By Dawn Chmielewski
(Reuters) -The board appointed by Florida Governor Ron DeSantis to oversee Walt Disney (NYSE:DIS)'s theme parks accused the company of giving a previous local board and its employees millions of dollars' worth of tickets, discounted hotel stays, merchandise and other benefits that were "akin to bribes of public officials."
"For years, the company treated district employees like Disney employees by, for instance, providing complimentary annual passes and steep discounts -- benefits and perks that were akin to bribes," said the 80-page report, which the new board was required to prepare for DeSantis and the Florida legislature within one year of its creation.
"Not surprisingly then, the district's employees believed that it was in their job to prioritize the interests of Disney."
The state legislature established the Reedy Creek District in 1967 as a special purpose district to support the development of Walt Disney World, which would be built on 25,000 acres of pasture and swamp land in central Florida that was so secluded, the nearest power and water lines were 10 to 15 miles way (16 to 24 km). A special taxation district is a unit of local government created for a specific purpose, in this case to provide municipal services, with jurisdiction to operate in a limited geography.
The report said the board enjoyed "exceptionally broad authority to regulate itself, at Disney's total discretion." It found the board was "inverted to serve Disney," which held voting control of the prior board of supervisors.
The current board is not accusing the previous board of criminal activity in the report. However, the report concludes the old board "was in dire need of reform, and thus the legislature was amply warranted" in instituting a new board to oversee fire protection, water treatment and other services.
The Central Florida Oversight Board will meet Wednesday to vote whether to accept the report, which was prepared for the board by a group of experts.
A Disney spokesperson said in a statement was an "exercise in revisionist history." “This report is neither objective nor credible, and only seeks to advance (the Central Florida Tourism Oversight District's) interests in its wasteful litigation that could derail investment within the district. Further, it does not change the fact that the CFTOD board was appointed by the governor to punish Disney for exercising its Constitutional right to free speech."
It is likely the report's findings will factor into future legislation, according to a person familiar with the matter who declined to elaborate.
Disney did not directly address the allegations in the report. The five former members could not immediately be reached for comment.
Disney and Florida's longtime cooperation collapsed last year after Disney opposed a new state law limiting the teaching of LGBTQ issues in schools. In what Disney described as retaliation, the Florida legislature in February replaced the old board with a new Central Florida Oversight District, whose five supervisors are handpicked by DeSantis. The Florida governor, in signing the bill into law, pronounced, "the corporate kingdom finally comes to an end."
Disney would temporarily deed prospective board members plots of land so they would be eligible to oversee the Reedy Creek District -- and also paid the property taxes due on behalf of these officials, according to the report. The report did not name the officials.
Among other key claims, the report found Disney effectively "captured" the supervisors and the district's employees by "showering" them with gifts and lavish spending. Disney provided complimentary annual passes and discounts on cruises, hotel stays, merchandise and food to employees, supervisors, retirees and vendors.
The company initially provided these benefits free, though in 2006, the district began reimbursing Disney for these expenses using taxpayer dollars, according to the report. Reuters couldn't establish why this alleged practice changed.
To provide the benefits, the district spent $1.78 million to $2.54 million annually, from fiscal 2018 to the current fiscal year, the report found.
The report claimed the Reedy Creek District labeled the spending as "financial and administrative services," a practice the report called "misleading."
The report also found that the Reedy Creek district "flagrantly spent tax money under its control on employee perks," on parties and special events. Over a 15-month period, ending in December 2022, former District Administrator John Classe charged about $166,000 to his district American Express (NYSE:AXP) card -- $100,000 of those charges were related to parties and celebrations, the report said. Classe declined to comment.
In April, Disney sued Florida in federal court, claiming DeSantis and his allies of "weaponizing" state government to punish Disney for exercising its free speech rights. The DeSantis-appointed oversight board counter-sued in state court, seeking to void the "backroom deals" favorable to the entertainment giant.