Sunday, December 17, 2017

Fiscal Oversight board reveals nearly 20 contracts

By on February 28, 2017

SAN JUAN – Details of 19 signed contracts as well as financial information about its seven members and its executive director were posted by the fiscal control board on its website Tuesday night.

The governing body’s contracts so far include those with law firms Proskauer Rose, Luskin, Sten & Eisler, O’Neill & Borges, A&S Legal Studio and Acosta & Ramírez; financial advisers McKinsey & Co. and Citi; Pension Trustee Advisors, which specializes in retirement systems; the Ernst & Young accounting firm; and local public relations and communications company Forculus.

Fiscal Oversight & Management Board (Juan J. Rodríguez/CB)

Fiscal Oversight & Management Board (Juan J. Rodríguez/CB)

Also revealed in the documents is the compensation of newly announced legal counsel Jaime El Koury, who for three years and working from New York will charge $225,000 a year plus expenses and benefits.

Meanwhile, financial information, including salaries, assets and investment, of board members José Carrión, José R. González, Arthur González, Ana Matosantos, Andrew Biggs, Carlos García and David Skeel, as well as interim executive director Ramón Ruiz Comas was disclosed.

In the case of McKinsey, the firm advises the board on virtually every area, from the organization of its operations to the decision-making and short- and long-term goals the oversight body considers. For this, it will charge nearly $945,000 a month for the first three months of its work, and then at a rate of $315,000 a month until May 15.

Meanwhile, Citi will charge $250,000 a month for advice on debt restructuring, creditor negotiations and capital markets. If any transaction were to be made in which the process involves the government issuing new bonds, Citi will charge up to 0.0333% of the value of these bonds, with a $10 million cap, unless it participates as underwriter in the transaction.

In the case of Ernst & Young, the firm will be validating the bridge financial information for fiscal years 2015 and 2016, in order to update the numbers the board is working with. It will also prepare a report on Puerto Rico’s debt, which is slated to be delivered on or before March 7. For this work, the accounting firm may charge no more than $350,000.

In the legal area, Proskauer assures that due to the nature of the board’s public service, it lowered the cost per hour of service it normally charges clients, to more than $750 an hour. Luskin – as the board’s representation in Promesa-related federal court cases – will charge $325 to $800 per hour, depending on who performs the service.

In the case of O’Neill & Borges, it is established that once their services reach $250,000, every invoice will receive a 10% discount. A&S Legal Studio’s contract establishes a sum of $500,000 a year for general legal advice. Finally, Acosta & Ramírez is under contract until the end of the year and its compensation will be based on hours worked.

To coordinate with the Puerto Rico Police and other security-related efforts with regard with the board members, ESC Group and its president, Roberto Escobar, will be providing those services at a rate of $7,500 per month.

As for the island’s retirement systems, Pension Trustee Advisors will model the reductions proposed by the board and advise on the matter. It will charge up to $45,000 in three phases and is contracted until March 15, when the oversight board expects to certify a fiscal plan.

Familiar faces

The list of contracts also includes economist Andrew Wolfe, who worked on the famous “Krueger Report,” a document commissioned by the administration of former Gov. Alejandro García Padilla and which served to lay the foundations for the magnitude of the fiscal and economic crisis in Puerto Rico. The report called for a reduction of the island’s public debt and a host of austerity measures.

For the board, he worked from the end of last year until Feb. 28 in the review of the economic models and fiscal parameters established so far, a service for which he charged $25,000 a month.

Other names such as Citi, Proskauer and Estudios Técnicos maintained consulting contracts with the past administration on issues related to Puerto Rico’s fiscal situation. Such is also the case with José Coleman Tió, president of RCT Advisors and former adviser to the Government Development Bank and García Padilla’s fiscal team. He worked for the board until the beginning of the year, when he left to run the legal division of Banco Popular.

Also hired is Jayson Padilla, who worked for the local Treasury Department during the former administration and will be with the board until the summer advising on the cash flow and accounts of the government of Puerto Rico.

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