Puerto Rico update: IEEFA letter urges U.S. inspectors general to scrutinize PREPA contracting

July 22, 2019 (IEEFA U.S.) – In a letter to federal inspectors general, IEEFA director of finance Tom Sanzillo and energy analyst Cathy Kunkel urged increased scrutiny of any contracting involving the Puerto Rican government.

The analysts warned that the latest scandals involving Puerto Rican officials raise serious questions about the legality and propriety of contracts relying on federal funds, in particular, the construction of a natural gas-fired power plant in the San Juan area.

“José Ortiz, executive director of the Puerto Rico Electric Power Authority (PREPA) has stated his intention for the project to be constructed with federal funds,” wrote Sanzillo and Kunkel. “The announcement of this contracting process comes at exactly the moment that Puerto Rico is being rocked by a series of contracting and governance scandals.”

The letter was sent to Teri Donaldson, Inspector General of the Department of Energy; Jennifer Costello, Acting Inspector General of FEMA (Federal Emergency Management Administration/Dept. of Homeland Security); and Brian Nysenbaum, Acting Assistant Inspector General of the Office of Special Investigations at the U.S. Department of Housing and Urban Development.

The IEEFA analysts call into question the reliability of PREPA’S financial reporting that was based on accounting and auditing services provided by BDO whose Puerto Rican representative was implicated in the recent investigations into fraud, conspiracy and money laundering.

“Additionally, the 889 pages of chat messages between Governor Ricardo Rosselló and his advisors disseminated publicly point to possible corruption in the process for the concession contract for PREPA’s transmission and distribution system,” the letter continued. “The chat suggests a pay-to-play system of using the contract process for campaign contributions.”

“Now is not the time for the government of Puerto Rico to be announcing major new contracting processes,” the letter concludes. “Indeed, the scandals call into question the integrity of every major contract that has been issued under the Rosselló administration.”

Cathy Kunkel ([email protected]) is an IEEFA energy analyst.

Tom Sanzillo ([email protected]) is IEEFA’s director of finance.

Sanzillo/Kunkel Letters: Inspectors General should review San Juan power plant project

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The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.