Wikileaks: Fanjuls among ‘sugar barons’ who ‘muscled’ lawmakers to kill free trade deal

By Michael LaForgia and Adam Playford

From the Palm Beach Post

The cables read like a political thriller: In the Dominican Republic, a “small, powerful coterie of infuriated sugar barons” was trying to sabotage a top American priority, a free trade agreement.

Growers were likely bribing Dominican lawmakers, sponsoring anti-American attack ads and paying for slanted newspaper coverage, American diplomats alleged in secret dispatches to Washington in 2004 – documents obtained by WikiLeaks and reviewed by The Palm Beach Post.

The cables outline just one side of a high-stakes and contentious debate, but they contain controversial allegations against Palm Beach County’s most influential sugar family: the Fanjuls.

The diplomats identified the Cuban expatriates as especially fierce opponents in the fight over the free trade agreement, a struggle that led to layoffs and a mill closing in the Glades.

On one side, the Fanjuls, owners of 155,000 acres in Palm Beach County and among the largest sugar producers in the world, and other Dominican sugar growers bridled at what they viewed as “heavy-handed” and “dictatorial” tactics by the U.S. ambassador and at American pandering to special interests.

On the other, the diplomats said the Fanjuls and other Dominican sugar barons threatened to land a devastating blow to a key piece of President George W. Bush’s agenda, just as he was vying for re-election.

Details of the hard-fought conflict never before have been published. A close look at the cables, and at the Fanjuls’ recent responses, offers an unvarnished glimpse at the nitty-gritty of diplomacy – and at how both sides of a controversial trade issue struggled to shape events and perceptions on foreign soil.

The State Department blamed Jose “Pepe” Fanjul, and representatives of his family’s Dominican company, Central Romana, for much of the fierce opposition to the trade deal, according to interviews and The Post’s review of hundreds of pages of diplomatic cables.

A lawyer for the Fanjul family, known for its hard-nosed business dealings and clout with politicians, dismissed the cables as “chatty gossip” and denied that the family was involved in any inappropriate or illegal dealings.

“The suggestion in these materials that lobbying and free speech activities are somehow evil and corrupt is absurd,” attorney Joseph Klock wrote in a letter to The Post.

Clash with Bush

The Fanjuls are the largest landowners and private employers in the Dominican Republic, a nation of about 9.5 million.

Likewise, their clout in America is legendary. They live in massive homes on Palm Beach, and they’re fixtures at society balls and charity events. Their lives became the rough basis for a short-lived network television series, Cane.

They’re ranked by The Land Report as the 62nd-largest private landowner in America. They own about 12 percent of all land in Palm Beach County.

Pepe Fanjul, 67, was one of a handful of donors who raised more than $100,000 for Bush’s second presidential campaign.

As he campaigned in 2004, though, the president was pushing a trade agenda that fell squarely at odds with the Fanjuls’ business interests. And a critical part of that agenda was the trade agreement, known as DR-CAFTA.

Embassy villainized

What resulted was a “titanic struggle,” according to the cables, a dramatic example of what happens when the interests of a powerful family collide with the priorities of a president it helped elect.

By September 2004, the cables said, Dominican sugar growers had mounted a fierce campaign to counter the trade deal. They were worried that cheap foreign imports would crowd out their place in the Dominican economy. They warned that the pact would spell the end of agriculture in the Caribbean nation, according to the cables.

Here’s the U.S. Embassy’s take on what went on:

As a first tactic, the sugar lobby spread rumors and bought advertisements, aiming “to shift perceptions, making the U.S. government, the U.S. ambassador and the embassy the villains of the piece,” according to a confidential cable.

Pepe Fanjul, the cable said, spread rumors that the United States was revoking the visas of those who opposed the trade deal – “a patent absurdity,” the cable said, “but one that Dominicans, with their conspiracy theories of bilateral relations, would be eager to swallow.” Meanwhile, the sugar lobby relentlessly campaigned in newspaper ads, running personal attacks on the U.S. ambassador.

At the same time, the trade deal was savaged in the Dominican press, causing the diplomats, in an unclassified cable in September 2004, to conclude: “It’s not just the search for drama that has motivated reporters. We are convinced that sugar interests are buying slanted coverage.”

Next, according to the diplomats, the sugar lobby “muscled” a tax on imported high-fructose corn syrup into a badly needed Dominican tax reform package. The diplomats saw the “protectionist measure” as a major stumbling block and began campaigning hard to repeal it.

Concluding the cable, an embassy official complained that Dominican industry had done little to counter the efforts of sugar interests, “a group everyone perceives to be motivated and wealthy enough to purchase congressional votes wholesale.”

‘Legitimate lobbying’

After reviewing the cables, the Fanjuls’ attorney wrote that the dispatches only confirm that the United States resorted to “inappropriate and heavy-handed” tactics to batter the Dominican government into compliance.

As to whether Pepe Fanjul spread stories about Americans revoking visas, Klock wrote that “such an allegation is false and completely unsupported by any facts in the cables.”

“Pepe denies ever making any such comment,” Klock said Thursday in an interview.

More broadly, Klock noted, there’s nothing improper or illegal about publicly opposing a controversial trade deal. “What these materials disclose at most is completely legal and legitimate lobbying and public relations activities.”

‘Man with the suitcase’

In fall 2004, U.S. Ambassador Hans Hertell struck back, pressing the Dominican president, Leonel Fernandez, to repeal the tax on high-fructose corn syrup, according to a confidential cable.

“You don’t have to convince me,” Fernandez answered in English. “You are preaching to the converted.”

The problem, he continued, was with the Dominican lawmakers. The Senate president “does not control the Senate on this issue,” Fernandez said. “Central Romana” – the Fanjuls’ company – “has it blocked.”

The sugar lobby, Fernandez added, was rich and powerful, and it employed “the man with the suitcase” full of money to bribe congressmen.

Companies deny involvement

Klock wrote that it is “absolutely untrue,” and he forcefully reiterated this point several times, that the Fanjuls or any employee or representative of their companies did anything illegal or improper. He also said that Central Romana doesn’t consider itself part of the Dominican “sugar lobby.”

However, he added, “the company and its executives do belong to various trade groups, some of which maintain relationships with officials in the Dominican government.”

As for “men with suitcases,” Klock wrote, “none of them have anything to do with, nor are they supported or countenanced by, our companies or the executives who run these companies – not now or in the past.”

Layoffs in Glades

As the debate roiled Santo Domingo, in America, the Fanjuls and the U.S. sugar lobby used their own tactics to fight free trade.

As in the Dominican Republic, Big Sugar predicted that the pact would mean the end of the American sugar industry. It warned that more foreign sugar on the U.S. market would drive American operators out of business.

Ahead of the 2004 elections, sugar interests spent more than $4.1 million on lobbying and gave $2.9 million to members of Congress, according to the Center for Responsive Politics. The Fanjuls gave at least $171,700.

Then, in December 2004, six months before Congress was to vote on the trade deal, the Fanjuls’ Florida Crystals company announced it was laying off 182 truck drivers in Palm Beach County.

“CAFTA and agreements like it will have significant effect on the industry,” Crystals spokesman Gaston Cantens told the South Florida Sun Sentinel at the time. “We need to make the cuts in order to remain viable in the future.”

In July 2005, the trade deal squeaked through Congress, passing the House by a two-vote margin. Two months later, the Fanjuls’ Atlantic Sugar Mill, between Wellington and Belle Glade, announced it was closing. The company blamed the trade deal.

Tax breaks approved

As the Fanjuls’ companies readied for layoffs in Palm Beach County, the U.S. Embassy kept the pressure on Santo Domingo. In December 2004, the Americans met with two key Dominican senators for an update on rolling back the “protectionist” parts of the tax reform law.

“The senators spoke with one voice: The Senate had failed four times to pass (a repeal bill) because many senators have obligations or links to the traditionally powerful sugar industry,” officials reported in a Dec. 16 cable. “Only with ‘compensating’ tax breaks would a majority of senators vote to repeal.”

The International Monetary Fund, which was aiding the struggling Dominican government, strongly opposed the senators’ plan. But the bill satisfied Central Romana, the cable said, and the following September, the Dominicans ratified the free trade pact.

In his letter, Klock wrote that Central Romana supported the tax plan “because it was in its best business and economic interests to do so, especially when faced with the heavy-handed and threatening posture of Ambassador Hertell and other embassy staffers.”

Business survives

In a November telephone interview, Hertell responded. “I acted with the utmost respect for the government and people of the Dominican Republic, and everything that we did was in coordination with them,” Hertell said. “To say that I was heavy-handed is unfair.”

In the years since the deal, the Dominican sugar industry remained alive and well. Most recently, Central Romana cranked out about 150,000 tons of sugar for export to America, where the sugar could fetch about $112 million.

Neither has the Fanjuls’ Florida business dried up, records show. But it has taken a hit: Instead of producing $1.9 billion worth of sugar, as they did between 2000 and 2005, the companies produced less in the past five years, when crops were ravaged by hurricanes and freezes.

The new figure? $1.8 billion.