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  • Writer's pictureThe San Juan Daily Star

Legislator seeks probe into selection of firm associated with Lisa Donahue as adviser to AAFAF

Rep. Mariana Nogales Molinelli

By The Star Staff

Citizen Victory Movement Rep. Mariana Nogales Molinelli proposed on Wednesday to investigate the selection of Alix Partners and Ankura Consulting Group LLC as two of the companies that will advise the Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) on the Puerto Rico Electric Power Authority’s debt adjustment plan (DAP) and the issuance of bonds that it orders.

“Since the beginning of February, when we were discussing the amendment to the budget to enable the payment of the DAP, I insisted that we needed to know the names of all the natural and legal persons who were involved in the bond issue that is supposed to be done now in March,” the lawmaker said.

She said AAFAF Executive Director Omar Marrero hesitated “but finally provided some resolutions from the AAFAF board authorizing the selection of several companies, including Alix Partners, “the firm that brought us Lisa Donahue and the debacle in the restructuring process of PREPA.”

Donahue was chief restructuring officer. When then-Gov. Ricardo Rosselló Nevares took office, the contract was canceled. During Donahue’s tenure, the first restructuring support agreement (RSA) for PREPA was negotiated. However, the Financial Oversight and Management Board rejected it.

“How is it possible to rehire a company that charged us $45 million for poor work with irregularities that the Institute of Energy Economics and Financial Analysis (IEEFA) pointed out at the time?” Nogales Molinelli said in a written statement. “To make matters worse, AAFAF assigns it such an important role as calculating the extra payment that will be made to the creditors of the debt if the government’s collections exceed the projections included in the Certified Fiscal Plans.”

The legislator also described Ankura’s role as AAFAF’s financial adviser as problematic.

“It must be remembered that the main executives of Ankura, the Batlle brothers, held executive positions in the Government Development Bank during the Luis Fortuño administration, as part of a revolving door scheme with Banco Santander, an institution that established itself as one of the main bond underwriters while Puerto Rico’s public debt grew,” Nogales Molinelli said. “From there they were responsible for actions that led Puerto Rico to the debt crisis and to the gloomy situation that exists today when the restructuring of a debt that has not been audited reaches its climax. That was not an impediment for Ankura to receive almost $128 million in consulting contracts since 2017. It cannot be that the same ones who indebted us are now profiting by deciding how the debt is paid.”

House Resolution 697 would order the Finance and Budget Committee and the Economic Development, Planning, Telecommunications, Public-Private Partnerships and Energy Committee to obtain all available information on the requests for proposals issued by AAFAF between November and December 2021 that led to the selection of Alix Partners and Ankura Consulting Group LLC as “calculating agent” and financial adviser, respectively, as well as the one that culminated in the appointment of UMB Bank as depositary, paying agent and registrar of the bond issue that, according to the DAP, should occur this month.

Likewise, the measure seeks to explore the proposals presented by different financial institutions, the terms and conditions of the contracts with Alix Partners and Ankura Consulting Group LLC and official communications, in other related matters.

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