The FBI arrested 10 Puerto Rico officials and businessmen in a corruption probe, dealing a blow to the government as it looks to resolve its financial crisis.
"Unfortunately, this is one more case of graft, greed, and corruption that over the last 20 years have contributed to the government of Puerto Rico's fragile economic condition and [placed it] on the brink of bankruptcy," Carlos Cases, special agent in charge of the San Juan division of the FBI, said in a press statement Thursday.
Cases said that the Puerto Rico branch of the FBI would continue to attack corruption with an "undeniable and fervent passion…. Let there be no doubt this is only the beginning and the investigation will continue," he said.
Some United States Senators have already voiced skepticism about the ability of Puerto Rico's government to properly govern the island, said a municipal bond analyst who specializes in the territory. Today's arrests may make the U.S. Congress more likely to approve a control board to run Puerto Rico's affairs, said the analyst, who spoke anonymously, citing his company's policies.
If it turns out some of Puerto Rico's leaders were involved with the corruption, that would limit the leaders' abilities to negotiate on financial issues, the analyst said.
"The arrests weaken the position of the governor and diminish his political capital," said Advantage Business Consulting president Vicente Feliciano. "That [Gov. Alejandro] García Padilla will not run for reelection is ever more likely. Therefore, we would have a lame duck governor."
The U.S. Attorney's Office filed a 25 count indictment in the case, which will be heard in U.S. District Court for the District of Puerto Rico. The charges include conspiracy to commit federal programs bribery and honest services wire fraud, wire fraud, extortion through fear of economic harm, money laundering, false declarations before a grand jury, and obstruction of justice.
According to a press statement from the United States Attorney's Office for Puerto Rico, Anaudi Hernández Pérez, who is charge of campaign finances for the Popular Democratic Party, was at the heart of several government corruption schemes. García Padilla and the majority of members of the Puerto Rico Senate and House of Representatives are members of the same party.
Also charged was the administrator of the government's Workforce Development Administration, three important professionals working for the House of Representatives, two businessmen, a former vice president of the Puerto Rico Aqueduct and Sewer Authority and the head of purchasing for this authority. In addition, the FBI charged the sister of PRASA's head of purchasing.
"For decades now, political cronyism, favoritism, and corruption have robbed the people of Puerto Rico of the right to decent services and unbiased representation, including legally awarded government contracts," said U.S. attorney for the District of Puerto Rico Rosa Emilia Rodríguez Vélez. "The people of Puerto Rico foot the bill for the underhanded dealings detailed in the indictment.
"The time for government cronyism that allows some to line their pockets with ill-gotten contracts at the expense of the many, is over. The time for public servants to trade their duty to represent the people of Puerto Rico in exchange for political appointments and gifts, is also over," Rodríguez Vélez said.
The office claims that after the election of García Padilla in November 2012, Hernández Pérez and several unindicted co-conspirators set up corporations that were de facto under his control and made alliances with other corporations and limited liability companies. He used his connections with high ranking members of the government and with the governor's brother to get the new government to appoint certain people to government positions.
After these people gained these positions, Hernández Pérez gave them valuable things like expensive meals, personal gifts, concert tickets, and the payments of debts. In exchange for their positions and these gifts, these people used their authority to approve contracts and purchase orders for the corporations and limited liability companies connected to Hernández Pérez.
"On many occasions, Hernández Pérez and his co-conspirators provided substandard work on their contractual obligations in that they: a) failed to make the required payments to suppliers, subcontractors and creditors; b) failed to abide by the terms of the contract regarding performance results/follow up as required under the contract; c) failed to competently provide the services they were contracted to perform," the U.S. Attorney's Office said in a written statement.
"With sadness, anger, and great disappointment, I received today information about the arrests made by federal authorities for apparent crimes committed by a group of people among who are officials of this administration and people I know," García Padilla said in a press statement. "The Department of Justice of the Commonwealth of Puerto Rico and all executive agencies are cooperating and will continue to support this and any other investigation by federal authorities."
