Thursday, December 3, 2020

Editorial: Captain America Throws His Mighty Shield

By on October 16, 2020

If gubernatorial hopeful Pedro Pierluisi were an entity, he would be a public-private partnership (P3A). The P3A in his DNA traces to a career that includes several terms in public service under several administrations and stints working as an attorney making rain for corporate law firms.

Pierluisi cut his government teeth serving as secretary of Justice under the administration of Gov. Pedro Rosselló. He used that track record to make two successful runs for resident commissioner in 2008 and in 2012.  

In this edition’s cover story, a third installment of our Black & White Series on candidates running for governor, Pierluisi says he would run the government as a  chief executive officer (CEO). The corporate tenets underpinning the candidate’s plan trace to his work as an attorney advising companies in various areas of their operations.

Unfortunately, the company—in this case, Puerto Rico—that Pierluisi aspires to run, is bankrupt and stuck in the litigious swamp of bankruptcy-like proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).

To his credit, Pierluisi attempted to pass legislation that was shelved in 2016, leading the non-voting representative to rail against Congress for passing Promesa on the condition that an oversight board be enabled to control all of Puerto Rico’s financial affairs.

His detractors say that he is complicit in the passing of Promesa, which enabled the fiscal panel to impose austerity measures on the government and certify structurally balanced budgets. This journal cannot make the point often enough that Promesa has everything to do with debt restructuring and very little to do with economic development. Pierluisi knows this. 

Still, he is willing to work within the terms of the law. On Capitol Hill, they call it building consensus—working across the aisle. The people, however, sometimes see it as speaking with a forked tongue.

To be certain, Pierluisi is very well acquainted with the Hill, where then-House Natural Resources Committee Chairman Rob Bishop (R-Utah) invested considerable political capital in passing Promesa to stabilize Puerto Rico’s listing financial ship. The truth is that Promesa’s language had everything to do with taking a restructuring support agreement (RSA) struck between the Puerto Rico Electric Power Authority (Prepa) and its many creditor constituencies to safe harbor.

Unfortunately for Bishop and the creditors bankrolling him, advisers hired by then-Gov. Ricardo Rosselló declared the RSA untenable, a decision certified by the Financial Oversight and Management Board (FOMB). 

Now that Gov. Wanda Vázquez took over La Fortaleza—after Rosselló resigned because of leaked chat messages among his inner circle that were laced with misogynist comments and insensitive remarks regarding deaths occurring in the aftermath of Hurricane Maria—Prepa has struck a deal with LUMA Energy to manage Prepa’s transmission and distribution under a division called GridCo.

Pierluisi insists that if he were to become governor, he would honor the LUMA deal while preventing energy rate hikes as a consequence. The candidate for governor has also said he would not permit conflicts of interest in the contracting of LUMA subsidiaries to participate in the rebuilding of the Prepa grid.

Although those are seemingly good policies, Pierluisi must be mindful that ATCO, the company that formed the LUMA consortium, is a producer and distributor of natural gas, which Prepa sources say is an important “dancing partner” for the bankrupt utility to avoid rate hikes not too far afield. 

Whether he manages to work within the realm of Juntaeconomics is yet to be seen. Austerity comes with pain—always for the people. If he plays nice-nice with La Junta, Puerto Rico might slow the hemorrhaging of millions in costly legal fees that are inching up toward the $1 billion mark.

However, the question remains: What might a new Oboard with seven strict viceroys want in exchange for their service? With tens of billions in federal reconstruction funds coming down the pike, new FOMB members who will be named to the board may have their own ideas of who and how that money will be managed.

The White House assignment of DCI Managing Partner Justin Peterson to replace Judge Art González on the FOMB could be a harbinger of the shape of things to come. The capitol executive is known for his work as a creditor lobbyist and work on behalf of natural gas companies. 

If Pierluisi were to become governor, would he succeed in convincing a new junta that he can manage the reconstruction of Puerto Rico’s dilapidated energy grid and the repair of essential infrastructure or would he succumb to the natural gas cartel’s representatives? That is an important question to answer, for too many jobs are at stake.  

Subscribe here to read the rest of the Oct. 15-21 issue of Caribbean Business.

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