Virgin Islands: A Rum Go

The U.S. Senate’s Interior Committee finally approved one of the most controversial of President Kennedy’s political appointees last week, but not without a wrangle that caused a sensation in the placid Virgin Islands and some raised eyebrows in Washington. At issue was the appointment of Millionaire Democrat Ralph Paiewonsky, 53, to be Territorial Governor of the Virgin Islands. The question: How could Paiewonsky possibly avoid conflict of interest considering the fact that his family owns the islands’ biggest rum distillery as well as wide-ranging island interests in real estate, movies, liquor, stationery and gift shops?

At the Senate hearings in Washington, Paiewonsky declared that there was no problem, since he had divested himself of all family holdings that might do business directly with the Government. He and his family had sold their $1,500,000 interest in the A. H. Riise Chemical & Distillers Corp., which buys molasses from the Federal Government’s Virgin Islands Corp. (VICORP). As Governor. Paiewonsky would sit on the VICORP board.

As matters turned out, it was not all that simple. Under sharper questioning, he testified that the family’s distillery interests had been sold to the Schenley Corp., in which he and a brother held $250,000 worth of stock. A rum-distilling competitor, A. M. Brauer, took the stand to testify that Paiewonsky had once imported Cuban rum and transshipped it to the U.S. mainland falsely labeled as Virgin Islands rum, thereby dodging $1,000,000 in taxes. “He’s totally unfit for any position of public trust,” concluded Brauer. Answered Paiewonsky: he had indeed bought 5,000 bbl. of Cuban rum, but had never shipped it to the U.S.

Down in the islands, the sound of crashing surf was temporarily drowned out by the echo of charge and countercharge. Aroused pro-and anti-Paiewonsky factions fired hundreds of messages to Washington, about 9 to 1 in Paiewonsky’s favor. Said Novelist Herman (The Caine Mutiny) Wouk, who lives on St. Thomas: “Paiewonsky is the best man.” In Charlotte Amalie, the Seventh-day Adventist Church said prayers for Paiewonsky.

Last week, two weeks of committee hearings came to an end. With the Internal Revenue Service’s Alcohol Tax Unit clearing Paiewonsky of Brauer’s accusation, with Paiewonsky swearing to divest himself of the Schenley stock, and with the White House standing pat with its choice, the committee approved Paiewonsky as Governor. The full Senate was expected to go along.