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Lawsuit requests U.S. government to answer for Puerto Rico’s debt

By on April 24, 2018

SAN JUAN – Several individuals, unions and civic groups have sued in U.S. District Court to bring the United States as a defendant in an action challenging the constitutionality of the Financial Oversight and Management Board created for Puerto Rico, so it can be held accountable for the island’s $70 billion debt.

The lawsuit also seeks the repeal of all fiscal plans that were recently certified by the fiscal oversight board, a forensic audit of the island’s debt and a ban on the sale of its public electric power utility, Prepa.

This is the third lawsuit challenging the constitutionality of the fiscal board. The action seeks injunctive and declaratory relief, including the determination that certain provisions of the law that established the board, Promesa, are in violation of the “First, Fifth, and Fourteenth Amendments of the U.S. Constitution and the Declaration of Independence and other statutes and international covenants that bind de United States.”

U.S. Treasury building Washington, D.C. (CB photo)

The document says the establishment of a fiscal oversight board with “executive and legislative powers over the Government of the Commonwealth of Puerto Rico, elected officials and residents is unconstitutional.”

The lawsuit also claims that “the conflict of interest of various of the members of the Oversight Board’s renders them unqualified to remain in the Board, and it prevents any and all attempts to pursue the objectives of Promesa and further constitutes a violation of the constitutional right to due process of law of the Plaintiffs and the People of Puerto Rico.”

The allegation refers to board members José Luis González and Carlos García, who respectively headed Santander Securities, which was involved in island bond transactions.

The suit also petitions the court for an order to perform an “urgent integral, legal and forensic audit” of the public debt.

“We affirm that further delaying the audit will only aggravate the socio-economic crisis of Puerto Rico and impede the fair and equitable fiscal reorganization and equitable and sustainable development and quality of life of the Plaintiffs and the People of Puerto Rico, which is, at least in paper, an integral part of the legislative intent of PROMESA,” the suit reads.

A commission created in 2015 issued two preliminary reports that revealed violations in borrowing practices by the commonwealth and private parties and entities and therefore “forensic and legal audit is further needed to account for the extent of the potential wrongdoings, fraud, and corruption over the public debt of the Government of Puerto Rico, and to specifically identify wrongdoers,” the suit says.

The suit also wants the court to include the U.S. government as a party to the lawsuit to “not only assume a position with respect to the constitutional claims but also to assume any and all constitutional and legal liabilities.”

Nevertheless, Promesa specifically states that the United States will not pay or be held liable for Puerto Rico’s massive debt.

As for the public power company, the suit also wants the commonwealth barred from “disposing of the Puerto Rico Electrical Power Authority without complying with the Constitution of Puerto Rico and the right of the Plaintiffs and the People of Puerto Rico to participate in the decisions regarding the preservation, management and disposition of its most important essential service.”

The suit was filed by Rene Pinto Lugo; the Citizenship Concentration Movement Inc., (Vamos); the Union of Office Employees and Professionals of the Public Buildings Authority, (UEOGAEP); Insular Union of Industrial Workers and Electrical Constructions Inc., (UITICE); Independent Union of Employees of the Puerto Rico Water and Sewer Authority, (UIA); Union of Employees of the Trade Office and Associated Branches, Ports, (UEOCRA); Union of Employees of the Housing Bank, (UEBV); Union of Independent Professional Employees (UEPI); National Union of Educators and Workers of Education, (Unete); Association of Gambling Inspectors, (AIJA); and Association of Retirees of the Electric Power Authority (AJAEE).


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