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Duty Free Owners Big on Political Campaign Contributions
by Dan Telvock, InvestigativePost.org
The Florida-based owners of the duty free store on the Buffalo side of the Peace Bridge are big-time operators with more than 100 stores here and abroad.
They’re also big-time donors to politicians in both the United States and Israel, with contributions topping $2 million, although none of the money has funneled into Western New York.
Their company, Duty Free Americas, stands to potentially profit by an expansion of the Peace Bridge plaza on the Buffalo side. The expansion would likely require the duty free store to relocate, presumably into bigger, better, and more profitable quarters on the Episcopal Church Home campus off Busti Avenue. Indeed, revenues have jumped all three times duty free stores have relocated over the past 20 years.
The company is owned by three brothers: Simon, Jerome and Leon Falic. The company headquarters is in Hollywood, north of Miami.
The brothers and 12 other family members have made 682 donations worth $1.76 million to numerous political campaigns and PACs in the United States. There’s a long line of recipients from both major parties, but the only one with local ties is Senator Charles Schumer, who received two $1,000 donations in 1998.
In 2012, family members donated $275,200 to candidates and PACs, including nine donations totaling $75,000 to the National Republican Congressional Committee. Contributions to individual politicians in 2012 included $20,000 to Mitt Romney, $7,500 to Michele Bachmann, and $5,000 to House Majority Leader Eric Cantor from Virginia.
Several attempts to interview company officials and the chairman of the company, Simon Falic, were unsuccessful.
Although the duty free business is highly competitive, people interviewed for this story who know the Falics said they seem to donate to politicians who are pro-Israel rather than in a position to help their company. The Falic brothers are of Lebanese-Russian origin but their parents, Fima and Nily, are from Israel.
“My personal feeling is that Israel is very important to them and any donations that they do give is more related to Israel,” said a reporter who knows the family but asked to remain anonymous.
The Falics are political donors in Israel, as well. Four family members gave Prime Minister Benjamin Netanyahu at least $45,000 each last year for his Likud Party primary campaign. According to press reports, the family donated $15,000 to Netanyahu in 2005 when he became chairman of the Likud Party.
The Falics have money to spend on campaign contributions because the company is very profitable.
The parent company, the Falic Group, owns several fragrance brands and has the worldwide license to manufacture and distribute Perry Ellis fragrances and cosmetics. The Falic Group also owns the fashion line House of Christian Lacroix.
According to a 2005 Miami Herald story, the Duty Free Americas franchise made $13 million in profit on $354.2 million in revenue.
Exactly one month after the 9/11 terror attacks, the brothers purchased what was then called World Duty Free Americas for $121 million. They acquired 86 duty free, news and gift, and specialty retail stores, as well as several gas stations and convenience stores.
They changed the company name to Duty Free Americas, which is now the largest operator of duty free stores along the United States-Canadian border with 28 outlets in nine states. The company has an even bigger presence on the US-Mexican border with 48 stores, and operates 19 international stores in Mexico, South America and China.
The company also owns duty free stores in at least 12 US airports, including JFK in New York City, Miami International Airport, and Dulles International Airport near Washington, DC.
The bidding process for duty free airport leases is a “very competitive, very open public process,” said Michael Payne, the executive director of the International Association of Duty Free Airport Stores (IADFAS). Simon Falic is a member of the IADFAS board of directors. In the US, elected state leaders typically appoint board members to airport authorities that manage the bidding process and make a final decision.
Is a lot of political influence involved in the competition for store leases?
“The people who run the airport stores in local communities certainly have relationships with airport authorities, and if you have a 10-year contract, you work very closely with the aiport authority. But again, it is a very transparent process,” Payne said.
When duty free stores bid for leases, they typically share a percentage of the sales with the public entity that is their landlord. The Public Bridge Authority has an agreement with the two duty free stores—the Falics do not own the duty free store in Fort Erie—but it refused to disclose the terms of its leases. The PBA receives a base rent and an unknown cut of sales from the two duty free stores.
Duty Free stores at the base of the bridge in Buffalo and Fort Erie account for 22 percent of the authority’s operating budget, or $7.2 million projected for this fiscal year.
The authority has not released its preliminary plans for the plaza and possible store relocation, but some in the community are concerned it could include a gas station, which could bring traffic and its accompanying fumes deeper into the adjacent neighborhood. The Falics own at least six Gastrak gas stations with duty free stores, located in North Dakota, Texas, Maine, and California.
The Morouns, the owners of the private Ambassador Bridge, earned big profits when they added a gas station to its duty free property. That bridge opened in 1929 and remains the largest border crossing for trucks and cars in North America. The Peace Bridge is the third busiest.
The Morouns added duty free gas in 2007. In an April 25, 2011, article in the Detroit Free Press, one of the owners said the gas station profits are more than a million dollars, but wouldn’t disclose the actual figure. The article estimates the profits could be as much as 60 cents per gallon that they don’t have to pay in state and federal taxes.
PBA board chairman Sam Hoyt unequivocally denied Peace Bridge plans include a gas station at the US plaza.
“I can say this: that as long as I’m involved with this authority, [a gas station] won’t be a part of the plan,” Hoyt said.blog comments powered by Disqus
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