The Financial Oversight and Management Board for Puerto Rico filed more than 230 complaints against individuals and entities to recover some $4.2 billion in payments by the Commonwealth of Puerto Rico that were in conflict with the U.S. Bankruptcy Code and Puerto Rico law.
The complaints allow the Oversight Board to ensure that the payments to vendors and contractors who worked for the Puerto Rico government were appropriately and fairly spent, and if not, recover that money for the people of Puerto Rico, the regulatory body stated.
The Oversight Board’s Special Claims Committee identified individuals and entities which received payments above $2.5 million without a valid contract or for whom payments didn’t match the respective contract during the four years prior to May 2017, when the Oversight Board initiated the debt adjustment proceeding under the Puerto Rico Oversight, Management and Economic Stability Act.
“The Oversight Board has a responsibility to the people of Puerto Rico to recover any payments in contravention of bankruptcy or Puerto Rico law made prior to the Commonwealth’s bankruptcy,” said Oversight Board Executive Director Natalie Jaresko.
The legal actions do not necessarily imply that the individuals and entities committed any wrongdoing, the regulatory body stated.
“If a vendor demonstrates a proper basis for the payments, the Oversight Board will dismiss the claim,” it said in a statement.
Board urges gov’t to pursue pension payments in arrears In a separate action, the Oversight Board to take immediate action to secure reimbursement of $340 million in payroll retirement withholdings.
In a press release, the regulatory body cited the “PayGo and Individual Contribution Debt by Entity” report by the Puerto Rico Fiscal Agency and Financial Advisory Authority, which showed that 28 public corporations and 66 municipalities accrued the debt since implementation of the PayGo system in 2017.
The report showed that 20 municipalities and seven public corporations are not remitting individual employee payroll withholdings for that employee’s defined contribution retirement account. These are deductions taken from employee paychecks and must be remitted to a segregated defined contribution account on that employee’s behalf.
The largest debts due to the central government, are from the municipalities of San Juan, Ponce, Carolina, Arecibo and Toa Baja, as well as the Puerto Rico Aqueduct and Sewer Authority, the Puerto Rico Ports Authority, and the State Insurance Fund. The Metropolitan Bus Authority, the Highways and Transportation Authority are also on the list.