Friday November 17, 2017

'It's a mess': Ex-governor of Puerto Rico slams Whitefish deal as island struggles to restore power

Residents gather to receive food and water, provided by FEMA, in a neighbourhood without grid electricity or running water on Oct. 17 in San Isidro, Puerto Rico.

Residents gather to receive food and water, provided by FEMA, in a neighbourhood without grid electricity or running water on Oct. 17 in San Isidro, Puerto Rico. (Mario Tama/Getty Images)

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Story transcript

Nearly two months after Hurricane Maria decimated Puerto Rico, many residents are still without power and basic services. Fifty per cent of the island has no electricity and intermittent blackouts have pushed that number even higher. 

Meanwhile, the island's power authority is coming under criticism for signing a $300-million US contract with a tiny Montana energy company — Whitefish — to repair the power grid. The government has now promised that contract will be canceled. 

On Friday, the executive director of the Puerto Rico Electric Power Authority Ricardo Ramos resigned in the wake of the controversy

As It Happens host Carol Off spoke with Acevedo Vila, a lawyer who served as governor of Puerto Rico from 2005 to 2009.  His home in San Juan has been without power since the hurricane hit in late September.

Here is part of that conversation.

What do you make of this contract that was signed between the utility in Puerto Rico and this company Whitefish Energy?

I feel like everyone who has read the contract, there's no way to explain that, there's no way to understand that, and it has hurt Puerto Rico in two ways.

It has hurt Puerto Rico because the recovery has been slower and the government of Puerto Rico has lost a lot of credibility in the public opinion in the United States, in particular in Congress, which we need now, for Congress to appropriate the adequate funds for the reconstruction and recovery of Puerto Rico. There are many doubts. 

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A police car patrols on a darkened street three weeks after Hurricane Maria hit the island. (Mario Tama/Getty Images)

Do you think there was corruption? Were there kickbacks? Was there some kind of a deal cooked?

I wouldn't rule that out. I don't have any strong evidence of that, but the fact that the administration, the local administration, the governor and the head of the power authority haven't been able to give a clear response just makes more doubts about what happened.

They say that the problem is that Puerto Rico, the utility, owes $70 billion dollars to creditors. It couldn't get any other company to do this because it has no credit and they have to pay the money up front. This is the only company they could find.

There are three problems with that story. Number one, they admitted that the power authority had $400 or $500 million on reserve so if they had to make any kind of down payment to any company they did have the money for that.

Number two, they did pay in advance, I think it was like $3 or $4 million to Whitefish to move here.

Number three, they paid in advance to another company, Cobra, which is another contract which is also kind of suspicious. They paid $15 million to Cobra.

And the last one, which is the most important, they never called the American Public Power Association, the organization of all the public utility companies. So they don't know if they were willing to come here asking for nothing because those are public-owned utilities so they are not in the business for profit. They will basically make an offer on a cost basis. So we don't have anything to compare because he went directly to this private company. 

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Anibal Acevedo Vila is a lawyer and was the governor of Puerto Rico from 2005 to 2009. (Amy Sussman/Getty Images)

And these are outrageous charges. Apparently, the reasons for that, this is the excuse, is that it was difficult to get workers given the conditions in Puerto Rico and they had to pay them a premium in order to go down there and do the job.

What Whitefish did is that they got the contract and they subcontracted with precisely those companies that were willing to contract directly with the government of Puerto Rico.

The New York Times had a story that some of those companies were here in Puerto Rico. Their lineman workers were being paid like maybe $100 per hour and Whitefish was being paid $360. So there's no way to explain for that. 

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U.S. President Donald Trump speaks with Gov. Ricardo Rossello of Puerto Rico about the continuing recovery efforts following Hurricane Maria. (Kevin Dietsch-Pool/Getty Images)

Do you mind if I say this? What a mess.

Yeah. It's a mess and the people of Puerto Rico are really mad. I just came from Washington. I went to the two hearings, one in the Senate, one in the House, last Tuesday. I can tell you those members of Congress, Republicans and Democrats, are really mad at this contract.

Sen. Lee from Utah, who is a Republican, he had a great line. He said, "You don't have to be a biologist to know that Whitefish doesn't swim alone." He used the word corruption so he was implying that someone is behind this. 

This interview transcript has been edited for length and clarity. For more on this story, listen to our full interview with Anibal Acevedo Vila.