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Vetting Weeds Down Control Board Candidates

By on August 17, 2016

As the Sept. 15 deadline for President Barack Obama’s naming of the federal fiscal-control board approaches, issues remain unresolved in the selection of candidates coming from the Republican side of the aisle.

Mitch McConnell_ Majority Leader of Senate_ Kentucky_ speech_ PHOTO BY Gage Skidmore

Senate Majority Leader Mitch McConnell

Lists have already been received by Obama from Speaker of the House Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Minority Leader Harry Reid and House Minority Leader Nancy Pelosi—all of whom have said they will not be submitting more names to the Executive for scrutiny by the Executive.

According to the Puerto Rico Oversight, Management & Economic Stability Act (Promesa), the law enabling the creation of the fiscal control board, the Republican leadership in the U.S. Congress will have two appointments each selected by Obama. “Those lists have already arrived at the White House,” a source close to the matter told Caribbean Business. “Maryam Brown in the Speaker’s office, who had been on top of all of this, has left the office and I think that the Speaker’s view is that they submitted this list—if the administration wants to do something different, then they can submit their list.”

Brown is described by Bloomberg News as: “a Hill veteran with long ties to K Street, who joined Ryan’s team after spending three years with former House Speaker John Boehner, who resigned in October.” She had worked for the Senate Republican Policy Committee, knew how to build consensus and she was up to speed on the Promesa issues. Her exit has reportedly put the Promesa process in the hands of staffers who “are ill-acquainted with Puerto Rico and don’t seem to care.”

At this writing, it also remains unclear whether McConnell would bolster his list. The Senate Majority Leader was contemplating adding to his list of candidates in direct response to an alleged political ploy by the Obama White House, first reported by Caribbean Business, which could reject the names from McConnell’s list, which would force those names to go through a Senate confirmation process.

“The Democrats are working a lot closer to the administration. So you have Reid’s list; you have Pelosi’s list. And it is still a possibility that Mitch [McConnell] will go back to the drawing board and bolster his list with two additional candidates, but as of right now, it has not been executed,” said one source with knowledge of the process who has ties to the GOP.

In what has been described as a ramped-up process of parallel vetting, the list of names received thus far has been vetted by the U.S. Treasury, which has been giving feedback to the Executive. Presidential personnel then provide candidates Form 278, which registers the individual’s financial information and that of their respective spouses.

“You have to disclose your financials, your holdings and all of that. That is where the conflict of interest comes into play—almost in parallel, you get a call from the FBI originated from the field office closest to where you live,” said one candidate to the board, who insisted on remaining nameless because of the critical juncture at which the process stands. “The FBI calls you and says we are conducting a background check for this position. These things are all running in parallel—a little different from a normal appointment, because the FBI doesn’t get involved from the beginning, until you are about to get appointed; sort of like a gut check, the FBI doesn’t get involved until the end, you know, to make certain that you are not wanted or something like that.”

The vetting in the stretch run to configure Promesa’s board has names stamped with the Good Housekeeping seal of approval—the lists on Obama’s desk are already vetted and cleared of issues before they can get to him.

So rigorous has been the process that some candidates have been forced to drop out, while others still have deeply pondered the possible impact on their finances, as the appointments are pro bono and could have other repercussions. For example, another candidate tied to the Democratic side of the aisle sought a legal opinion regarding the impact on his spouse’s business. The concern traces directly to her eligibility for tax breaks under Law 20. “Should I get to the point where somebody says that you might be selected for the board—my lawyers and her lawyers will probably show up and say we want a letter from you, the government saying that this is not going to be a conflict of interest,” the candidate told Caribbean Business.

The conflict of interest issue is reportedly behind the rejection of other candidates whose names have been made public. Former New York Gov. George Pataki has reportedly been called into question because he owns property on the island-municipality of Vieques, according to a source on Capitol Hill with ties to the Democratic Party. Some sources disagree.

“I am not so certain that he is out and I believe that the reason he is out traces to his proactively wanting to be on the board and his proactively going to the hedge funds to say he would be their guy,” said the GOP source about Pataki, who has great relationships in Puerto Rico with the business community. “I understand that [Pataki] went out and actively campaigned among the people in the financial services community saying, ‘you should promote me because I am going to be your guy.’ I think a self-promoting person will always raise a red flag. At the end of the day, what ultimately raises red flags is the conflict of interest. The question is: Do you have a way to make decisions that are the right decision without having to worry about how they are going to affect you personally?”

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