The government of the United States Virgin Islands filed a lawsuit against the Hess Corporation on Monday, alleging that the company broke its contract with the territory when it decided to close down an oil refinery on St. Croix.
The office of USVI Governor Kenneth Mapp issued a statement on the suit the day it was filed, explaining that it’s seeking $1.5 billion in damages, a figure that covers at least $150 million per year in benefits allegedly owed to the territory’s citizens over the period from when it shut down in 2012 to when its contract expires in 2022.
Hours after the suit was filed in the Superior Court in the USVI, the Hess subsidiary that ran the St. Croix refinery filed for Chapter 11 bankruptcy, allowing it to pursue the sale of the complex for use as a storage facility, according to the Associated Press.
The USVI’s complaint alleges that Hess conspired to strip the facility’s assets in order to leave the government with claims against a broke, polluted and inoperable refinery, the AP reported.
The USVI also charges the company with criminal misconduct, alleging that it broke the Corrupt Organization Act and various other laws, according to Mr. Mapp’s office.
“This is not about a business disagreement. It is about Hess breaking the law,” Mr. Mapp said. “The territory of the Virgin Islands expect that the law is followed by every entity that does business here. Hess violated the law and its obligations to the people.”
Hess is denying the allegations.
“We believe this suit is wholly without merit,” a spokesperson for Hess reportedly told the AP.
According to the communications director for Mr. Mapp’s office, Kimberly Jones, the Hess oil refinery was established on St. Croix in the mid-1960s as a long-term commercial relationship involving the construction, maintenance and operation of the facility in exchange for “significant tax benefits for Hess” from the USVI legislature.
The agreement was reportedly renewed in 1998 with a legal obligation through 2022.
“Without any advance warning, John Hess, the CEO of the Hess Corporation, notified the government in January 2012 that the company would shut down the refinery within a month, violating the law that dictated operations through 2022,” Ms. Jones stated.
As a result of the shutdown, thousands of jobs and more than a quarter of the island’s income were lost, Ms. Jones stated, adding that the corporation was also fined $40 million for environmental violations at the time.
Ms. Jones stated that the government of the USVI had tried to reach an agreement with Hess to have the company sell its refinery so it could continue to operate. As recently as 2013, the corporation was given extra time to find a buyer, but the corporation did not do so, she explained.
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