Following Sunday’s confirmation that Puerto Rico Treasury Secretary Juan Zaragoza had stepped down from his post at the Government Development Bank’s board of directors, to “avoid a conflict of interest,” a group of bi-partisan lawmakers demanded transparency from the troubled public agency.
Senate President Eduardo Bhatia, of the incumbent Popular Democratic Party, requested “total and absolute transparency” from members of the government’s fiscal team.
“Fiscal uncertainty causes dangerous speculation that neither the people of Puerto Rico, U.S. Congress, nor the U.S. Treasury and capital markets need nor tolerate at this time,” he said.
According to published reports, Zaragoza stepped down ahead of the possibility of placing the GDB under receivership given its alleged insolvency status — a task the Treasury Department is charged with. On Friday, Gov. García-Padilla denied the GDB will be closed down, saying the government is looking for every alternative to keep it going and meet a May 1 debt service payment of some $422 million.
In a statement, Bhatia reiterated the Senate’s availability to address any legislation needed to restructure the GDB in an “urgent, prioritized and responsible” manner.
“Time is short and we must proceed with corrective actions,” he said.
Meanwhile, New Progressive Party lawmakers Jennifer González-Colón and Jorge Navarro-Suárez berated the government’s lack of transparency that has “lead to the GDB’s insolvency.”
Specifically, the legislators chastised the current administration for granting more than $140 million in consulting contracts to firms, including several they claim have “driven bankruptcies of sovereign countries.
They requested an audit of the GDB as well as an interpellation of bank officials and other government fiscal authorities. Furthermore, they asked for the disclosure of the total deposits that have reportedly been moved to private banks and the effect this has had on the GDB’s reserves and capitalization.
“No one can help Puerto Rico if they do not provide information that is being required. With the imminent receivership of the GDB, it is time to seek alternatives that help Puerto Rico end the crisis this administration has brought about,” said González-Colón.
“The Risk Management Report the GDB presented to address the crisis are not the right ones: a default, or a moratorium on the payment the obligations, which will have a detrimental effect on the Puerto Rican economy,” she said.
On Friday, GDB President Melba Acosta issued a lengthy statement denying the bank will be shut down or privatized, as was reported.
“This irresponsible rumor is damaging to the GDB as an institution, as well as needlessly harmful to our employees and their families. GDB management has met with employees and informed them that, due to the fragility of the Bank’s liquidity, all available options are currently being reviewed,” she said.
“These options will responsibly address the issues facing the GDB and will not involve the dismissal of public employees. As we have for weeks, GDB representatives continue to engage with a considerable group of our creditors about the restructuring of the GDB’s debt,” Acosta said.
“As we have stated publicly, the government is also considering additional measures to address this situation, such as declaring a temporary moratorium on payments, and amending the GDB charter,” she added.