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On that day I met with Mr. Dwight Avis, head of the unit, and his four principal assistants. The case is now in their hands and I ask you gentlemen, based upon all of the information which I have and will receive, is Ralph Paiewonsky fit to be Governor of the Virgin Islands? The people of the islands, other than those who have and who would profit through their association with him, believe he is not.

I thank you for your patience and consideration and stand ready to answer any questions which the members of this committee may wish to ask.

The CHAIRMAN. Are there any questions?

Senator DWORSHAK. Did you own a distillery in the Virgin Islands
at one time?
Mr. BRAUER. I run a distillery, I run the Sunfruit Products plant.
Senator DWORSHAK. How long have you owned it?
Mr. BRAUER. Seven years.
Senator DWORSHAK. Do you buy molasses from VICORP?
Mr. BRAUER. No, they won't sell it to me. They told me they were
under contract. I have to buy it from outside sources.

Senator DWORSHAK. What did they tell you?
Mr. BRAUER. It was under contract. They would not sell it to me.

Senator DWORSHAK. Mr. Paiewonsky's distillery does not buy all of the molasses that VICORP has ? Who buys the balance of it?

Mr. BRAUER. I understand Paiewonsky gets 70 percent.
Senator DWORSHAK. Who gets the 30 percent?
Mr. BRAUER. I was told that Skeoch gets quite a bit and some of it
is sold to the farmers to feed cattle.

Senator DWORSHAK. Skeoch owns the other distillery?
Mr. BRAUER. That is right.
Senator DWORSHAK. There are two big distilleries?
Mr. BRAUER. Two large ones there.
Senator DWORSHAK. You say you have one. Is it a small one?
Mr. BRAUER. A very small one.
Senator DWORSHAK. You get your products from outside ?
Mr. BRAUER. Yes, I have to buy it from the English islands.

Senator DWORSHAK. What is the nature of your operation? Do you distill rum, too? Mr. BRAUER. Yes. The CHAIRMAN. Any further questions? Senator Burdick? Senator BURDICK. Somewhere along the line I recall some testimony in which Skeoch and Paiewonsky were partners?

Mr. BRAUER. That is right, Consolidated Distilleries. That is a selling organization for both of them.

Senator BURDICK. As far as you know Skeoch and Paiewonsky take the molasses output from VICORP! Mr. BRAUER. That is correct. Senator BURDICK. With the exception of what is sold to farmers? Mr. BRAUER. That is right.

Senator BURDICK. You have never been able to buy any molasses from VICORP! Mr. BRAUER. Not a drop.

Senator BURDICK. You heard the testimony in regard to the subsidy that the legislature paid. Did you ever get any of that subsidy?

Mr. BRAUER. No, sir.

Senator BURDICK. Were you in business at that time?
Mr. BRAUER. Yes.
Senator BURDICK. Did any other distillery besides

The CHAIRMAN. Wait a minute. The yes answer could apply to
either part of his question. He said did you ever get any of the
subsidy?
Mr. BRAUER. No.
The CHAIRMAN. But you were in business at that time?
Mr. BRAUER. That is right.
The CHAIRMAN. I thought both answers were necessary.
Senator BURDICK. Who got the subsidy as far as you know?
Mr. BRAUER. Mr. Paiewonsky's distillery and Mr. Skeoch.
Senator BURDICK. No other distillery!
Mr. BRAUER. No, sir.

Senator BURDICK. Were there other distilleries in operation in the islands at that time besides yourself.

Mr. BRAUER. There was another distillery in St. Croix, the name fails me at the moment. He is an old timer there, Bruges. I don't know if he is a distiller. I know he has a plant there.

Senator BURDICK. Did you have a going active business during this period ? Mr. BRAUER. That is correct.

Senator BURDICK. During the period in which VICORP was selling molasses to Riise and to Skeoch?

Mr. BRAUER. That is right. I tried to buy molasses from them when I first came to the islands. They told me then it was under contract.

Senator BURDICK. You have never been able to buy any at any time?

Mr. BRAUER. That is right.
Senator BURDICK. You have never received a subsidy at any time?
Mr. BRAUER. No, sir.
Senator BURDICK. That is all.

Senator ALLOTT. I have one question. Is there land available for additional sugarcane production on the island of St. Croix?

Mr. BRAUER. I am not qualified to answer that question, Senator, I am sorry. I am not too familiar with St. Croix.

Senator ALLOTT. As I get the picture then there were the three or four possible distilleries on the island ? Mr. BRAUER. Well, I will name them for you. Senator ALLOTT. You have named them I think. Mr. BRAUER. There are two others there. There is the Virgin Islands Distilleries. They weren't in operation then. Then there was Ronsoro Distillery. Ronsoro and the Carlysle Distillery made some kind of contract to purchase from St. Croix sugarcane industries because St. Croix needed the business in the first place and in the second place it was more economical for them to buy on a cost-plus business I believe than distill.

Senator ALLOTT. Do you know whether these other distillers have been able to purchase from the VICORP?

Mr. BRAUER. Well, the only thing I can tell you is what Mr. Rosenblatt

Senator ALLOTT. Of your own knowledge do you know whether they have or not?

Mr. BRAUER. No. I know I couldn't buy any.

Senator ALLOTT. Do you know whether or not any of these corporations receive any of the subsidy from the Virgin Islands?

Mr. BRAUER. They did not. Senator MILLER. I would like to ask one question. The CHAIRMAN. Senator Miller. Senator MILLER. What is the name of this export-import company that you said I believe that Mr. Paiewonsky or the Skeochs owned ?

Mr. BRAUER. I am not sure of the name. I think the Riise but I am not sure. Senator MILLER. There is this Riise Chemical & Distillery Corp.? Mr. BRAUER. Yes. Senator MILLER. Is that the export-import company? Mr. BRAUER. I couldn't say. I know that everything they control as a rule is under the name of Riise.

Senator MILLER. But you do know that they control or own an export-import company ?

Mr. BRAUER. That is right.
Senator MILLER. That is all I have.
The CHAIRMAN. Senator Long.
Senator Long. No.

Senator HICKEY. Mr. Brauer, how long have you been a resident of
the Virgin Islands?
Mr. BRAUER. Seven years.
Senator HICKEY. You lived on the continent prior to that time?
Mr. BRAUER. Yes, sir.

Senator HICKEY. Did you begin your business 7 years ago in the islands, your distillery ? Mr. BRAUER. This distillery here! Senator HICKEY. Yes.

Mr. BRAUER. Well, we started putting up the plant 7 years ago. It took considerable time.

Senator HICKEY. When did you ultimately get your plant established on the island ? Mr. BRAUER. In 1953.

Senator HICKEY. Did it fall in the category of a new business or new industry at that time? Mr. BRAUER. It did.

Senator HICKEY. Did you receive any benefit from the Government as a new industry? Mr. BRAUER. Yes. Senator HICKEY. What was the nature of those benefits? Mr. BRAUER. I got a tax exemption for 75 percent because we are supposed to go into fruit juices and wines which was new. We were promised 2,500 tons of fruit per year from the various islands. Predicated on this promise we went ahead with our proposal. When we got the plant started we found we could not get 2,500 tons. We could not get 25 tons.

So then we were compelled to do whatever we could with the equipment we had available. So we rearranged our program. I went into the liquor business for which I am very well qualified.

Senator HICKEY. Then was the liquor business that you went into still in the nature of a new industry?

Mr. BRAUER. Yes, because many of the products I made were not made before.

Senator HICKEY. Did you receive as an incentive as a new industry some benefits to the liquor business?

Mr. BRAUER. Yes. I got the tax exemption which never meant anything because the company never made any money.

Senator HICKEY. What was the nature of the exemption?
Mr. BRAUER. 75 percent of the income if we made any.

Senator HICKEY. But your business never made such money to take advantage of the exemption ?

Mr. BRAUER. That is correct.

Senator HICKEY. I think you said there are four distilleries on the island ?

Mr. BRAUER. I said there are four distilleries on both islands.

Senator HICKEY. You were the only new industry in the distilling business? In that category?

Mr. BRAUER. Well, the new industry was in the fruit juice business originally, that was the intention.

Senator HICKEY. But the new industry that you are now in, have been for some time, is distilling? - Mr. BRAUER. That is right.

Senator HICKEY. Of the four distilleries on the island you are the only one that is new, is that true?

Mr. BRAUER. That is right.
Senator HICKEY. You have not made any profit?
Mr. BRAUER. That is right.

Senator HICKEY. Have you had some difficulty with the Federal officials on the island with regard to some of the things you charge against the nominee?

Mr. BRAUER. I don't quite understand that question, Senator, I am sorry.

Senator HICKEY. I understand that you charge the nominee with having converted some of the products purchased on the continent and mislabeling them after they have been shipped into the islands and then shipped out, a charge of mislabeling? Mr. BRAUER. That is right. Senator HICKEY. Have you ever been charged with mislabeling? Mr. BRAUER. No.

Senator HICKEY. Have you had any difficulties of any kind with regard to the customs officials or Federal officials or island officials since you have been there?

Mr. BRAUER. No. Senator HICKEY. Do you recall a brand known as Vat 69? Mr. BRAUER. Vat 97, you mean. Senator HICKEY. You sell a product under that label ? Mr. BRAUER. No; we made 200 cases of a product called Vat 97 and by mutual consent we discontinued manufacturing it because it was a question as to whether or not we were infringing upon another manufacturer. Rather than go into a lot of litigation on something on which we made no profit I forgot about it.

Senator HICKEY. That is all.
The CHAIRMAN. Any other questions?

ent or some inacreement witof the similar The Vat 69 peo

Senator ALLOTT. With respect to this Vat 97 there is also a liquor called Vat 96, is there not?

Mr. BRAUER. I don't know about that. I know there is 69. Senator ALLOTT. I am just 35 or 40 points off. Mr. BRAUER. I want to explain something to you, Senator. The Vat 97 we were making was not a scotch whiskey. It was an extra dry liqueur.

Senator ALLOTT. May I ask this: You said you got into some kind of disagreement or something and rather than go ahead with it you forgot it. Was your disagreement with a department of Government or was it with the manufacturers of the similar name?

Mr. BRAUER. It was with the attorney representing the Vat 69 people. So we gave a consent decree rather than go into a lot of litigation.

The CHAIRMAN. Thank you. Mr. DICKSTEIN. I was going to ask whether the committee will take legislative notice of the fact that Vat 69 is a scotch and not a liqueur because if it is I think that links with the witness' testimony.

The CHAIRMAN. That is news to all of us. None of us had any idea what it was.

Mr. LEVENTHAL. Would it be possible for this witness to remain over for further proceedings of the committee in which there are questions to be addressed to him?

The CHAIRMAN. I had not thought so. I think the committee would be the one to suggest.

Mr. LEVENTHAL. I suggest to the committee that there be addresed to him—

The CHAIRMAN. I would like to get along on this.

If we need him back we will try to get him back. If you can stay here conveniently, stay. If you cannot, well, we will have to try to get you back or have a rehearing in your part of the world. I am up against this situation

Senator DWORSHAK. Mr. Chairman, I would be reluctant to be there for fear we would not return. We would get employed in all the political manipulations.

The CHAIRMAN. Who said we were going to go there? We were going to send others. We had a situation at one time when somebody suggested to the Atomic Energy Commission, in order to find out what might happen, we should plant some people inside another country that I won't name and I asked what the dangers were. I was promptly informed that no one they had ever sent in there had ever come out.

I thought that since the suggestion came from the Republican side this was one thing we could afford to be lenient about and I agreed to name several Republican Senators to visit this country. .

But unfortunately the then able majority leader of the Republicans, Senator Knowland, felt that since it was a Democratic administration that only Democrats should look into the matter.

I never got anybody to go so we may have trouble sending a delegation down to your part of the world.

Mr. Henry Rohlsen, St. Croix businessman and former member of Virgin Islands Legislature. ;

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