Tuesday, January 19, 2016
I Threw A Pebble In A Pond And Started A Ripple
You might not believe what I am about to tell you but I hope you read
this article through to the end.
My company invested in developing a large solar power plant for the
Puerto Rico Electric Power Authority (PREPA). PREPA is one of the
largest government owned utilities in the world. At the time the utility
had BBB+ ratings from the credit agencies.
As time went on we felt the utility was not acting in good faith. Their
behavior was really bizarre. We had experience with other large utilities
and this was nothing like them. The long and short of it was, we lost eve-
rything, our company went bankrupt and all of the executives that guaran-
teed our loans are now being sued.
Normally, not an uncommon occurrence. Unfortunate but it can happen.
I felt terrible that we could not pay back our creditors and investors so ra-
ther than throw my hands up, I started to take a better look at this govern-
What I found will shock you. It appears that this government entity has
been defunct for many years. They have been issuing billions of dollars
in municipal bonds they couldn’t pay for and Wall Street’s largest com-
panies knew it, but went along. The credit rating agencies knew it and
issued false and misleading credit ratings. This weekend, The Puerto Ri-
co Government admitted they issued $11 billion dollars in fraudulent bo-
nds. But that is only part of the story.
I uncovered strong data that would suggest that this very same govern-
ment entity was also missing up to $1 billion dollars a year in public fun-
ds. It now appears that there may be missing funds in their huge construc-
tion and capital improvement budgets as well as creating a scheme to buy
low quality oil for their power plants while paying for high quality oil.
The difference in price on the oil, up to $700,000,000 a year was alleged-
ly kicked back to politicians and government bureaucrats. Again, I want
to stress, Puerto Rico has not admitted to this yet.
Big news right? Well I took this data and gave it to the SEC, EPA, FBI,
U.S. Attorney and the Attorney General. Bottom line, no one but the SEC
took any interest. You see the SEC is run by a four-person panel and is
not subject to the political pressures the DOJ and the EPA are. The infor-
mation I provided was supported by financial reports and was unquestiona-
ble. I also took this information to the press, The Wall Street Journal, New
York Times, The Bond Buyer, The Financial Times, Bloomberg, Cavoto,
John Stossel, Reuters, AP and others. The few that paid attention and con-
tacted me, laughingly suggested I couldn’t prove any of this or they may
look into it, but no promises. Again, I gave them proof! Maybe they coul-
dn’t read, didn’t understand financials, were lazy or just incompetent? Or
could it be that it reflected negatively on the administration, a Democratic
administration and that outweighed informing their readers and preventing
them from losing more money on this scheme?
It is clear that the administration wants bankruptcy for Puerto Rico and
this story breaking would not be helpful. The Treasury Secretary deman-
ded Congress get moving and consider a bankruptcy option for Puerto Rico.
I should mention two things here. The Treasury Secretary used to run Citi-
bank a firm that issued billions in these fraudulent bonds. Our President is
from Chicago and Chicago definitely needs a bankruptcy option. An option
that would likely be available if Puerto Rico gets it. Lastly politicians like
Chuck Schumer need to win the Puerto Rico vote and even though he had this
information, Mr. Schumer continues to push for bankruptcy.
Bankruptcy would help hide all this malfeasance and mismanagement. It
would also make it more difficult to sue.
These bonds failed and were sold for 50-60 cents on the dollar. $11 billion
in fraudulent bonds, that means the owners of these bonds, Americans, lost
about 5 billion dollars. Let me write that out: $5,000,000,000.00.
Our politicians knew about this and did nothing. The press knew about this
and did nothing.
How broken is our system of government?
DOJ is subject to political pressure. The Treasury Secretary like the politi-
cians wanted to run over millions of Americans to get what Obama wanted
and protect his wall street friends. Our career government employees, our
Attorney General, the head of the FBI, the head of the EPA all kicked up
their skirts and bent over their desks to achieve a political result. If it does-
n’t enrich them personally or enhance their career, they are not interested.
It may be over for Puerto Rico but the United States is right behind them.
The restructuring of our voting districts gave job guarantees to our career
politicians. They no longer answer to each other or the people. They come
into office relatively poor and leave 30 years later a multi-millionaires and
it’s not from their salaries.
Could you imagine that I let one of my employees accept a $500,000 spea-
king fee from a company and then let that employee direct our equipment
purchases to that company. In Washington that is what it is all about.
Unfortunately, in a few days everyone will forget my name and with pre-
ssure from the administration and congressional politicians the Press will
kill this story. I suspect the full magnitude of this criminal enterprise will
never be told. Billions of dollars buy a lot of cooperation.
It’s all our fault because come election day we will almost certainly vote
for the same corrupt career politicians that put this all in place.
God help America, how will we ever survive?
The opinions expressed in the preceding commentary are exclusively those of the author and do not
necessarily represent those of the Puerto Rico Monitor.