A Sweet Deal for Big Sugar's Daddies
Palm Beach's Fanjul brothers devour Domino
Alfonso--or, as he prefers to call himself, Alfy--Fanjul was on the line, wanting to talk about the sugar business. This, in itself, was nothing unusual. In his most famous call on the subject, the Palm Beach, Fla., sugar billionaire was on the phone with Bill Clinton one afternoon in February 1996, trying to persuade the then president not to support a sugar tax. It was two years later--when Fanjul saw Independent Counsel Kenneth Starr's report--before he discovered that while he was trying to bend the president's ear, Monica Lewinsky was in the Oval Office trying to get Clinton's attention in other ways. "I heard no heavy breathing or nothing," Fanjul recalled last week. "I was really handling my own business, and I didn't know anything else was going on."
Last week, Fanjul was back in the public eye, talking up his company's takeover of the Domino sugar refineries in this country from Britain's Tate & Lyle. The $180 million deal will give Florida Crystals Corp.--part of the Fanjuls' privately held holding company, Flo-Sun--control of the sugar manufacturing process from cane fields to supermarket shelves. But once again, Fanjul found his interlocutors had other subjects on their minds. Did Fanjul and his younger brother Pepe, during the presidential recount in Florida last winter, underwrite the legal fees for Secretary of State Katherine Harris, whose attorney, Joseph Klock, is also their chief counsel and spokesman? (They didn't, they insist.) And had the Cuban-born Fanjuls paid the legal expenses for the Miami relatives of Elian Gonzalez last year? (They did.) "It was a small amount," Pepe Fanjul said. "Less than $20,000."
When it comes to talking business with the brothers whose names are synonymous with Big Sugar, politics is an essential ingredient. Last week, their Domino deal sparked renewed calls on Capitol Hill for an end to the federal government's $560 million-a-year subsidy to sugar growers--an estimated $65 million of which goes to the Fanjuls. Five years ago, Florida Rep. Dan Miller failed to kill the 20-year-old subsidy, but he vows to try again this fall. Miller and others blame the program for creating a crisis in the domestic sugar industry. Facing an end to subsidies for other crops in the 1995 farm bill, hundreds of farmers tore up their wheat fields to plant sugar beets--producing a glut. At a time when sugar is selling at 9 cents a pound on the world market, the program has forced U.S. industries that gorge on the sweetener to pay domestic growers more than twice that amount.
Candyland. A report by the General Accounting Office last year estimated the scheme has cost U.S. consumers $1.9 billion in higher prices for baked goods and bonbons. Last month, Chicago Mayor Richard Daley blasted it for costing his city 8,000 jobs in the past decade, as candy makers moved offshore. But Pepe Fanjul waved off that argument. "Jobs are moving abroad," he said, "because they can make their products with cheaper labor."
The subsidy scheme has clearly sweetened the Fanjuls' sumptuous lifestyle. Since their 1959 flight from Cuba, where their family ruled the sugar industry--entertaining the Duke of Windsor and Hollywood's royalty--they have toiled to reclaim that lost glory. Their secretive web of global holdings now includes 180,000 acres of sugar cane in Florida and 240,000 more in the Dominican Republic. Still, the Cuban Revolution taught them not to leave their political fate to chance. During the last election cycle, the sugar industry contributed $3.3 million to candidates in both parties--about a third of that from the Fanjuls' own larder.
Sharing the political duties, Pepe tends to the Republicans, Alfy the Democrats--which landed him in the Starr report three years ago. But by the time he interrupted Lewinsky's Oval Office visit, he was already miffed by the Clinton administration's apparent lack of appreciation for Flo-Sun's efforts to clean up the Everglades, where its toxic pesticide runoff has been blamed for widespread degradation. Nor was he enthusiastic about the possibility of a victory by environmentalist Al Gore. Last year, Gore received only $7,750 of the sugar growers' largess, while Bush got nearly five times that amount--$36,700.
No wonder then that under Bush, Pepe Fanjul now predicts the sugar industry's prospects are sweet. Or that he admits cheering the sight of the Fanjuls' own pit-bull-style attorney, Joe Klock, at Katherine Harris's side. He claims Klock's hiring was a surprise. "Of course," Fanjul quips, "I congratulated Joe that Katherine Harris had such a good counsel."
This story appears in the August 6, 2001 print edition of U.S. News & World Report.