A sweet deal: The royal family of cane benefits from political giving

This is the second story in a two-part series. Read the first story, about the working conditions of the cane cutters on Dominican sugar plantations violating labor law, here. 

WASHINGTON — Charlotte Ponticelli used to work for the State Department, but when she describes a recent visit to sugarcane plantations in the Dominican Republic, she ditches the diplomat speak.

“What I saw made me sick,” she says of the laborers’ living conditions. “[The cane workers] were skeletons wearing rags. One old man told us, ‘We have no access to anything from our pensions.’ They had worked for 40 to 50 years, and nothing … I wanted to cry all the way home. I thought, ‘After … all this work, this is how these people live?’”

By “all this work,” Ponticelli means the United States Department of Labor’s push to improve conditions for cane workers in the DR, one of the top sugar exporters to the U.S. As part of the Dominican Republic-Central America Free Trade Agreement, or CAFTA-DR, which went into effect in the Caribbean nation in 2007, signatory countries were required to enforce their own labor laws. The deal was promoted as a tool to improve worker conditions — just as the Trans-Pacific Partnership agreement is being advertised now — but such promises are frequently broken. Four years into CAFTA-DR, an activist priest filed a complaint under the treaty about an alleged “laundry list” of abuses on Dominican sugar plantations, from work-hour and wage violations to unhygienic living conditions. Ponticelli, who previously headed the DOL’s Bureau of International Labor Affairs, facilitated meetings between Rev. Christopher Hartley and her old staff in Washington.

In 2013, after a two-year investigation, the department issued a report expressing concern that the Dominican government might be failing to protect sugar workers. The report was followed by three reviews, one every six months, that found working conditions still lacking. But as the DOL pushed for reform in Dominican sugar, members of Congress and other politicians maintained lucrative relationships with the royal family of cane: the Fanjuls.

The four Fanjul brothers have an outsize presence in both the Dominican Republic and the United States. In the DR, their American company, Central Romana, produces most of the country’s sugar. In the U.S., the Fanjuls also grow cane and spend heavily in Washington, ranking among the sugar industry’s top political donors and biggest spenders on lobbying. As big players in both countries, they benefit from a highly profitable combination of factors: In the DR, Central Romana pays some of the lowest wages in the country, produces most of the country’s allotment of sugar exported to the U.S. and, thanks to CAFTA-DR, pays dwindling tariffs for those exports. Meanwhile, in the U.S., the Fanjuls sell their sugar at sometimes two to three times the global market price, thanks to import limits and price supports.

Political contributions by cane and beet sugar industries to congressional candidates

Source: Center for Responsive Politics

Sugar is “more dependent on government support or protection than any other agricultural industry in this country,” says Daniel Pearson, senior fellow of trade policy studies at the Cato Institute, a libertarian think tank. “Government has tended to look out for them, so it is a symbiotic relationship.” The price support system, known as the sugar program, is reinserted into the U.S. farm bill every time it comes up for renewal. The program limits the amount of sugar on the U.S. market, whether imported or grown domestically, to keep prices higher than they are everywhere else. And if there is a glut in the market, the U.S. government buys the surplus, which can cost taxpayers hundreds of millions of dollars.

Critics of the program claim the elevated prices constitute a redistribution of money from consumers to wealthy sugar companies and that they have driven thousands of candy-making jobs out of the country. Still, the program continues, and according to Pearson, the elevated sugar prices add billions to consumer costs. In the face of efforts by some legislators to reform the sugar program, cane and beet growers say the U.S. sugar policy is needed to keep the domestic sweetener competitive and has allowed for the creation of thousands of jobs.

'Sugar Program' ensures prices in the U.S. are higher than in the rest of the world

Source: United States Department of Agriculture Economic Research Service 

As exporters to the United States, the Fanjuls have some objectives that the rest of the U.S. sugar industry doesn’t. “They have a balancing act in lobbying,” says Vincent Smith, a professor of agricultural economics at Montana State University and visiting scholar at American Enterprise Institute, a conservative-leaning think tank. According to Smith, the Fanjuls have an interest in limiting imports on sugar to keep domestic prices high, but also for the DR to have the highest proportion of those imports. The tariff rate quota, or TRQ, is the amount a country can export to the U.S. with reduced tariffs. The DR is consistently among the top exporters of sugar to the U.S., and it has the highest TRQ of any country, taking 17 percent of the share. (Brazil is second with 13.7 percent.) Sixty-three percent of the DR’s quota is allocated to the Fanjuls’ company, Central Romana.

Still, what the DR exports to the U.S. is not enough to depress domestic prices. In recent years, the Caribbean country has been far from filling its TRQ because of reduced production due to drought and increased exports to Europe. But even if it did, that wouldn’t lower the price of sugar in the U.S., say analysts. Most of the sugar Americans consume is produced domestically, and the big import threat comes not from the DR, but from Mexico — which is exempt from quotas under the North American Free Trade Agreement. In their lobbying on NAFTA, the Fanjuls’ Florida Crystals and other domestic producers have the same interests. Last fall, U.S. sugar was able to convince the Department of Commerce to impose a tariff on Mexican sugar imports in an ongoing anti-dumping case, in which U.S. sugar representatives claim, ironically, that Mexico is violating NAFTA by subsidizing its sugar. (The tariffs were struck down last winter but replaced with a price floor.)

Source: FEC, Center for Responsive Politics
*Note: Since 2009, employees of Florida Crystals have collectively donated $81,000 to Marco Rubio, and are among his top five donors.
*Note: Because of a lack of clarity in FEC data, this count excludes roughly $200,000 in donations that could have come from either José "Pepe" Sr. or José "Pepe" Jr. 
**Note: Because of a lack of clarity in FEC data, this count excludes roughly $200,000 in donations that could have come from either José "Pepe" Sr. or José "Pepe" Jr. 

In January, Bill and Hillary Clinton visited their old friend and campaign donor Alfy at Casa de Campo, the Fanjuls’ 7,000-acre residential resort in the DR, where the Fanjuls have a second home. The resort’s website says that over dinner they chatted about Hillary’s possible presidential run.

In addition to the Clintons, Casa de Campo has hosted both George Bushes and Donald Rumsfeld, as well as Beyoncé, Kim Kardashian and Sen. Bob Menendez of New Jersey. According to an April corruption indictment, Menendez was repeatedly flown to Casa de Campo on the private jet of his friend Dr. Salomon Melgen, who has a house there and with whom he stands accused of swapping favors.

Casa de Campo, which Dominican-American author Junot Díaz once called “The Resort That Shame Forgot,” is one of Central Romana’s signature properties in the DR. As the Fanjuls have expanded their Dominican business beyond sugar, Central Romana has become a significant player in tourism and real estate. Here, more than 80 houses are on sale for millions of dollars apiece, including a mansion for $19.5 million that features an elevator, a museum, a gym and a private beach. The over-the-top wealth of Casa de Campo’s predominantly white residents and visitors is also on display in the pages of CasaLife magazine, the resort’s English-language glossy, with photos of VIP parties and sporting events alongside advertorials for cigars, yachts and private jets.

The contrast between Casa de Campo and the conditions in cane plantations just outside, where cane workers, most of whom are immigrants, make a few dollars a day and live in tiny homes without electricity, is stark. But are those conditions illegal? According to the U.S. Department of Labor, there are many reasons to believe they are. The fact that, as Ponticelli notes, there are elderly cane cutters who paid into social security but have been unable to access their pensions is only one of several problems cited in the DOL report. Other concerns include excessive work hours; children toiling in the fields; workers not getting health and safety protections and making too little money to eat; and conditions that the DOL says could constitute forced labor. But the Dominican government and sugar industry have denied these allegations, so the DOL is reduced to conducting inspections, reaching out to individual government and industry leaders and performing the semiannual reviews — with little response.

Critics say that’s because the sanctions allowed under CAFTA-DR are so minor that the interested parties tend to see more benefit in protracted negotiation than in confrontation. “There’s always a little bit of a mention of the labor standards, but there’s no teeth in any of these agreements,” says Brian Finnegan of the AFL-CIO International Department. The AFL-CIO opposed CAFTA-DR but, after it was passed, joined forces with Guatemalan unions to file a complaint under the deal about the treatment of workers there. Last fall, after more than six years, that case made it to the arbitration phase — the furthest any labor case has ever made it under a U.S. trade deal. Still, Finnegan is not confident that a win would bring change.

Charlotte Ponticelli, meanwhile, is convinced the United States can and should be doing more. “If you have international agreements, you should be able to verify compliance,” she says. “Otherwise the agreement isn’t worth the paper it’s printed on.”

Living conditions on Central Romana’s plantations are not necessarily the worst among Dominican sugar growers. They’re generally more likely to have functioning latrines, potable water, primary schools and adequately constructed homes than the independently owned plantations from which the company buys its cane. And one cane cutter pointed to Lian Fanjul de Azqueta’s local charity, which runs three schools, as proof that the family is made up of people “with a good heart.”

If the workers don’t blame Central Romana or the other sugar companies for their grinding poverty or shabby living conditions, the U.S. Department of Labor doesn’t single them out, either. Finnegan wonders what would happen if it did. “What can the U.S. do with a U.S. company like that?” he asks.

Meanwhile, last fall Obama announced that his administration is developing a national action plan to ensure that U.S. companies uphold certain standards overseas, including respecting the human rights of their workers. Finnegan says that what the government is doing is “a step in the right direction,” as long as — unlike with CAFTA-DR — those standards are binding. But Eston Pierre, a 63-year-old cane cutter on a Central Romana plantation, is fatalistic. When asked who has the power to change his working conditions, he points to the sky and says, “Only God.”

Editor’s note: This article has been amended to reflect that elevated sugar prices in the U.S. add billions of dollars to consumers’ costs, not to sugar companies’ profits. We regret the error.

Additional reporting by Euclides Cordero Nuel.

Reporting for this article was funded by a grant from the Fund for Investigative Journalism.