Thursday, March 22, 2018

Fiscal board blames Puerto Rico gov’t for high legals fees

By on March 12, 2018

SAN JUAN –Puerto Rico’s Financial Oversight and Management Board (FOMB) wrote to members of the U.S. Congress to justify the panel’s substantial legal fees and blamed the government for hiring its own attorneys and advisers as well, raising costs.

The fiscal board said it has worked since its inception with the Government of Puerto Rico to carry out its duties under the Promesa law: To help Puerto Rico achieve fiscal balance, provide a path for its return to the capital markets, and restore economic growth and opportunity.

“Unfortunately, this work has proven to be extraordinarily expensive for the people of Puerto Rico. While we understand that complex restructuring proceedings are costly, and that the situation facing Puerto Rico guaranteed that it would be so, there is a structural factor at play that has made the costs excessive,” the letter reads.

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The fiscal board is the legal representative of any debtor in Promesa Title III proceedings. As such the panel represents the commonwealth and the Puerto Rico Electric Power Authority (Prepa) in court, requiring it to retain counsel and other advisers.

However, the commonwealth and its instrumentalities, including Prepa, have retained their own counsel and other advisers for the proceedings, on the grounds that the commonwealth and its instrumentalities “often have divergent interests” from those of the board.

“While the Commonwealth and its instrumentalities are entitled to their own advisors, and the FOMB and the Government of Puerto Rico have strived to work cooperatively and collaboratively with such advisors, there has nonetheless been duplicative work as a result of this arrangement, which has led to additional costs,” the board wrote.

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The federally established oversight panel said it was seeking to find more ways to work more efficiently with the commonwealth and its instrumentalities’ advisers to minimize the duplicative work to reduce fees in the proceedings. “To underscore this commitment, we have also sent a letter to the Governor of Puerto Rico, urging him to cooperate with us in this endeavor,” the board said.

“Historically, the people of Puerto Rico have suffered from wasteful government spending. The FOMB is doing all that it can to avert such waste as the legal representative of the Commonwealth and its instrumentalities in the Title III proceedings so that the Commonwealth’s resources are spent on what matters most: providing for health, education, and safety and promoting economic development,” the letter signed by Chairman José Carrión adds.

Read the letter here.