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Prepa Hearings: Utility Contracted Firms Convicted of Corruption

By on March 3, 2016

SAN JUAN – The Puerto Rico Electric Power Authority (Prepa) contracted companies that had been disqualified from doing business with the public utility because they had engaged in corruption, current and former officials said in their testimonies Wednesday before the Special Senate Committee investigating irregularities in the corporation’s fuel purchases.

“Obviously, the authority contracted companies that were found guilty of corruption, and that violates Act 458 of 2000,” committee Chairman Aníbal José Torres said. “The authority did not try to obtain information related to those convictions,” he added.

Act 458 states that any government instrumentality, public corporation or municipality cannot award contracts to companies or individuals convicted of acts of corruption.

During the hearing, Prepa’s supply division supervisor, Natalia Martínez Lugo, said that in the process of evaluating the income of a company for the registry of bidders, there is no procedure to investigate the financial condition of the applicant. The firms merely have to sign an affidavit stating they have no convictions to be listed in the registry.

Two firms, Vitol and Trafigura, which had been convicted of corruption, obtained Prepa purchasing orders to deal with an emergency situation at the utility, which has sued Vitol, seeking the return of $3 million after the firm failed to disclose its conviction.

Officials said the public corporation ignored claims that Trafigura was using fuel company Petro West as an intermediary to obtain a contract from the utility.

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