• The San Juan Daily Star

Legislator proposes probe of 2010-2012 PREPA bond issues

Rep. José Rivera Madera

By The Star Staff

Popular Democratic Party Rep. José “Cheito” Rivera Madera proposed to investigate the legality of the bond issues executed by the Puerto Rico Electric Power Authority (PREPA) between March 26, 2010 and April 12, 2012, arguing they are part of a scheme to dismantle the public corporation.

The probe, as announced, would be carried out under Resolution 563, filed by Rivera Madera and referred to the House Committee for Economic Development, Planning, Telecommunications, Public-Private Partnerships and Energy.

The lawmaker stated in the resolution that “in the face of the unprecedented crisis of the electricity service for the Puerto Rican people, it is necessary to establish the use that was given to that money, amounting to more than $3 billion in various bond issues, the purpose of which was supposedly to improve the infrastructure and capacity of the country’s energy service.”

“We are less than a year away from the expiration of the terms of some of these obligations and after 10 years the main purposes of that indebtedness do not seem to have materialized,” Rivera Madera added, referring to PREPA’s deteriorated infrastructure.

In 2015, the STAR reported that money from bond issues executed by PREPA starting in 2000 for capital works were used to pay debt instead of for infrastructure improvements.

From 2009 to 2012, PREPA issued $4.5 billion in bonds but only used $807 million for capital works construction. The rest was used to pay for credit lines at the request of bondholders and the Government Development Bank.

In a report, PREPA officials erroneously certified that the money was used for capital improvements.

Rivera Madera said financial entities that the U.S. Securities and Exchange Commission has said were involved in mismanagement and violations of law were involved in some of the bond issues.

“The government of Puerto Rico entered into negotiations with companies that had committed illegalities and were offering bonds for sale under trickery and deceit,” he said. “In other words, here, in the case of the loans, PREPA may have fallen into a scheme of deception in the issuances that made the corporation even more indebted.”

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