Diageo distillery offered $2.7 billion in tax benefits by Virgin Islands

With little fanfare, a deal is moving forward to provide billions in tax dollars and tax breaks to an unlikely beneficiary -- the giant British liquor producer that makes Captain Morgan rum.

Under the agreement, Diageo in London will receive tax credits and other benefits worth $2.7 billion over 30 years, including the $165-million cost of building a state-of-the-art distillery on the island of St. Croix in the Virgin Islands, a U.S. territory.

Virgin Islands officials say the arrangement complies with the letter and spirit of tax law and will help the islands' sagging economy.