Summary: The General Accounting Office has made a review of the sale of electric power and salt water distillation facilities, owned by the Virgin Islands Corporation, to the Government of the Virgin Islands. Our review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 531, and the Accounting and Auditing Act of 1950 (31 U.S.C. 67). We reviewed a private engineering firm's appraisal report on the facilities, appraisal review procedures of the General Services Administration (GSA), pertinent laws and legislative history in support of such laws, and the action taken by the Corporation's Board of Directors to dispose of the facilities. This review was made because we had noted, during our audit of the Virgin Islands Corporation, certain circumstances which led us to question the fair market value assigned to the facilities and the legal authority cited for the disposal of the facilities.
We are presenting in this report, for the information of the Congress, the details, circumstances, and legal background which gave rise to our opinion that section 4(f) of the Virgin Islands Corporation Act (48 U.S.C. 1407c (f)) did not provide authority for the disposal of the electric power and salt water distillation facilities. Our report also describes the subsequent actions by the Virgin Islands Corporation and the General Services Administration, which have resolved our objection to the legal authority for this disposal. In addition, our report includes comments concerning the adequacy of the appraisal of the electric power and salt water distillation facilities that was obtained by the General Services Administration and the need for improvement in appraisal evaluations by the Administration's appraisal review staff. On May 28, 1965, the Virgin Islands Corporation entered into an agreement for the sale of its electric power and salt water distillation facilities to the Government of the Virgin Islands, citing as its authority section 4(f) of the Virgin Islands Corporation Act, for $6.5 million which was the amount at which the facilities had been appraised as of September 30, 1964, by a private engineering firm employed by the General Services Administration, This amount was adjusted to reflect changes in plant investment and current assets between September 30, 1964, the appraisal cutoff date, and May 3 1, 1965, the transfer date. The adjusted price established pursuant to provisions of the contract of sale was $7,296,765 and resulted in a net loss, recorded in the Corporation's accounting records, of $2,861,119.
