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Puerto Rico’s Financial Oversight Board’s integrity problem

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In the aftermath of the utter devastation that Hurricane Maria brought to Puerto Rico, public servants and elected officials of both parties have worked tirelessly alongside private sector entities to support the recovery. This Herculean task is far from over and an incredible amount of work still remains, but progress is being made.

To build more momentum for sustaining that progress, everyone engaged in the recovery effort must be resolute in their focus and effective in their execution. Integrity has never been more important. While most stakeholders are committed to Puerto Rico’s goals of good government and fiscal austerity, one critical body is not showing that commitment at all.

{mosads}Puerto Rico’s Financial Oversight and Management Board (FOMB) was created by the United States Congress to oversee an effort to restore fiscal responsibility to the Puerto Rican government. The Board is charged with overseeing the restructuring of the debt, restoring fiscal integrity, and ensuring a return to the private capital markets. In 18 months, the Board has made very questionable progress.  

The Board consists of seven Obama appointees and is led by an executive director making more than $600,000 per year. The average income in Puerto Rico is $19,519.

Worse, Puerto Rico’s taxpayers paid for her travel to Ukraine, once a month from March to June, including when she relocated her family to Puerto Rico, according to her contract. That’s not exactly a shining example of austerity or proper stewardship of the Puerto Rican citizens’ tax dollars. The FOMB is largely immune from local oversight and has been critiqued frequently by elected officials on both sides of the aisle for its lack of transparency and accountability. While very troubling, the optics and operations of the group are far from the most pressing concern. 

The Title V PROMESA process requires the Board consider all submitted projects. The Board will consider moving forward with Energy Answers and its controversial “Waste to Energy” project – in essence, constructing an incinerator that would burn the island’s garbage in an attempt to simultaneously solve three pressing problems:  deteriorating infrastructure; lack of reliable power sources; and an overwhelming number of non-compliant landfills.

The program is typical of the same political cronyism that has left Puerto Rico with billions of dollars in debts and sowed the seeds of its ongoing fiscal woes. Plus, it would only add to the immeasurable public health concerns already plaguing the island in the aftermath of the storms.

To environmentalists, like Earth Justice, the Energy Answers plan is “little more than an incinerator,” sending “plumes of toxic ash and pollutants, including lead and dioxin” into an island whose air quality already fails to meet the EPA’s lead standards. 

To conservatives, this is akin to the failed solar startup Solyndra all over again. The project requires a loan from the United States Department of Agriculture Rural Utilities Section for $750 million in order to be financially viable. American taxpayers will be on the hook for three-fourths of the loan if Energy Answers fails to make the project work. 

To the governor of Puerto Rico, Ricardo Rosselló, the proposed project is an environmental hazard, won’t solve the island’s power problems, and will perpetuate the landfill crisis. This past weekend, the governor publicly rejected the project, a powerful rebuke of the Board. His decision comes just days after Congress provided Puerto Rico with access to up to $165 million to close the toxic landfills. 

Curiously, Jose Carrión, the FOMB’s chairman, came to power at the recommendation to House Speaker Paul Ryan (R-Wis.) of a key promoter of the Energy Answers project, none other than former Puerto Rican governor and darling of the Republican Latino movement, Luis Fortuno. In an exclusive story reported by Puerto Rico’s El Vocero newspaper, it was revealed that former Gov. Fortuno has been lobbying for Energy Answers through his well-connected Washington law firm, Steptoe and Johnson.

The Board exists to foster and ensure integrity in the recovery process and has instead done just the opposite, acting as a prime example of crony capitalism. These bad actors are threatening needed recovery in Puerto Rico by blatantly disregarding their duly appointed responsibilities. 

Hon. Christopher D. Coursen served as Majority Counsel to the Senate Commerce Committee & Chief Counsel of the Communications Subcommittee in the 1980s. He has been president and CEO of The Status Group for 32 years and he is currently senior counsel to Federal Advocates, Inc.

Tags Paul Ryan

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