Saturday, February 6, 2016

A Federal Fiscal Board is a great opportunity for Puerto Rico to regain its government's institutional capacity

The Benefits of a Federal Fiscal Board for Puerto Rico
by Jose Oyola,
El Nuevo Día, February 3, 2016

Politicians and analysts have expressed outrage at the congressional proposal to establish a Fiscal Control Board. It is true that the Board will temporarily reduce Puerto Rico's fiscal autonomy, but it is also a great opportunity to regain its government's institutional capacity, lost beginning in the 1970s.

According to Congressman Sean Duffy: "I do not care the name the Legislature wants to give to a park, I do not want the Council to get into that. I designed it to be limited to the collection of taxes, finance and budget. That's where the problem lies."

Governors in Puerto Rico know what needs to be done to strengthen the capacity to collect taxes and have published timely financial statements in the past. Not so long ago the Legislature approved honest, balanced budgets. If we know how to do them, why we need a Fiscal Board to carry out these three essential components of good governance?

The Board will provide two essential elements to overcome the crisis: credibility and capacity to act. Local politicians lost their credibility and ability to implement transparent and fair fiscal measures, adjusted to Puerto Rico's new economic reality. The credibility of the Fiscal Board is necessary to regain the confidence of investors in the Government of Puerto Rico and convince them to provide the essential financing to overcome its current liquidity crisis.

The ability to act will allow the Board to make budget adjustments quickly, fairly and transparently. Major changes the Board will be able to implement quickly include increasing revenues without raising taxes, reducing the enormous tax evasion. There is consensus that the local Treasury, known as Hacienda, needs a significant increase in its budget and a qualitative change in its organizational structure, but it can not complete its ongoing modernization without the support of a Federal Control Board, for at least five years.

The Control Board will help restore fiscal and financial transparency by establishing standards and assigning resources to promptly publish the audited financial statements, no later than six months after the end of each fiscal year.

The Board will restore access to capital markets, regaining the reputation painstakingly built under the

Administrations of Rexford Tugwell and Luis Munoz Marin. Puerto Rico will be known again as an issuer who honors fully its existing and new obligations. This change in financial policy would be enough to open capital markets and allow a successful, consensual debt restructuring.

The Board will radically change the unhealthy fiscal rules that have existed in Puerto Rico for decades, which allow inflated revenue estimates to "balance" budgets. The Board will establish budgetary rules that will help the Governor and the Legislature to develop realistic estimates of revenue and expenditure, which will by certified by external experts.

The Board will eliminate the practice of overestimating income before the start of a fiscal year, as happened with the $9,800 million budget in fiscal 2015. The Board will not approve borrowings to finance structural operating deficits.

The Board will establish rules to prevent future secretaries of Hacienda to "give away the house," negotiating temporary tax breaks to large taxpayers in order to balance current deficits with future revenues.

The Board can not do everything. Its main objective will not be to prepare a detailed economic development plan. But the Board will have an immediate impact on economic growth, removing the uncertainty on the financial and fiscal sustainability of the government, which is main cause of the high cost of interest on the public debt. There will be an immediate effect on fiscal health, reducing the cost of servicing the debt, freeing up resources for economic development.


Dr. Jose Oyola,  is Advisor On Public Debt Management Auditing

Thursday, February 4, 2016

The Immortality of Corruption!


by Franklin D. Lopez
February 2, 2016
“Many people, especially the ignorant, want to punish you for telling the truth, being right, for being you. Never apologize for being correct, or being years ahead of your time. If you’re right and you know it, your right to speak. Even if you are a minority of one, truth is still the truth. “- Mahatma Gandhi


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CORRUPTION
If something has revealed Puerto Rico’s public debt and economic crisis, is the high level of corruption and pillage of public funds. It began as a viral disease, in one cell and extending to the total body killing it. The crisis has also revealed the expenditures of tens of billions of dollars in ineffective and failed mega public projects, with no strategic planning, done in order for the politicians to extort moneys, enriched themselves and “raise funds for the political party.” For example two failed train systems.

The crisis has also revealed what we all know as a key element of modern politics, the high level of lies and deceptions, hollow ideas of faces intended to illuminate a path but taking the people into the darkness of corruption. They present great plans and projects without the knowledge of how deep the financial condition of the territory really is. For the past two years the Puerto Rico government has failed to produce audited financial statements.

Corruption has spread from the territorial central government, municipalities, legislature and the administration of justice, from prosecutors, judges and lawyers promoted by greed and unjust enrichment. Some years ago, returning from a trip to Washington, DC, while walking through the finish Dulles Airport, I saw a sweatshirt with a message that includes what I’m trying to communicate. Hoodie I bought a gift for a young family friend who had just passed the bar examination of attorney. The sweatshirt was printed the following: “Good lawyers know the law. Great lawyers know the judge. “

schemesplit.jpgDuring the past week it was published in the local press that Puerto Rican labor leader Dennis Rivera had moved to Puerto Rico a foundation under the name “Moving America Forward Foundation” which was located in Albuquerque, New Mexico and under the direction of former Governor Bill Richardson . The story was profiled in the New York Post on November 22, 2015 (Link: http://nypost.com/2015/11/22/ny-labor-chief-sent-1-1m-to-sham-charities- in-new-mexico / ). The newspaper story alleges that the nonprofit organization was nothing more than a front where it allegedly squandered $ 1.1 million donations from unions and private sectors under the belief that it was for the public good.

The recent story was published by a conservative website under the name This story reveals that the founding of New Mexico was moved to the island and renamed “Economic Society Friends of the Country” (www “The Washington Free Beacon.”. http: / /economicsocietypr.org ).Its board of directors is chaired by the President of Banco Popular Richard Carrion, and its directors include renowned personalities, all identified with colonialism and immobility. They include Dennis Rivera, Miguel A. Ferrer (ex-chairman of UBS), Guillermo Martinez, Joaquin Bacardi, billionaire Nicholas Prouty. Its executive and it’s sole employee director Antonio “Tony” García-Padilla, brother of Governor Alejandro García Padilla who receives $ 70,000.00 a year salary while being a full law professor at the University of Puerto Rico.

When the news became ​​public, most of the press, with the exception of El Vocero newspaper and NotiCel, buried it under the carpet of oblivion. Dennis Rivera chose to “shoot the messenger” of “The Washington Free Beacon” accusing the web site of being a right-wing entity without credibility. The opposition New Progressive Party, in spite of been requested in the social networks to demand an investigation by the Federal government or the Comptroller or the Office of Government Ethics, chose to focus on their electioneering campaigns and the search for the elixir of administering the colony, which has made ​​many of them multi-millionaires with total and absolute impunity.

Government corruption is a twin brother of prostitution. In prostitution you sell your body and in corruption your conscience. Both were born on the same day. In 1979, as a member of the Panel for the appointment of judges of the First Circuit of Appeals in Boston, one of its members was the executive director of the Commission on Conflict of Interest. I asked her for a copy of the law and tried to promote in Puerto Rico during 1979 without getting traction or any interest or the Governor or the Legislature.

In 1997 whe I was an advisor of the President of the Senate, Charlie Rodriguez I recommended two measures to try to clean up the legislature and electoral processes fundraising for political campaigns. The first measure promoted and established the first and only Public Bidding Board with representation of the three colonial parties in any branch of the territorial government in its history. The second, recommended a Citizens Panel promoted reforms in the electoral processes to identify donors, especially politicians warn investors. The Commission made ​​many recommendations but adopted a system that another measure that sought to reform the electoral system.

Today, Puerto Rico is facing the worst crisis in its history. The government of the possession of the United States is bankrupt and it’s show case destroyed. Seventy of the 78 municipalities are bankrupt. The Retirement System will be insolvent in two years and the present government PPD failed to comply with its obligation to contribute to it. The government is not paying  suppliers and t has accumulated a debt of one thousand eight hundred million. The public health system is also in literal bankruptcy and may collapse at any time.

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But the most aggravating of all this gloomy picture is the total and absolute impunity with the sharks of corruption. The judicial system process the sardines and the sharks , the real mega thieves, with their strength escape the net of justice. The Federal Justice Department in Puerto Rico, through the FBI and the US Attorney’s Office, do not have the resources needed to implement a comprehensive plan and process thousands of cases of government corruption that is affecting, both the government and major private institutions, In Puerto Rico. It has given priority to drug trafficking and organized crime continues.

20151203_rc_cparrestos_tcr5.jpgAfter the failures in the cases against former Governor Anibal Acevedo Vila and former Sen. Hector Martinez, Federal Prosecutor the U.S. Justice Department, again because of lack of financial resources, has taken a stance to focus more on the sardines and sharks go unpunished for corruption. The problem with this judicial public policy is that the people have been losing faith in their elected officials, the government in general and even justice.

There are dozens of cases that have been referred to federal authorities here and in Washington, DC that have been placed in a file of total oblivion. Cases like that of a Mayor who used proxies to acquire property and businesses, with money received from extortion and money laundering. On this, there is even a story of a Metropolitan mayor who transferred more than $ 2 million dollars worth of property to a public employees who acted as his front. The employee died and the Mayor went to reclaim the employee’s widow to  return othe property and businesses and she replied, “please … sue me.” The mayor could not for obvious reasons.

The sheer volume of public debt, which includes $ 72 billion and pillage in the Retirement Fund, which has a structural deficit of more than $ 37 billion, is the product of government corruption. The bankruptcy of PREPA and the AAA is also the result of government looting.Corruption in the private sector is also considerable. Sales of marketable instruments based on false financial statements are punished banks with civil penalties while sardines steal from a bank or credit union and the system applies the full weight of the law. It is common knowledge that under the administration of George W. Bush over $ 5 trillion of investments and savings of workers managed by investment bankers were lost in the 2008 financial meltdown. The system rescued the banks at a cost of a trillion dollar and not one of those bankers until today has been processed. Why?

Creatures of corruption and monumental public debt are well known. Transactions like these were not investigated and or were partially and guess who were prosecuted? The sardines. Let’s see:

bridge-teodoro_1.jpg1- The Sale of Puerto Rico International Telephone Company to Telefónica of Spain.


2- Financing and assumed responsibility for the debt of the Teodoro Moscoso Bridge at a cost of $ 144 million from the private developer

3- Multiple contracts of San Juan’s Metro system built by Siemens, a company with an abysmal history of government corruption globally

getPart.jpg4- The Light Rail Bayamon to Toa Baja that was supposed to cost $ 53 million and ended up costing $ 92 million and is a solemn failure.

5- The Puerto Rico Sevilla Pavilion

6-The super natural gas pipeline at a cost of tens of millions that was never built.


7-The Windmill at Kennedy Avenue that does not work and it was an obsolete equipment donated by a Spanish Gamesa to a Spaniard hidden in Puerto Rico for corruption in Spain.
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8- The One Thousand 200 millions spent on the  Special Communities projects that drained capital of the Government Development Bank

9- Purchases of land, properties and leasing buildings for government offices, from the private sector by the executive, legislative and judiciary. The most recent scandal the purchase of land for the Northern Corridor project paying  tens of millions of dollars.

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10- The Port of the Americas that cost more than $ 300 million in Ponce and abandoned and without being used
 by a simple small pleasure boat!

11- Changed Orders in the tens of millions at the Puerto Rico Coliseum in 2001.

None of the above 11 cases have been investigated deeply. Various investigations are announced and ended in dead files and archived into oblivion. To date no elected officials or candidates for elective office by the NPP has made ​​a referral of the case of the brother of Governor Dennis Rivera to the the Office of Government Ethics.

The negativity of Congress to assign a federal cent to help the U.S. citizens in the territory with its public debt crisis is based on the $ 20-billions that have gone into the pockets of politicians, politicians, investors, traders and businessmen with impunity while tens thousands lost their homes and have lost faith in their homeland and take their bags and leave on the first flight of Jet Blue to the 50 states of the union.Many elected officials when they leave public service accumulate massive wealth and properties, origin of extortion and corruption and nothing happens or occurs. Impunity prevails for that is twhy corruption has spread like a plague.

If given the economic resources and guidance, federal investigative and judicial agencies can pursue the trail and footprints of money (follow the money) stolen by public officials and  begin a process of ending corruption restoring confidence of the people in our democratic institutions and private sectors. This should be a Washington priority.

Corruption is immortal and it will continue as the ambitions of man controls the minds and consciences of human beings. We live in a country whose government approves thousands of laws and amendments to laws which are never enforced or implemented. That impunity and passivity, alienation and ignorance of the people opens the way for mediocrity to aspire, run, dominate and control the elective positions to loot what remains of government financial resources.
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The acceptance of corruption as part of our everyday environment and passivity of the people against it’s impunity is shameful, but not surprising because it is the product of 523 years of colonialism. How often have I heard in coffee shops and public places people expressing about this crisis of corruption and impunity the following, “I don’t care of the governor steals as long as I get a piece” or “Let’s elect the one that steal the least” Many people in the political party that I support chastise me every time that I promote measures to fight public corruption!

The weight of public corruption is sinking the People of Puerto Rico. The recent statement of the U.S. Senate Majority Leader, Mitch McConnell expressing his unwillingnes to assign “one cent of Federal funds to deal with crisis” is emblematic of Washington.s distrust of Puerto Rican elected officials. Harder times will come to the Isnald’s residents/ Get ready, wake up, defend your dignity and strive to resolve not only the serious problem of corruption around the social environment of Puerto Rico, but also the fundamental problem is the status.

In closing, I like to share a quote from the writer Ernest Hemingway of his book, “Farewell to Arms”

“The world breaks everyone and then some are strong at the broken parts. But those who can not break it kills. Kill the good, the very gentle and the very brave impartially. If you are none of these, you can be sure that they will kill you too, but will not in a hurry! “

In colonialism the Metropolis controls more the people by their ignorance and passivity than with the force of violence – If we do not act now … when will we do?

Writer’s note: This column was distributed among members of House and Senate and the Eexecutive staff of the White House.

by Franklin D. Lopez
Journalist, Author, entrepreneur and political prisoner
@ Trueblue51 

"Political cronyism and outright corruption goes a long way to explain why PR’s political leaders have poured many millions of dollars into small group" Boehm

Puerto Rico's dire economic and political situation, due to its anti-democratic territorial status, has finally arrived at the front pages of the mayor news publications in the US. 
It is encouraging, to read articles such as the one below, since it addresses the real reasons why Puerto Rico reached this level of economic disaster. I applaud Mr. Ken Boehm, from the National League and Policy Center, for saying like it is and identifying the root of this situation.
MJ

City lawyers, consultants cash in on Puerto Rico’s bankruptcy
NY POST
By Isabel Vincent and Melissa Klein 
January 31, 2016 

New York lawyers, consultants and publicists stand to rake in more than $100 million in fees as Puerto Rico struggles to stay afloat. The commonwealth’s $72 billion debt crisis has been a boon for well-connected companies like MillCo Advisors, a financial-restructuring firm, which stands to gain as much as $52.4 million. Jim Millstein, who heads MillCo, is a former official of the US Treasury Department. Puerto Rico also has contracts with Manhattan law firms Cleary Gottlieb and Proskauer Rose that max out at $37 million and $6.6 million, respectively, according to government records and contracts reviewed by The Post.

Another Manhattan law firm, Kirkland & Ellis, is nickel-and-diming ­Puerto Rico, charging for catering and 16 cents per page for photocopying, according to its contract, which shows it stands to make up to $4.6 million. Despite all the high-powered help, Puerto Rico defaulted on debt payments this month, the second time it has done so, and US Treasury Secretary Jack Lew this month said the commonwealth was “in the midst of an economic collapse.” 

Puerto Rican Gov. Alejandro Garcia Padilla has said he will pay municipal workers over the commonwealth’s own constitutional obligation to pay its debt. “The fact that the Puerto Rican debt crisis resulted from years of over-spending, political cronyism and outright corruption goes a long way to explain why Puerto Rico’s political leaders have poured many millions of dollars into a small group of politically connected legal, lobbying and consulting firms,” said Ken Boehm, chairman of the National Legal and Policy Center, a Virginia watchdog. 

 SKDKnickerbocker, the powerful Manhattan communications and public-affairs firm, was retained by Puerto Rico to handle public relations and marketing at a cost of up to $3.4 million, including $500,000 for advertising. Influential lobbyist Jennifer Cunningham is the point person in six of the seven Knickerbocker contracts with Puerto Rico, records show. Cunningham, pal to Gov. Cuomo and former wife of Attorney General Eric Schneiderman, is a former honcho with SEIU Local 1199, the giant health-care-workers union based in Manhattan.

 Some of Puerto Rico’s contracts with Knickerbocker, like with other firms, were amended and the payment caps increased. The contract ­totals were confirmed by Puerto Rico’s Office of the Comptroller. Yet Knickerbocker VP Barbara Morgan, speaking also for MillCo, Cleary Gottlieb and the Puerto Rican government, insisted to The Post that the contract figures listed on the comptroller’s Web site were inaccurate. “The documents referenced do not reflect the payments made to these firms; they only represent the potential costs of the contracts,” said Morgan, former spokeswoman for Rep. Anthony Weiner’s mayoral race. 

Morgan issued a statement defending the hiring of the consultants. On Jan. 16, she said the statement came from Puerto Rico Secretary of State Víctor Suárez; and on Jan. 22, she attributed the same statement, with four words changed, to Grace Santana, chief of staff to the governor. The other firms refused to comment or refused to discuss payments. The commonwealth has been suffering from a sagging economy after a tax break expired and is facing massive debt.

MORE: NATIONAL LEAGUE & POLICY CENTER

Monday, January 11, 2016

Puerto Rico - Historical Photographs (XM NEWS)


MUSIC BY ROY BROWN