of Flo-Sun's own brand, Florida Crystals. Profitable though Flo-Sun is, it is impossible to say exactly how profitable. Like U.S. Sugar Corporation, Flo-Sun is a privately held company, and its spokesmen won't comment on its balance sheet. Thanks to the work of the General Accounting Office, however, it is possible to estimate the value to Flo-Sun's bottom line of the federal price-support program for sugar. The GAO estimates that the sugar program translates into about five cents for each pound of sugar produced in the United States. Taking Flo-Sun's output of 650,000 tons of sugar, that means that about $65 million per year goes directly to the Fanjuls' bottom line as a result of the price-support system. A more complicated calculation, taking into account the acreage, its milling operations, and apportioned benefits, was performed by the staff of Rep. Dick Armey (R-Texas). It also arrived at benefits of $65 million. Florida environmentalists have produced an estimate that is even higher -- some $85 million in benefits to the Fanjul family, or as much as $125 million if the profits they earn from their Dominican Republic business are included. (The Armey estimate does not include any calculation of what the Fanjuls earn from their Dominican Republic holdings. According to George Barley, a Florida real estate businessman and chair of Save Our Everglades and several related Everglades preservation organizations, the import part of the U.S. sugar program allows the Fanjuls to import sugar into the United States from the Dominican Republic and sell it at a higher price than they would get on the world market.) Even sticking to the GAO's conservative figures, however, Flo-Sun's $65 million in yearly benefits represent about 12 percent of all of the benefits to sugar cane and sugar beet growers nationwide as a result of the U.S. sugar program. Considering that Fanjul family members and officers of their companies have contributed about $1.2 million in campaign contributions over the past decade, that is not at all a bad return on their investment. The Fanjuls are the largest, richest beneficiaries of the federal sugar program. But they are far from the only beneficiaries in Florida, and are hardly the only campaign contributors. A series on the sugar industry in the St. Petersburg Times in 1994 estimated the benefits received by Florida sugar cane concerns. Many of these companies are also campaign contributors. For example, A Duda & Sons, which received an estimated $20 million in benefits from the sugar program, has contributed $155,425 to federal candidates, political committees, and presidential campaigns since 1979, $6,000 in soft money to national parties, and $33,140 in soft money to Florida state political parties. Hilliard Brothers of Florida, which received $1.6 million in federal benefits, contributed $90,773 to federal candidates, political committees, and presidential campaigns; $1,000 in soft money to national parties, and $1,200 to Florida state political parties.

The Florida sugar cane industry's campaign contributions may have helped to preserve the federal price-support system for sugar. This political capital, both at the national and state levels, has also been helpful for another fight: the battle over the Everglades.