Bipartisan bill targeting financial transparency in Puerto Rico introduced to Congress
On December 19, lawmakers in Washington DC introduced a bill that seeks to require greater measures of transparency on past deals undertaken by the Puerto Rico Financial Oversight and Management Board, as well as outside consultants. The legislation was introduced in the previous Congress, prior to the arrival of new representatives on January 3, 2019, and has now been referred to the House Committee on the Judiciary for review.
The bill HR 7355, referred to as PRRADA which is an acronym for the Puerto Rico Recovery Accuracy in Disclosure Act of 2018, was sponsored by Representative Nydia Velázquez (D) of New York. Representative Velázquez, who was born in Puerto Rico and now represents the 7th congressional district of New York covering areas of Brooklyn, Lower Manhattan, and Queens, was quoted as stating that “The people of Puerto Rico can’t have faith that this oversight board is putting their interests first if consultants helping implement the restructuring could profit from how much debt service is available under the very fiscal plans they design” following the introduction of the bill to the House of Representatives.
The aim of the proposed bill is “To impose requirements on the payment of compensation to professional persons employed in voluntary cases commenced under title III of the Puerto Rico Oversight Management and Economic Stability Act,” and in addition to sponsorship by Representative Velázquez, the Puerto Rico Recovery Accuracy in Disclosure Act was co-sponsored by Resident Commissioner Jenniffer González-Colón (R) of Puerto Rico, Representative Raúl Grijalva (D) of Arizona, Representative Rob Bishop (R) of Utah, and Representative Andy Biggs (R) of Arizona.
The Puerto Rico Recovery Accuracy in Disclosure Act was primarily prompted for introduction to Congress as a result of the relationship between Puerto Rico’s Financial Oversight and Management Board and consulting firm McKinsey & Company. McKinsey & Company, an American management consulting firm based in New York City, had previously bought Puerto Rican bonds that totaled were at a value in the range of multi-millions of US dollars. However, McKinsey & Company is also currently in the process of advising the Puerto Rico Financial Oversight Management Board, a publicly-funded task force put together to restructure Puerto Rico’s current debt burden and seek strategic funding management for the territory under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), under a consulting contract on the territory’s financial management and debt restructuring process.
The bill recently introduced by Representative Velázquez is attempting to dispel the possible conflict of interest between McKinsey & Company’s holdings of Puerto Rican bonds, used to finance public debt, and their advising decisions concerning the Puerto Rico Financial Oversight Management Board’s future debt restructuring procedures. The Puerto Rico Recovery Accuracy in Disclosure Act would require all files and records taken during the financial management process to be submitted and disclosed for all previous and future individuals and groups employed by the Financial Oversight Management Board.
Representative Velázquez pledged in an official release to move legislation forward as expediently as possible