Investigator subpoenas more financial institutions in Puerto Rico debt probe

SAN JUAN – Kobre & Kim LLP, the independent investigator hired by Puerto Rico’s Financial Oversight and Management Board to investigate policies or absent safeguards that contributed to the island’s debt crisis, has not only interviewed dozens of witnesses but also issued subpoenas to three banks.

The firm had already issued subpoenas on Oct. 27 to Popular Inc., Popular Securities LLC and Banco Popular de Puerto Rico, and began interviewing witnesses. Attorney John Couriel, who ran for a Republican seat in the U.S. House of Representatives and now practices with Kobre & Kim, leads the fiscal board’s debt investigation.

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“Additionally, since the last public report, pursuant to the October 18, 2017 Investigative Subpoenas Resolution, the Independent Investigator issued subpoenas on December 19, 2017 to Santander Bancorp, Santander Securities LLC, and Santander Asset Management LLC and on January 17, 2018 to Mesirow Financial, Inc. Those entities also have produced materials on a rolling basis,” the report reads, adding that it relied on the Promesa federal law to issue the subpoenas.

Since Sept. 1 Kobre & Kim said it has obtained numerous documents and interviewed dozens of current and former executives and employees, both career and political appointees spanning multiple administrations–from the Government Development Bank (GDB) and various local departments and agencies, including Treasury and the Department of Justice; to executives at various issuers; analysts from the credit rating companies; attorneys and other outside professionals who advised the issuers; members of the underwriting syndicates; and others.

It wrote that “a large majority” of the witnesses have expressed a willingness to cooperate with the investigation.

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The firm revealed it has entered into non-disclosure and cooperation agreements with the Retiree Committee and Official Committee of Unsecured Creditors of Promesa’s Title III proceeding to obtain their input.

The report, however, did not reveal any preliminary findings citing confidentiality agreements.

The investigator believes it could deliver a final investigative report this summer. “That estimate is subject to adjustment in light of evidence-recovery and review issues that have arisen in the aftermath of Hurricanes Irma and Maria, as well as issues related to litigation, invocation of attorney-client privilege and other confidentiality protections,” it explains in the report.

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