Bhatia denies conflict of interest in bond purchases

By John McPhaul

Popular Democratic Party (PDP) gubernatorial hopeful Sen. Eduardo Bhatia acknowledged that he has invested in government bonds, saying nothing was unethical about the purchase of the bonds for which he had privileged information as alleged by the New Progressive Party (NPP) Rep. José Enrique “Quiquito” Meléndez.

“I purchased the bonds in a bet on my own country,” Bhatia told the press.

On Tuesday, Meléndez said he had referred the case to the Puerto Rico Department of Justice, urging the department to refer the case to the Special Independent Prosecutor Panel to make clear whether violations of the government ethics law had occurred, whether Bhatia acted for his own benefit, and whether the former Senate president violated other laws.

Meléndez said in a written statement that “regardless of whether Senator Bhatia had profits or losses from his bond purchases from the Puerto Rico Electric Power Authority (PREPA), the reality is that he may have had access to privileged information while he was president of the Senate and did not abstain from voting on legislation that would benefit him as a bondholder.”

“Additionally, he could not participate in government meetings where privileged information related to the agencies where he bought bonds would be discussed,” Meléndez added.

According to press reports, Bhatia could have personally benefited from his position as president of the Senate by promoting legislation that would give him earnings as a government bondholder, Meléndez suggested.

“By participating in all kinds of meetings and voting on legislation related to the payment of bondholders, Bhatia was seeking to ensure the recovery of his money and he remained silent,” the legislator added. “While Eduardo Bhatia was buying COFINA [the Spanish acronym for the Puerto Rico Sales Tax Financing Corp.] bonds, at the same time he was cutting the funds to the retirement system of teachers and public employees. Using insider information to seek to raise his earnings as a bondholder. And that action must be investigated by the Justice Department as soon as possible.”

Bhatia’s spokesman, PDP Rep. Ángel Matos said Bhatia’s family lost $60,000 on investments in the bonds.

While Senate regulations prohibit senators from legislating on behalf of legislation in which they stand to profit, an exception is made for measures that are meant to benefit the island such as the PREPA bonds in which Bhatia invested.

Matos called Meléndez’s accusations a “distraction” from the federal investigations recently aimed at New Progressive Party lawmakers.

“At a time when the corruption of the NPP is at its height, they come up with these allegations, which are a whole lot of nothing,” Matos said.

Meléndez said the former Senate president traveled with public funds to the U.S. Capitol in Washington, D.C. to discuss with members of Congress issues related to debt payments and the establishment of a fiscal control board, which would immediately work in Puerto Rico in search of debt payment to the island’s bondholders. He added that in 2015 the Puerto Rico Senate approved legislation to increase the sales and use tax (IVU by its Spanish acronym) to 11.5 percent, and Bhatia voted in favor of the tax when he should have abstained as one of the bondholders who would benefit from the legislation.

“Bhatia’s actions were irregular transactions as a legislator because he was voting in favor of the repayment of his investment and that of his family, as stated in the media,” Meléndez said. “I had to refrain from participating in the processes.”

“He participated and had access to meetings where privileged information was discussed, first hand when the increase in the IVU was discussed to benefit him as a bondholder and he did not abstain,” Meléndez said. “He did not express to legislators or participants beforehand that he was a bondholder and that he should not be in those meetings, much less could he lobby in his favor with public money when he appeared as president of the Senate at the time. By participating in all kinds of meetings and voting on legislation related to the payment of bondholders, Bhatia was seeking to ensure the recovery of his money and he was silent.”

The NPP lawmaker said he referred the case to the island Justice Department and relevant federal agencies because the current Legislature has no jurisdiction over the actions of the former Senate president.

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