Torres Cruz refers LUMA CEO to Securities & Exchange Commission
By The Star Staff
Following the findings that emerged from a House investigation ordered under Resolution 136, Popular Democratic Party Rep. Luis Raúl Torres Cruz referred LUMA Energy CEO Wayne Stensby on Wednesday to the U.S. Securities and Exchange Commission (SEC) citing an alleged conflict of interest.
Torres Cruz said the House probe revealed that Stensby held a senior position in Canadian Utilities, ATCO’s parent company, the latter of which owns 50% of the shares in LUMA Energy, with Quanta Services owning the other 50%.
“This business relationship between these two companies presents a potential conflict of interest for Stensby,” Torres Cruz said in the letter sent to SEC Chairman Gary Gensler.
Stensby participated in negotiations that led the island government to hire LUMA Energy in June 2020 to operate the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D system. LUMA Energy took over control of the T&D system on June 1 following a one-year transition phase.
At the time, Stensby was negotiating the contract in his capacity as vice president of ATCO early in 2019, and led the closing of the contract with PREPA in June 2020. During this initial transition, LUMA hired ATCO affiliates and Quanta for several million dollars, giving them access to inside information that would give them an undue advantage over other potential subcontractors.
Both Quanta Services and ATCO have made representations to their investors that the LUMA contract in Puerto Rico represents potential earnings in the order of $6 billion for each of these companies during the term of the contract.
“Mr. Stensby has been negotiating the LUMA Contract as a vice president of ATCO since early 2019, and has entered with LUMA into a front-end transition process with PREPA since June 22, 2020,” Torres Cruz said. “During this front-end transition LUMA has actually contracted ATCO and Quanta affiliates for several millions of dollars and given access to inside information that would give both Mr. Stensby and Quanta and ATCO affiliates an undue advantage over other potential subcontractors.”
Torres Cruz added that Stensby has a relationship of trust and confidence with LUMA and ATCO, according to the LUMA Code of Conduct.
“Mr. Stensby will have access to nonpublic and privileged information which would be an issue under Rule 10b5-l since insider trading liability arises in connection with a trader’s ‘use’ or ‘knowing possession’ of material nonpublic information,” the lawmaker said. “This rule provides that a person trades ‘on the basis of’ material nonpublic information when the person purchases or sells securities while aware oí the information. If Mr. Stensby uses nonpublic and privileged information which he has access to through his CEO positíon at LUMA, he would engage in a breach of duty arising from a relationship of trust and confidence and leading to a personal gain or benefit that would configure a violation of the Securities and Exchange Commission’s rules.”
Torres Cruz had previously filed a complaint against Stensby in the Government Ethics Office.
LUMA Energy, meanwhile, also will have access to federal reconstruction funds.
The Puerto Rico Energy Bureau approved an investment of $1.24 billion for 65 electrical infrastructure projects included in PREPA’s integrated resource plan (IRP), according to a press release.
Among other initiatives, the projects include works on the utility’s T&D system, as well as on its energy generation assets in Aguirre, Cambalache and Costa Sur, according to the document.
LUMA Energy will handle the funds related to the T&D.
The projects will improve the quality of the services PREPA subscribers receive, the item noted.
Most of the financing is coming from Federal Emergency Management Agency (FEMA) funds to support the island’s reconstruction from the damages caused by Hurricane Maria. PREPA now has to receive final approval from FEMA and the commonwealth Central Recovery and Reconstruction Office to access the funds, the press release indicated.