by Richard Lawless
What is that saying? Fool me once, shame on you, fool me twice, shame
on me. For over a decade PREPA has reached out to the bond market pro-
mising upgraded facilities, new cheaper electricity with natural gas, solar
and wind. Time and time again, it didn’t happen.
Yes, PREPA took the money. Nine billion dollars in bond and bank debt.
The banks didn’t hold them responsible for their lack of action nor did the
bond holders, ever.
I went back and looked at S&P, Fitch and Moody’s reports and almost with-
out exception every bond offering over the last decade had “upgrades” as a
critical component of the bond offering. Again, none of the reports looked
back and said, hey wait a minute, we heard this before and they didn’t do
any of that!
The open secret is that Politicians and company executives were using
PREPA as their personal piggy bank and redirecting $100,000,000 a year
or more for their own personal uses. Any upgrade to the facilities would
put an end to this scheme. The Hagens Bermen RICO suit filed in February
of 2015 claims this has been going on for over a decade and continuing to-
day. That’s nine billion dollars in bond fraud! They promised upgrades
knowing those upgrades would never happen!
With Alixpartners on board will things be different? Let’s look. Alixpart-
ners has played the role of the ultimate insider since 2014 and has taken
over $20,000,000 in public money for their assistance. Over that time,
Alixpartners has not reported any of the numerous SEC violations, the
falsified oil quality reports, the altered bookkeeping or the alleged theft
of $100,000,000 in public funds to anyone. Did the $20,000,000 in fees
cause Alixpartners to look the other way?
We contacted the ad hoc group of bond holders and shared our concerns
about all this. Their response was that any discussion of the corruption at
PREPA would only hurt bond values so they see no benefit in dealing with
that. The committee will take a look at forcing alternative, lower cost ener-
gy sources but only if it does not interfere with a solution.
Are there any honest people involved with this organization? Are there
any honest people in the Puerto Rico government? What do you call
someone who has been fooled four times? Unfortunately people are li-
ning up and dropping their trousers for one more ride on the PREPA
train. This time I am not buying a ticket for that train ride!
Richard Lawless is CEO of Commercial Solar Power, Inc. in Temecula, CA. The opinions expressed in the
preceding commentary are exclusively his own.