Puerto Rico gov’t retracts court statements over Whitefish contract
SAN JUAN — During a hearing on Oct. 25, the counsel for the Government of Puerto Rico told Judge Laura Taylor Swain that the contract between the Electric Power Authority (Prepa) and Whitefish Energy complied with Federal Emergency Management Agency (FEMA) regulations.
In light of recent developments, those comments are being taken back.
Two days after the hearing, FEMA stated it didn’t approve the $300 million contract awarded to Whitefish and had “significant concerns” with the procurement process that was followed. On Sunday, Gov. Ricardo Rosselló Nevares called for the immediate cancellation of the agreement.
A few hours after the governor’s announcement, the counsel for the commonwealth government notified the court it “can no longer represent that they believe the Contract is compliant with FEMA regulations.”
“I believed the statement regarding FEMA compliance to be true when I made it based on an understanding regarding a provision in the Contract supporting that statement,” said Peter Friedman, a lawyer with O’Melveny & Myers, which represents the Rosselló administration in the commonwealth’s Title III proceedings.
An amendment made to the Whitefish contract on Oct. 17 said FEMA had reviewed and authorized the deal, but it was later amended to remove that language, according to Prepa Executive Director Ricardo Ramos.
During the hearing, Friedman stated that the government believed Prepa awarded the deal “in a compliant manner with FEMA regulations,” as the contract provides. He further said the island’s financial control board had requested information on the Whitefish contract and that it would be shared with it. It is still unclear if the board revised and signed off on the deal.
A U.S. Congress committee, the Office of the Inspector General (OIG) and FEMA are all investigating the contract, while the Wall Street Journal reported Monday that the Federal Bureau of Investigation (FBI) is also conducting a probe into the matter.
At the local level, the Office of Management & Budget initially reviewed the contract, but two days later the investigation was referred to the Office of the Comptroller.
The contract, of up to $300 million, with the small, Montana-based company covered work related to the restoration of Puerto Rico’s power grid following the passage of Hurricane Maria. In turn, Whitefish, which reportedly had only two employees before making the deal with Prepa, subcontracted three Florida power companies, which put forth the necessary manpower to perform the job.