Dec 2016 Financial News

Wrong Blend? Integrity of Trinidad Rum Called Into Question

Dec 05, 2016

PORT OF SPAIN, Trinidad, Monday December 5, 2016 – Leading Trinidad and Tobago rum manufacturer Angostura is facing possible sanctions after the company’s Board of Directors uncovered “illegal” practices that raise serious doubt about the integrity of its rum products.

The rum company has been importing heavy rum concentrate (HRC) from Cuba and South America and repackaging it to Caribbean Community (CARICOM) neighbours without substantial changes, according to documents obtained by the Trinidad Express newspaper.

Under the law, the company is required to fully process and age HRC – which is the initial distillation from the fermentation of sugar cane molasses – before it is repackaged and sold to the export market.

One source told the Trinidad Express that the company, which has a rum import licence, is only allowed to sell the product on the local market.

The action violates the European Union’s rules of origin with regard to rum blending integrity and the company could be slapped with fines pending the outcome of an audit into the transaction being performed by PricewaterhouseCoopers.

The Board of Directors first discovered the practice back in August after management made a request for $16.5 million to purchase HRC to meet its rum production quota for 2016 and early 2017.

According to board minutes, “the board observed that the aforesaid practice amounted to an illegal act and indicated its strong disapproval that management would attempt to ask the board to approve the purchase of HRC to produce rum intended for export, in breach of the law.”

The board deemed the practice “fundamentally improper”, despite suggestions that action was need to maintain $12.9 million in revenue, warning that it would lead to serious consequences.

“The board stated that the noncompliant practice risked an audit that would highlight the trace­abi­lity challenges, expose the breach, resulting in fines, causing: em­barrassment to the country; decline in brand value; decline in sales; decline in shareholder value and even courting litigation which would cause a further decline in shareholder value,” the document said.

The company formally placed Chief Executive Officer Robert Wong on official leave last Thursday. He has been off the job since September.

In the interim, Executive Manager of export and business development Genevieve Johan will assume Wong’s post.

Wong told the Trinidad Express he was innocent of any wrongdoing: “I won’t comment just yet. I am not guilty of anything. It’s unfortunate. I am not sure what the motivation is. I understand the present board wanted a changing of the guard and we had discussed it, but that action didn’t go through.”

Angostura, which also manufactures its popular aromatic bitters, posted $458.2 million in revenue for the third quarter of this year, 5.6 per cent higher than last year.

Sales over the same period has amounted to $26.6 million, exceeding that for the same period in 2015.

Source:
Caribbean360
Monday December 5, 2016

http://www.caribbean360.com/business/wrong-blend-integrity-trinidad-rum-manufacturers-products-question