Saturday, May 27, 2017

Senate Probe Alleges Existence of “Asphalt Cartel”

By on December 28, 2016

SAN JUAN—Following widespread allegations of an “oil cartel” operating within the Puerto Rico Electric Power Authority (Prepa), another so-called cartel, this time involving asphalt and deemed as bad or worse than its oil counterpart, is being linked to the Roads & Transportation Authority (ACT by its Spanish initials).

Senate majority leader Aníbal José Torres / File

Senate majority leader Aníbal José Torres / File

A recent Senate investigation has found that the ACT not only lacks the ability to analyze whether the imported liquid asphalt meets the specifications required in the projects that the corporation awards and pays, but it doesn’t even have a way to know the price of the product in the international market, which let importers have the last say in the matter.

Similarly, the probe found that the ACT certifies federal-funded projects as meeting specifications without doing the appropriate tests when construction is completed.

And ACT does not even require its contractors to test the liquid asphalt to be used in government projects, despite the fact that the Senate obtained evidence that the liquid asphalt used in a project delivered and accepted by the public corporation does not meet industry standards.

Such are some of the findings by a special committee tasked with investigating an oil purchase scheme by Prepa, and presented Wednesday by the Popular Democratic Party (PPD) majority spokesman in the Senate, Aníbal José Torres, during the latest special session.

The senator added that, just as happens in Prepa, it is possible that some importers of liquid asphalt used by the ACT in its projects are violating Act 458 of 2000, which prohibits the contracting in government of natural or legal persons who have been convicted or been found guilty of fraud, misappropriation or illegal appropriation of public funds.

“Because of the complexity of the matter and the tightness of the legislative calendar, the committee could not finish investigating this matter. However, because of the shocking and dangerous aspects of the preliminary findings, I suggest my colleagues in the new legislative majority take up this issue,” Torres recommended during his turn at the senatorial session, which began at 9:51 a.m.

Torres worked in the special committee along with minority leaders Maria de Lourdes Santiago, from the Puerto Rico Independent Party, and Larry Seilhamer, from the New Progressive Party (NPP), as well as with a group of researchers suggested by each delegation.

 

Probe insistent on Prepa failures in fuel purchasing system

On the other hand, and as part of the special committee’s findings on fuel purchases at Prepa, Torres presented the final report on the research, which divides the issues into three areas: laboratories, fuel purchases and administrative irregularities.

In the first instance, the legislator stressed that all the laboratories used by Prepa for fuel analysis, including the public corporation’s own laboratory, “at some point issued results lacking reliability and precision.” This is because they altered calibration curves for fuel analysis or manipulated documents, representing a “clear violation” of the process.

Such a lack of rigor in the analysis of fuel, Torres said, has represented a million-dollar impact on the costs of payment of the product in Prepa, because it has led to the purchase of a product of inferior quality.

It was also determined that Prepa has had a “pattern of favoritism in the assignment of fuel analysis work” by granting more than 75% of these tasks to the Saybolt laboratory between 2008 and 2014, when the public corporation was supposed to have a rotation system to change laboratories constantly.

In the second instance, Torres reported that “Petro West worked as a front man of [the oil company] Trafigura in a clear corruption scheme.” This was because Trafigura obtained, through an agreement with Petro West, access to about $ 4 billion in public funds for Prepa’s fuel supply , even though it had pled guilty in federal court, violating Act 458 of 2000.

The senator further complained that Prepa has deficiencies in the application and evaluation of certifications of the criminal history of the tenderers and contractors, as well as in the eligibility criteria for the bidders. He also said that the Fuel Purchase Office, an office William Clark led as its director for more than a decade, acts as an independent entity, so it is not being adequately supervised by Prepa.

 

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