Friday, July 19, 2019

‘The show must go on,’ says Puerto Rico’s financial czar

By on June 26, 2019

Christian Sobrino during a public meeting held by the fiscal oversight board for Puerto Rico in August 2017. (CB file)

After Treasury secretary’s dismissal, Christian Sobrino not only now heads the island’s fiscal agency, but is also CFO and OMB director

SAN JUAN — Christian Sobrino, the head of the Puerto Rico Fiscal Agency and Financial Advisory Authority, known as Aafaf for its Spanish acronym, assured Wednesday that he can carry out his current role as well as that of government chief financial officer (CFO) and director of the Office of Management and Budget (OMB).

“If I see that something is not manageable, I will be the first one to raise the flag,” the official said at a roundtable with reporters.

Sobrino was appointed two both positions Monday after the dismissal of former CFO Raúl Maldonado, who also served as Treasury secretary and OMB director, for failing to inform the governor’s office, La Fortaleza, before he said Monday morning that there was an “institutionalized mafia” at the Treasury Department and that he had been the victim of extortion.

The chief financial officer role was created by executive order and is not the same chief financial officer found in the certified fiscal plan, as the latter is for a separate agency and is not attached to La Fortaleza, Sobrino explained.

His role as CFO, he said is to coordinate resources among agencies, “oversee the implementation of public policy, report to the chief of staff and the governor and help address any issue when support is asked for. But the actual execution occurs at the agency level, namely Aafaf, OMB and Treasury,” he said.

He said he plans to focus for the time being on ensuring the legislature passes the budget and that the island’s Financial Oversight and Management Board, to which he is also the governor’s non-voting representative, certifies it as compliant with the fiscal plan.

“At OMB, my job is not that different from what I do here,” he said, adding that he plans to assign Aafaf resources to the OMB because that agency has had its payroll reduced.

After highlighting “the traffic jams” around the OMB headquarters, he said he will run the office from Aafaf, at the Minillas Government Center, because the facilities have parking. In fact, he said he plans to suggest the possibility of moving the OMB because they are difficult to access.

“The traffic jam makes it difficult to coordinate efforts with agencies,” he said.

Sobrino also said he was appointed temporarily to the positions since his appointments took place “suddenly” because of the abrupt events that occurred Monday. He said his salary will remain the same.

Regarding how he will manage his time, Sobrino said his main office will be at the Minillas Government Center but that he has to go to La Fortaleza every day to meet with the governor.
“In all of my affairs, I have a team of workers that helps me out and answers to me…and I am very strict about that,” he said.

The official, however, said he does not foresee making changes at the CFO’s office because most of the staff there is from the Treasury Department.

As part of his new responsibilities, he said he will make it a priority to have the government’s audited statements completed, especially after the abrupt departure of Maldonado after alleging corruption at Treasury.

When asked about how a CFO can carry out their functions when the Treasury Department is in charge of implementing the island’s General Accounting Law, Sobrino said Aafaf’s charter gives him legal authority to oversee the government’s financial function.

With regard to the effect on government operations that Maldonado’s abrupt exit could have, Sobrino said the former Treasury secretary was an important part of the governor’s team and had a lot of support but “the show must go on.”

As for the impact of the scandal on the island’s image in Washington, D.C., Sobrino said the impression he has received from U.S. Treasury officials, the White House and the U.S. Office of Management and Budget, among others, was that, “that was just bizarre,” but acknowledged that the controversy could be used to make the island look bad. Sobrino said he will be traveling to Capitol Hill in the coming weeks.

When asked about the fiscal oversight board’s reaction to the latest events, Sobrino said that the federally created panel is focused on the budget.

During the press conference, Sobrino also announced that the restructuring support agreement of the Puerto Rico Electric Power Authority (Prepa) has been delayed after the U.S. Judge Laura Taylor Swain put a halt to it earlier this month; therefore, any legislation to implement it will have to wait until the second legislative session, which begins in August.

This means that 1 cent per kilowatt-hour hike in customers’ electric bills, which was slated to take effect in July to pay the utility’s debt, will not come into effect, for the time being, Sobrino said.

Monday is the last day of the two-year statute of limitations Prepa has to file avoidance claims to claw back improperly made payments before the fiscal board entered it into bankruptcy-like proceedings under the Puerto Rico Oversight, Management and Economic Stability Act.

Sobrino said the Prepa vendors that are the “critical ones” to negotiate tolling agreements with, which would delay the lawsuits, are still being examined.