Senator MILLER. And you would become a member of the board of VICORP, if you were Governor?

Mr. PAIEWONSKY. I automatically would become a member of the Board.

Senator BURDICK. Mr. Chairman, another question.

Will any member of your family have any interest or stock in the West Indies Investment Corp.?

Mr. PAIEWONSKY. My brother has approximately 2 percent, which he has agreed to dispose of.

Senator BURDICK. Any other member of your family?

Mr. PAIEWONSKY. No other member of my family.

Senator BURDICK. Will your brother or any other member of your family have any stock in the Riise Chemical?

Mr. PAIEWONSKY. Yes; we have; but we are disposing of that 100 percent.

Senator MILLER. I cannot hear the answer.

Mr. PAIEWONSKY. The A. H. Riise Chemical & Distillers Corp. is a family corporation owned by the members of the family, and this is a 100-percent sale to the large distiller in the United States. The entire family is disposing of its holdings.

The CHAIRMAN. The answer to Senator Burdick's question, then, is that the entire ownership of the family in that corporation will be sold?

Mr. PAIEWONSKY. Yes. The answer is "Yes."

Senator BURDICK. Do you have a buyer for it?

Mr. PAIEWONSKY. Yes, sir.

Senator BURDICK. And there will be no interest whatever remaining in your family?

Mr. PAIEWONSKY. None whatsoever, sir.

Senator BURDICK. And does that corporation have a net worth of about $451,000?

Mr. PAIEWONSKY. The Riise Chemical & Distillers Corp.?

Senator BURDICK. Yes.

Mr. PAIEWONSKY. It is much more than that, sir.

The CHAIRMAN. More than that?

Mr. PAIEWONSKY. More than that, yes, sir.

Senator BURDICK. That is all.

The CHAIRMAN. Proceed, please.

Mr. PAIEWONSKY. The West Indies Investment Company has a management contract with VICORP to plant and harvest sugarcane on two of the estates belonging to the company. This contract was entered into at the request of VICORP-which wanted to assure sufficient cane for VICORP's mill to operate. This contract is primarily an accommodation to VICORP, and is not part of the real business purpose of the company. Thus far, indeed, it has meant a loss to the company.

Here, again, to avoid any possible conflict-of-interest problem, I will dispose of my interest to an outsider, and my brother has assured me that he will do the same.

As for the rest of my holdings in the Virgin Islands, they consist of a part of the Paiewonsky family holdings: certain real estate; two theaters; certain retail stores. Of course, I would discontinue all compensation for services from any of these interests, or indeed from

any other interest, while I am Governor of the Virgin Islands if confirmed. That is a full-time job.

Senator BURDICK. Mr. Chairman?

The CHAIRMAN. Senator Burdick.

Senator BURDICK. Is one of the theaters owned by Apollo Theater, Inc.?

Mr. PAIEWONSKY. Yes, sir.

Senator BURDICK. Do you have stock in it at this time?

Mr. PAIEWONSKY. I have stock; approximately 16 percent interest in the operating company. We do not own the real estate. We just have the operating company.

Senator BURDICK. And who owns the rest of the stock?

Mr. PAIEWONSKY. It is owned by other members of the family and one outsider.

Senator BURDICK. Are you disposing of that stock, too?

Mr. PAIEWONSKY. No. I do not believe there is a conflict of interest in the motion picture theater.

Senator BURDICK. I just want an answer.

Mr. PAIEWONSKY. No.

Senator BURDICK. You are not disposing of that stock, nor is any member of your family?

Mr. PAIEWONSKY. No.

Senator BURDICK. Is the Center Theater, Inc., another theater in the town that you have an interest in?

Mr. PAIEWONSKY. Yes.

Senator BURDICK. And is that owned totally by you and your family?

Mr. PAIEWONSKY. The Center Theater is owned by myself and family, yes.

Senator BURDICK. Do you or your family intend to dispose of that stock?

Mr. PAIEWONSKY. No, we are not contemplating that, sir.

Senator BURDICK. How many theaters are there in St. Thomas? I presume that is where these are located.

Mr. PAIEWONSKY. These are located in St. Thomas. One is a modern air-conditioned theater. The other is a second-run theater.

Senator BURDICK. How many other theaters are there in the city? Mr. PAIEWONSKY. There is no other theater. The population is a small population, and there are two theaters.

Senator BURDICK. In other words, you own all the theaters in St. Thomas?

Mr. PAIEWONSKY. Well, except that in the high school auditorium they occasionally show films by certain groups, and also they hold plays there. They hold several stage productions, and they hold

concerts.

Senator BURDICK. But as to the commercial movie houses, you own them all?

Mr. PAIEWONSKY. We own the two in St. Thomas.

Senator BURDICK. You and your family are not going to dispose of your interest in them?

Mr. PAIEWONSKY. It is not contemplated, sir.

Senator MILLER. Paragraph 1, certain real estate; paragraph 3, certain retail stores are those incorporated? Are those properties incorporated?

Mr. PAIEWONSKY. Yes, sir.

Senator MILLER. What is your stock interest in those corporations? Mr. PAIEWONSKY. I own approximately one-third. There is one corporation that owns the real estate and also operates the three retail establishments as branches of that corporation.

Senator MILLER. Is that corporation engaged in real estate development?

Mr. PAIEWONSKY. It is mostly commercial property in the center of the business community. We have no property actually for land. development, if that is what you mean.

Senator MILLER. When you say "certain real estate," I was curious whether it was just lands for development.

Mr. PAIEWONSKY. No, it is commercial property which we have developed in the island, and some of the properties we use ourselves in our three retail establishments, and the others we have leased out to other merchants doing business in the Virgin Islands.

Senator MILLER. So that by "certain real estate," you mean commercial properties?

Mr. PAIEWONSKY. Commercial properties.

Senator MILLER. That are being leased?

Mr. PAIEWONSKY. Correct.

Senator Miller. And you would derive only a stockholder's dividend income from these properties?

Mr. PAIEWONSKY. That is correct, sir.

Senator BURDICK. Mr. Chairman, one more question in regard to the theater business.

Do you have a lease with the Government, or on Government land, located in the submarine base? You or any corporation in which you are interested?

Mr. PAIEWONSKY. No, sir.

Senator BURDICK. Do you anticipate or does any corporation in which you are interested anticipate getting a lease on the submarine base?

Mr. PAIEWONSKY. No, sir.

Senator BURDICK. For purposes of an outdoor theater or any other purpose?

Mr. PAIEWONSKY. There was a question of an outdoor theater several years ago, in which we did put a bid in, and we found that it was not economically feasible for the investment that was involved. After engineering surveys and other things, we withdrew from that and canceled the lease, after forfeiting the deposit payment that was made. We lost our deposit, completely.

Now, we have no intention whatever of going into such an enterprise. It is not economically feasible.

The CHAIRMAN. Do I understand that you were invited to submit a proposal and did submit it, with a deposit? You then were awarded a lease, and having been awarded the lease you surveyed the proposition and decided it was not a good business proposition and withdrew from it, forfeiting your deposit?

Mr. PAIEWONSKY. Yes, sir. The reason is that after the engineers investigated prior to construction, they found drainage from the hill. The land was filled-in land, and to put in a drive-in theater would require quite a good deal of excavation. This land already was lowland, right near the sea. And to fill it in and to bring it up to serve the purpose or the need would require a tremendous investment. Since this was leased property, on a short-term lease, we deemed it not economically feasible to go into this type of proposition.

The CHAIRMAN. And you have given up that lease entirely?

Mr. PAIEWONSKY. We have given up the lease, and the deposit was forfeited.

The CHAIRMAN. Do you have any rights on it right now?

Mr. PAIEWONSKY. No rights. They are completely canceled. It was done some time ago.

Senator MILLER. What is the name of the corporation that owns those business properties we are talking about?

Mr. PAIEWONSKY. A. R. Riise, Inc.

Senator MILLER. Does that corporation have any plans for acquisition of additional real estate or additional commercial properties or development of additional properties?

Mr. PAIEWONSKY. No. As I will read the statement, you will see what plans we have. The plans are not for the acquisition. We are trying to retire from as many of the businesses-we have been pioneers in many of the businesses, creating businesses and then selling them or turning them over to new people that would be able to come in and make a living and reside in the Virgin Islands. But we have no plans for any expansion.

Senator MILLER. Might I ask: Who are the other stockholders in this corporation besides you?

Mr. PAIEWONSKY. My brother and my father and mother. It is a family corporation.

Senator LONG. Mr. Chairman, there is a question that I would like to bring up. The record shows that at various times the Virgin Islands Legislature has authorized the issuance of government bonds to construct hotels and other business enterprises. Do you or your family have any interest in those various projects?

Mr. PAIEWONSKY. Directly; no, sir. There was an insurance group that was interested in building a resort hotel on a piece of property that we own, and they wanted to buy 20 or 25 acres of this land and to build a hotel there. But we had no interest in the hotel whatsoever, or any part of it.

Senator DwORSHAK. One more question.

Do you own any liquor stores in St. Thomas?

Mr. PAIEWONSKY. Yes, sir. That is one of the retail stores that we

own.

Senator DwORSHAK. How many retail stores are there, all together? Mr. PAIEWONSKY. I imagine there must be about 18, approximately 18.

Senator DwORSHAK. Yours is the largest liquor store on the island? Mr. PAIEWONSKY. Yes. It was a branch of the A. H. Riise firm that was established in 1938, and it was expanded under our direction. To continue with my statement-I would also resign from the Virgin

Islands Advisory Committee of the Chase Manhattan Bank and discontinue that stipend.

My continuing interest in the Paiewonsky firms and their earnings would not raise any conflict-of-interest problems, in my opinion.

If I may, I would like to make a comment here concerning our approach to our interests in the Virgin Islands.

Our family has been in the Vrgin Islands for more than 60 years. We have made it a policy to try to pioneer new business enterprise in the Virgin Islands.

We built a modern drugstore, a modern air-conditioned restaurant, a modern bakery.

These were modern in the sense that they were designed in accordance with the efficiency standards prevailing in the United States. We did not use modern decor of a flashy kind. We always tried to preserve community motifs-conscious of the fact that we were serving community needs.

In any event, the drugstore, restaurant, and bakery have all been sold and are now being successfully operated by their present owners, all of whom are actually living in the Virgin Islands and are making an effective contribution to the economy of the islands.

In course of time we expect to do the same thing with the three retail businesses still operated by the family corporation; a gift shop, a liquor store, and a stationery store.

Senator BURDICK. You have not disposed of them or made arrangements as to that yet?

Mr. PAIEWONSKY. No, sir; but our overall plan has been along this line, even before I was a candidate for Governor. That was our longrange plan. The reason for that is that my parents were very active at one time in the business with us, and within recent years my father has been very ill and at home, and my mother has also been incapacitated and can no longer take an active part in the management of the business. And therefore, as a result, we have been reducing our activities insofar as the businesses are concerned, and confining them solely to a real estate proposition on a rental basis.

Senator BURDICK. Then you intend to dispose of the gift shop, the liquor store, and the stationery store?

Mr. PAIEWONSKY. In time, yes, sir.

Seantor BURDICK. What do you mean by "in time"?

Mr. PAIEWONSKY. I mean the contemplated disposal is not a matter of conflict of interest resulting from my accepting the governorship. I said "in time." Our general policy is over the years to dispose, and to lessen the burdens of these types of enterprises that require personal supervision.

Senator BURDICK. That does not quite answer my question. You say you intend to dispose of them. When do you intend to dispose of them?

Mr. PAIEWONSKY. In the future.

Senator BURDICK. Well, 1 year, or 10 years?

Mr. PAIEWONSKY. Well, maybe within the period of 10 years. I presume by that time we will have sold them.

Seantor BURDICK. Then you will be operating those three businesses while you are Governor?