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García Padilla Supports Transparency in Puerto Rico’s Debt Management

By on June 15, 2016

SAN JUAN — The Alejandro García Padilla administration supports any effort that seeks to ensure processes related to Puerto Rico’s debt issuance were transparent and lawful, Public Affairs Secretary Jesús Manuel Ortiz told reporters at La Fortaleza on Wednesday.

Photo by Luis J. Valentín

La Fortaleza (Photo: CB /Luis J. Valentín)

These efforts include work being conducted by the Puerto Rico Commission for the Comprehensive Audit of the Public Credit, as well as any potential investigations by federal regulatory authorities.

“Our administration has always been clear on the importance of transparency in these processes. We know these are debt issuances that didn’t necessarily happened during this administration. We support any measure that seeks transparency,” Ortiz said.

However, the public affairs secretary stressed that the local government remains focused on restructuring its debt because, “it is the main imminent threat that we have in front of us. We are 15 days away from making a [debt-service] payment; we don’t have the cash and still lack debt-restructuring tools.”

On Tuesday, seven U.S. senators sent a letter to Mary Jo White, chairwoman of the U.S. Securities & Exchange Commission (SEC), calling for an investigation into the role played by investment firms on the island’s debt crisis. Meanwhile, Massachusetts securities regulators have already opened a probe into three investment companies that sold mutual funds chock-full of Puerto Rico bonds, Reuters recently reported.

The group of lawmakers is asking the SEC “to investigate any possible misconduct by financial advisors to municipal entities in Puerto Rico in the years leading to the crisis,” including “possible market manipulation, conflicts of interest, trading practices and fraud” in the management of Puerto Rico securities.

White told the U.S. Senate Banking Committee on Tuesday that the SEC remains “very focused” on the matter, seeking violations to the securities law, according to BondBuyer.

“We support that any evaluation be conducted to ensure the process was transparent,” Ortiz said.

When asked by Caribbean Business whether the local debt-audit task force has received the necessary support from La Fortaleza, the public affairs secretary said “the governor has made himself clear he supports this process.”

Two weeks ago, the Puerto Rico debt-audit commission unveiled a preliminary report in which it questions the validity of a couple of recent debt issuances by the commonwealth, while urging for the need to receive the necessary funding to continue its auditing process.

Ortiz recognized that although $2 million were earmarked for the commission’s work, its disbursement has yet to take place. “We need to do what’s possible to give them [the funds],” he conceded, adding that the auditing work could be positive for the commonwealth, depending on its results.

However, he warned that the debt-auditing work requires time and investment, but that García Padilla “remains open to these processes.”

The García Padilla administration insists on solving the island’s debt problem, once and for all, through a broad debt-restructuring deal that would target $50 billion worth of Puerto Rico’s debt. Officials say talks with creditors continue in an effort to reach agreements over the restructuring plan’s economic terms and short-term relief amid the more than $1.5 billion in debt-service payments that hit the commonwealth July 1.

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