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Rumored Appointment to Fiscal Management Board Raises Concerns

By on July 5, 2016

SAN JUAN – While no official announcement has been made, the names of possible candidates for the seven-member Financial Oversight & Management Board are beginning to pop up.

FILE - This Jan. 28, 2015 photo shows an aerial view of the south side of the Puerto Rico's Capitol building in San Juan, Puerto Rico. A federal judge ruled late Friday, Feb. 6, 2015 that a Puerto Rico debt-restructuring law that aims to protect the government from bankruptcy and make public corporations self-sufficient is unconstitutional. Gov. Alejandro Garcia Padilla approved the Recovery Act in June of 2014 after submitting a last-minute bill to legislators, urging them to approve it amid concerns that certain public agencies might collapse financially. (AP Photo/Ricardo Arduengo)

An aerial view of the south side of the Puerto Rico’s Capitol building in San Juan. (AP Photo/Ricardo Arduengo)

One of them is a a nationally recognized expert in corporate restructurings, Harry Wilson, founder, chairman and CEO of MAEVA Group.  

He was the subject of a review by the Controlboardwatch.org, which was created by Puerto Rico-based attorney John Mudd, who noted there were too many concerns about Wilson’s background.

In 2009, Wilson served as senior adviser at the U.S. Treasury Department and as one of the four leaders of the Auto Task Force, which was responsible for Treasury’s role in the restructuring of General Motors and Chrysler. In 2010, Wilson was the Republican nominee for New York State comptroller (effectively the chief financial officer of the state).

Wilson’s MAEVA Group is a boutique firm founded in 2011 that focuses on investing in or leading corporate or public sector transformations, restructurings and strategic transitions. He also serves on the boards of Visteon Corp. and Sotheby’s.

Mudd wrote that before his time on the auto task force, Wilson had a successful, if relatively brief, career in the hedge fund industry. “He worked originally at Goldman Sachs, before leaving to lead Blackstone Group’s foray into distressed debt investing – aka ‘vulture’ investing. Following his time at Blackstone Group, he joined a former Goldman Sachs colleague at a hedge fund called Silver Point Capital. Wilson’s hedge fund career officially ended when he was forced out of Silver Point in 2008, but accusations of conflicts of interest stemming from his time on Wall Street have dogged him at multiple stops since his retirement,” Mudd said.

While heading the task force’s “Deals and Diligence” team in 2009, Wilson was embroiled in a scandal over the task force’s decision to sell a bankrupt auto-parts supplier, Delphi, to a Los Angeles-based private equity firm. The deal would have forced a group of hedge funds, including Silver Point Capital, to accept huge losses on their investments in the company’s debt, Mudd wrote.

“A more recent controversy occurred in 2015, when Wilson put himself up for a General Motors board seat as part of an activist investor campaign to force the company to buy back $8 billion of its own stock. The campaign was backed by a group hedge fund managers, including David Tepper and Kyle Bass, who owned roughly 2 percent of the company’s stock and who agreed to give Wilson a share of the profits generated by their investments in the company.

“Given his extensive ties to the hedge fund industry, and the stakes that many hedge funds have in the restructuring of Puerto Rico’s various debts, it seems inevitable that similar controversies would arise if Wilson were appointed to a spot on the control board. Further, his rumored gubernatorial aspirations in 2018 raise further questions about his ability to play the role of independent actor in the interest of the Puerto Rican people, and his ability to meet the time commitments that will be required by the board,” Mudd wrote.

Harry Wilson has brief hedge-fund industry history

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