Monday, September 24, 2018

Irregularities plague Puerto Rico Corrections Department phone deal

By on July 20, 2018

Editor’s note: This article first appeared in the July 19-25 print issue of Caribbean Business

The brouhaha over the renewal of the Puerto Rico Department of Correction & Rehabilitation (DCR by its Spanish initials) contract with Global Tel Link (GTL) to operate the island inmates’ calling service has roots that trace back across several administrations and are underpinned by irregularities.

Questions about the contract arose after news the Federal Bureau of Investigation (FBI) reportedly was investigating the DCR’s procurement process and after its secretary, Erik Rolón Suárez, announced with great fanfare in June that the agency had begun the bidding process for installation of the managed-access system and to continue offering the inmate phone service.

The contract was again awarded to GTL, including the installation of a monitoring system, despite the fact the firm has been plagued since 2015 with complaints and scandals related to irregularities.

According to the Puerto Rico Comptroller’s website, the original contract with the DCR became effective June 18, 2014, and was renewed June 29, 2018. However, during an exclusive interview with Caribbean Business, José Aponte Carro, DCR’s former interim secretary during the administration of Gov. García Padilla, explained that although the agreement began in 2014, it was put on track during the administration of former Gov. Fortuño in 2016.

Bid first issued under Fortuño administration

“This bid was issued under the former secretary of Corrections, Jesús González, who was the last [DCR administrator] under the Fortuño administration. He issued the bid to implement the project of putting phones in prisons, which are known throughout the nation as the [prison] wall phones. [In] this new scenario…calls are generated but there is a record that helps prisons more effectively monitor inmates and facilitates [access, so] relatives can pay for calls,” the former official said.

“Jesús González issued and carried out the bid. The telephone company Claro provided the service, but they, in turn, subcontracted GTL to offer the service. Claro had already informed that the service did not generate profits and they were thinking about canceling it. Obviously, there were negotiations on both sides, but Claro kept threatening to leave and Corrections could not be left without that service. A bid in which other companies competed was held, but GTL was the most robust and won it. Then came the change of government and former [DCR] Secretary José Negrón Fernández assumed the post, with whom I served as undersecretary,” Aponte Carro recalled.

The lawyer who now has a private practice said he was tasked with reviewing the projects that had been pending during the administration of the outgoing DCR secretary, to verify that all legal requirements were observed in the awarding of the contract.

Recent media reports also point out the alleged FBI investigation of Act 117 of Nov. 21, 2017, which amended Act 15 of 2011 to require the DCR to establish a controlled access system, known as managed access, to monitor calls made by inmates.

Act 117 was enacted through House Bill 966, authored by majority New Progressive Party (NPP) Rep. Félix Lassalle Toro, who was part of the communications team of former Gov. Fortuño and currently chairs the House Public Safety Committee and is vice chairman of its Agriculture, Natural Resources & Environmental Affairs Committee.

The bill succeeded in amending articles 3 and 5 of Act 15 to require the DCR secretary to initiate a process that would establish a controlled-access system to prevent unauthorized communications from within the island’s prison system.

Aponte Carro said the GTL contract, which did not include managed access, expired in June 2017 but included the possibility of a special extension for one year, that is, until June of this year, when the contract was renewed and the new service was added. During this extension period, the Legislature amended Act 15 and required the DCR to install the monitoring system.

It should be noted that neither the original nor the renewed contract represent a cost to taxpayers. As stated in the contract-renewal document provided by the DCR press office, “GTL will pay the DCR 30 percent of the gross revenue generated by all completed telephone calls, whether made or received….” However, in the “category of service” indicated by the Comptroller’s Office, the contract is for “Personal Services Not Professional” services.

Aponte Carro said that during his term in office, such a contract was rejected because, although it did not represent a direct cost to the Treasury, when evaluated during his time at DCR, the cost of installing the monitoring equipment was at least $60 million, or an average of $1.5 million to $2 million per facility, for a prison system that has some 40 institutions.

The former DCR official also explained that during the Fortuño administration, managed-access system tests were completed at the Guayama Correctional Complex, but were stopped when it was determined they were affecting communications at a pharmaceutical company adjacent to the prison. He said the system has proven to be inefficient even in states where the company, formerly known as Global Telcoin Inc. and Global Tel*Link Corp., has implemented them.

Claims, fraud and lawsuit

Puerto Rico Act 458 of 2000, as amended, provides that “a head of a government agency or instrumentality, public corporation or municipality, shall not award any bid or contract whatsoever for services or for the sale or delivery of goods to a natural or juridical person who has been convicted or found guilty in a state or federal forum or in any other jurisdiction of the United States of America, of certain crimes [that] constitute fraud, embezzlement or misappropriation of public funds, for a term of…10 years in cases of convictions for felonies and…five years for misdemeanors; to provide that a conviction for said crimes shall entail the automatic rescission of contracts in effect with government agencies or instrumentalities, public corporations or municipalities; to require the inclusion of a penal clause in the contracts for the reimbursement of public funds by the person convicted or found guilty; and for other related purposes.”

While GTL has not been charged with any of the aforementioned crimes, since 2015, it has been linked to one of the most notorious public fund scandals in the United States.

In February 2015, former Mississippi Corrections Commissioner Christopher Epps, along with other officials, pled guilty to bribery and filing false tax returns, after evidence submitted to the court indicated he led one of the largest and longest-running criminal conspiracies in the history of the state, the so-called “Operation Mississippi Hustle,” when accepting at least $1.4 million in bribes over an eight-year period to award more than $800 million in private contracts for that state’s correctional system, including to GTL. In May of that year, Epps, now 59, was sentenced to nearly 20 years in prison and fined $100,000.

On July 13, 2017, a federal class-action lawsuit was filed against those accused of the bribery scandal. The defendants include Epps, Global Tel*Link Corp. (GTL) and businessman Sam Waggoner, who were alleged to have taken part in a racketeering conspiracy, which the lawsuit called the “Mississippi Prison Phone Scam.”

In April of this year, GTL agreed to pay $8.8 million to settle the lawsuit, alleging the company violated the Telephone Consumer Protection Act when it sent automatic messages to 1.8 million people.

In addition, the state of Mississippi sued 10 individuals and 15 corporations in February 2017 to recover more than $800 million in illegally appropriated state funds during Epps’ incumbency. At the time, state Attorney General James Hood told stateside media that several corporations, including prominent private prison contractors such as GTL, paid millions of dollars in so-called “consulting fees” to people who used to pay bribes and kickbacks to Epps.

Furthermore, the Better Business Bureau posted dozens of negative customer reviews and complaints about the company’s dismal service. The renewed contract raises questions related to whether the Government of Puerto Rico was aware of the company’s history and whether it violates Act 458.

Done legally

DCR Secretary Rolón Suárez, who took over the agency last year, fiercely defended the GTL contract renewal and assured it was signed under the department’s existing legal framework.

“In this particular service, we included and requested the help of the Telecommunications Regulatory Board, which assisted us in the evaluation of the proposals that arrived; a recommendation was made and the DCR Bidding Board made the final decision; it wasn’t even this [public] servant. The Bidding Board made its decision based on the evaluation of the proposals. If there’s a class-action lawsuit or not…perhaps that information was not part of the evaluation because perhaps that information would not have arrived in due time during the process,” the secretary explained while assuring the contract did not require a competitive bidding process, despite having publicly said it did.

“Since it’s a renewal, there’s no time to [start the] process from scratch, and especially when there’s one running. Having done a bid would have meant starting another process, when we already had one running, and that would put us in a very uncomfortable position…the contract had to be renewed because the request for proposals [RFP] had not ended and the contract expired, and I, as secretary, cannot afford to have a service without a contract, and we extended it because the RFP has not concluded, so they would have a contract while the process ended,” he added.

He did not explain, however, that if the renewal of the contract did not require a bidding process, why it required the approval of the department’s Bidding Board.

Aponte Carro, the former DCR official, contradicted the current secretary and categorically stated that it is the secretary’s prerogative to authorize the contract with his signature.

“In the end, it’s the secretary who signs, but before arriving [to his desk], it [the contract] has to go through the different components that let him see there will be no problem when signing it; therefore, an office of primary interest comes first—administrative, security or any other—that’s interested in obtaining the equipment; they make the request and that goes to the purchasing department and establishes if there is money in the budget. Once that is complied with, it goes to the secretary, who determines whether he sends it to the bidding board or not,” the former official said.

As of presstime, Caribbean Business had yet to receive a reply to a request for comment from GTL.

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