Ay mi madre....!
N.Y. Fed Director’s Puerto Rico Bank Loses on Nephew’s Loan
Popular Inc., Puerto Rico’s largest lender, amassed record losses during the credit crisis and got a $935 million injection from U.S. taxpayers. Now a loan to a real estate venture overseen by the chief executive officer’s nephew is burning a hole in the bank’s books.
Popular loaned the money two years ago to a developer controlled by Jose Vizcarrondo, whose uncle, Richard Carrion, is the bank’s CEO, according to a March proxy filing. Vizcarrondo’s company used the cash to buy a residential project in Puerto Rico that had defaulted on an earlier debt to Popular, thefiling shows. Pouring more money into the project hasn’t worked out: Popular said it wrote off more than half the $15.7 million.
Add that Vizcarrondo, 49, is a Popular board member who until two months ago helped set Carrion’s pay, and the saga exposes conflicts of interest and potential weaknesses in the bank’s governance, according to Professor James Post of Boston University in Massachusetts.
“This deal does smell like rotten fish,” said Post, who was co-author of “Redefining the Corporation,” a study of governance and accountability. “It immediately raises the question: Have there been other deals of this sort that have gone on, and are shareholders entitled to know about that?”