Oversight Board defends revocation of $5.9 billion PREPA contract
The Financial Oversight and Management Board for Puerto Rico says alleged fraud occurred after its review and that it referred the matter to federal authorities.
File photoThe short version
- El Vocero reported the Oversight Board revoked approval of a 10-year $5.9 billion temporary generation contract with Power Expectations LLC, Enchanted Rock LLC and Reyes Contractor LLC
- The board stated the revocation was inevitable and in the best interest of Puerto Rico despite objections from the government contracting agency
- Microjuris al Día reported the board said alleged fraud and falsification happened after its review and the matter was referred to federal authorities
- The board questioned hedge fund bondholders seeking $12 billion from PREPA saying it would harm electric system reconstruction
Board cites post-approval changes
The Financial Oversight and Management Board for Puerto Rico defended its handling of a $5.9 billion contract on Tuesday, October 6. El Vocero reported the board revoked its earlier approval of the 10-year agreement between the Puerto Rico Electric Power Authority (PREPA), Power Expectations LLC, Enchanted Rock LLC and Reyes Contractor LLC for temporary electric generation systems.
The board said it had serious concerns from the day the government sent the contract for review. It approved the deal only after the government added extra safeguards. The board stated that changes to the agreement and the alleged fraud and falsification occurred after its review. It has referred the matter to relevant federal authorities. The board acted against the explicit objection of the government contracting agency.
What the sources posted
Posts and statements below are the sources' own words, quoted as published. They are not independently verified.
La reciente decisión [...] era inevitable y se hizo en beneficio del pueblo de Puerto Rico
Our translation: The recent decision was inevitable and was made for the benefit of the people of Puerto Rico
The source's own statement, as quoted by El Vocero. Not verified by PuertoRico.com.
Board clarifies its role
In a statement, the Oversight Board said it is not a party to the contract and does not direct the contracting process. PROMESA gives it a mandate of oversight rather than the function of a contracting agency. Microjuris al Día reported the board reiterated that the government has the obligation to examine its counterparties.
The board described the revocation as inevitable and beneficial to the people of Puerto Rico. It said the alleged fraud took place after its review and that it had referred the case to federal authorities.
Response to bondholders
The Oversight Board questioned a group of New York-based hedge fund bondholders. It attributed to them the intention to claim $12 billion from PREPA. The board said such claims would harm the reconstruction and maintenance of the electric system. It added that these funds continue to prevent PREPA from exiting the Title III bankruptcy-like process under PROMESA and block the delivery of a functional and financially sound public service.
Where the sources differ
Both El Vocero and Microjuris al Día report the Oversight Board's defense of its revocation of the $5.9 billion contract and that alleged fraud occurred after its review. El Vocero published on October 6 and includes the board's statement that it had serious concerns from the beginning and that it referred the matter to federal authorities. Microjuris al Día, published on October 9, uses nearly identical language on the timing of the fraud and the board's non-contracting role but adds detail on the government's obligation to examine counterparties. Both sources agree the board acted against the contracting agency's objection and criticize hedge funds seeking $12 billion from PREPA. No numerical or factual contradictions appear between the two reports.
What the reports do not say
The reports do not identify the specific nature of the alleged fraud or falsification, the individuals or entities involved, or the exact changes made to the contract after the board's review. They do not state when the board learned of the changes, the identity of the federal authorities to whom the matter was referred, or any actions taken by PREPA or the government contracting agency following the revocation. The current status of temporary generation needs for the electric system is not addressed.
Sources
Every link below was opened and checked when this story was published. Official means a government body, agency or the organization itself; Reporting means a news outlet.
- Official Junta de Supervisión defiende revocación de contrato de $5.9 mil millones
- Reporting Junta de Supervisión defiende revocación de contrato de $5.9 mil millones
- Reporting Junta de Supervisión defiende su gestión en contrato de $5,900 millones
How we checked this
El Vocero and Microjuris al Día both drew directly from the same Oversight Board statement. The board's claims about the timing of the fraud, its limited role under PROMESA, and the impact of bondholder claims rest on that single official communication. No independent verification or additional details from PREPA or federal investigators are included in either report.
Compiled by the PuertoRico.com News Desk from the reports and statements listed above, and checked against them before publishing. It does not include original interviews. Spot an error? Email support@puertorico.com with a link to this story.