Chief of staff Villafañe says debt audit would affect government
SAN JUAN – La Fortaleza Chief of Staff William Villafañe said Tuesday that an audit of Puerto Rico’s debt, as certain sectors claim, “would benefit the creditors” and “affect the government,” which would have to spend millions of dollars to start that process. Ultimately, he said, it also would not result in those “guilty” of the $71 billion debt being incarcerated.
He said the best option is to continue with Title VI of the Promesa law, which establishes consensual restructuring with creditors, and anticipated that a bankruptcy-like Title III restructuring process, “would cause abysmal damage” to the island.
“The information that could be provided from such an investigation [an audit], paid for by the government of Puerto Rico, would be public. Nobody here would go to jail because all those debt transactions were analyzed legal by the Department of Justice, and in the end it is the Justice Department” that has the authority, Villafañe said at a press conference after participating in the second Legislative Conference with United Public Servants.
The official explained that in an audit, instead of proving that some creditor acted in bad faith or illegally, it “could point out that X or Y debt is unconstitutional, but you have to pay it anyway,” since a default cannot be argued in court, even if it is not a legitimate debt.
“On the contrary, the court I consider it bad faith on your part and you would have to pay more than you could in an agreement like the one we are achieving [through Chapter VI],” he said.
Villafañe said that while an audit guarantees a decrease of up to 30% of the debt service, “the fiscal plan we have just obtained approval of implies an 80% reduction of the debt,” a difference he called “dramatic.”
“At the moment, we cannot begin using speculation that at the end of the day is to the detriment of the process that we need to carry out now. It does not make any kind of sense; it sounds nice because amid the crisis and situation we are in, someone needs to pay for being guilty,” he said.
Who are the culprits, he questioned rhetorically. “All those who increased public spending negligently, promoting a government operation with more spending than the revenue they had, those are the culprits.”
The Citizen Front for the Debt’s Audit, as well as the Ecumenical and Interreligious Coalition of Puerto Rico, are two of the groups that demand an audit of Puerto Rico’s debt, and were demonstrating Tuesday night in front of the Capitol to demand that the process be initiated.
Although the Commission for the Comprehensive Audit of the Public Credit was created last year, Gov. Ricardo Rosselló dismantled the group, which is why a final report was not issued. Rosselló argued in February that “when a bond issuance is made, certain parameters are set and when the bond issuance is made, part of the agreement is compliance.”