Mientras la Junta de Supervisión Fiscal exige ver y controlar cada renglón de gasto del gobierno de Puerto Rico, ningún ente local o federal parece tener visibilidad total o la posibilidad de detener la espiral ascendente de gasto en consultores, asesores y abogados que contrata la Junta y el gobierno y que suman hasta el primer trimestre del 2024, $2,021,957,705.  Cantidad que excede significativamente el estimado original de $370 millones que hizo el Congreso del costo que tendría PROMESA. Es notable la falta de transparencia de la Junta, cuando ésta no ha rendido cuentas al pueblo de Puerto Rico ni al Congreso de los Estados Unidos sobre la totalidad de los gastos de PROMESA, al EXCLUIR en sus informes el 84.8% del total de desembolsos que se ha hecho con cargo al bolsillo de los puertorriqueños. La opacidad y gasto sin aparente control, en este proceso, toma mayor relevancia en momentos en que la Junta ha solicitado aumentar de $50 mil a $100 mil la partida que retienen mensualmente uno de los representantes legales de la Junta.  Llama la atención la doble vara que utiliza la Junta en cuanto a los requerimientos que hace a las agencias locales respecto al gasto público y lo que ésta se aplica a sí. Ante el retraso evidente de un nuevo plan de reestructuración sobre la Autoridad de Energía Eléctrica de Puerto Rico que propició una reciente orden de la jueza Taylor Swain para que la Junta de Control Fiscal emita un informe sobre el retrasado plan fiscal y un calendario sobre la presentación del plan de ajuste enmendado de la AEE antes del 28 de febrero de 2025, Espacios Abiertos se ha dado la tarea de actualizar su informe de 2023,  Sus asesores, tus chavos: falta de acceso a los datos que han informado la reestructuración en Puerto Rico  con el objetivo de transparentar el gasto que sigue pagando el pueblo de Puerto Rico en la reestructuración de la deuda pública y otros gastos asociados. Además de exigir una completa rendición de cuentas de la Junta, debemos procurar que el conocimiento recogido y generado de estas consultorias pagadas con dinero público sobre los haberes públicos de Puerto Rico se transfiera en conocimiento para las instituciones nuestras de gobierno y que se ofrezca acceso completo al público de toda esa información. Las siguientes gráficas resumen visualmente el costo en consultores que ha tenido PROMESA.

Evolución del gasto en consultoría entre 2017-2024

Distribución del gasto en consultoría entre 2017 y 2024

Distribución del gasto en litigios principales bajo PROMESA

Los pagos por litigios bajo título III de PROMESA incluyen:  $1,109,013,249 para el pleito del Gobierno de Puerto Rico, $438,803,487 incurridos en el caso de la AEE, $62,816,103 en el de COFINA, $51,165,166 de la Autoridad de Carreteras,  $39,758,739 d el Sistema de Retiro y $960,400 en el caso de Edificios Públicos. El desembolso de $308,111,005 a consultores contratados fuera del proceso de Título III, es una partida de  consultores contratados directamente por la Junta de Supervisión Fiscal que son pagados del presupuesto operacional que se consigna anualmente a la Junta.

Principales consultores y abogados pagados en el proceso de reestructuración de la deuda de Puerto Rico Los principales consultores, según el gasto incluyen a: Proskauer Rose LLP con $355,826,874,  McKinsey & Company con $307,318,840, Ankura Consulting Group, LLC con $180,947,374, Ernst & Young LLP con $179,445,657, CITI Group Global Markets Inc. con $126,565,344, O’Melveny & Myers con $115,828,094, PJT Partners LP con $115,000,000, Paul Hastings LLP con $86,841,542, Deloitte con $55,497,713 y Alvarez & Marsal North America, LLC con $35,727,382. Si se compara el gasto acumulado entre 2023 y principios del 2024 (14 meses) con el acumulado antes, las firmas que han reportado el mayor aumento en pagos son Ankura Consulting Group, LLC, con un incremento de $137.59 millones o un 317.38% de aumento, seguida por Proskauer Rose LLP, que recibió $131.32 millones adicionales, reflejando un 58.50% de incremento en el mismo periodo,  CITI Group Global Markets Inc., con $46.50 millones (58.08% de aumento), Ernst & Young LLP, con $45.62 millones (34.09% aumento), y PJT Partners LP, que duplicó sus pagos con un incremento de $57.50 millones, representando un 100% de aumento en 14 meses.

________Acceda aquí el contenido del informe y tablas actualizadas a 2024. Versión español. English version. Para acceder el Informe original de Espacios Abiertos de 2023, oprima aquí para la versión en español.  English version.

Espacios Abiertos (EA) report reveals lack of transparency and billionaire expenses in consultancy by the Fiscal Oversight Board (FOMB)

EA questions the Board’s refusal to disclose the data that has informed the restructuring process and that it has been paid for with public money.

(San Juan – August 22, 2023) – During the period from 2017 to 2023, the Fiscal Oversight Board (FOMB) has spent over $1.5 billion in advisory and consulting services associated with the restructuring of Puerto Rico’s debt.  According to a report by Espacios Abiertos, the amount spent by the FOMB in seven years is far from the $370 million that Congress estimated in 2016 as the cost on legal, financial advice, and administrative fees to be spent over a decade for the debt restructuring process in Puerto Rico.

The report titled Their Advisers, Your Money: The Lack of Access to the Data that Has Informed the Restructuring in Puerto Rico and authored by Wilmarí de Jesús Álvarez, a policy analyst at Espacios Abiertos, gives visibility to the extraordinary expense in consultants required by the Fiscal Oversight Board and the Title III court. Upon review of the Board’s monthly and annual reports, the court’s docket, and the Fee Examiner reports, Espacios Abiertos identified, as of June 18, 2023, a total expense incurred of $1,500,353,160.

“At a time when the Board refuses to publish the raw data that was the basis for the Certified Fiscal Plans, as well as for the various debt adjustment agreements, EA highlights the expenses incurred from the pocket of the Puerto Ricans. Some 54 documents and hundreds of pages of references to reports, invoices for services rendered, contracts, invoices from the Fee Examiner, and other documents reveal what the people of Puerto Rico have paid to the consultants and advisors of the Board,” said the Executive Director of Espacios Abiertos, Cecille Blondet, while reiterating their demand to the Board to publish the requested information, which is public information, and alerting Congress to take action if the Board does not do so.

On the other hand, de Jesús Álvarez, author of the report, also questioned the transparency of the Board by highlighting that: “In its most recent annual report, the Board chose not to mention the total expenses that the restructuring of the public debt has represented up to date. In addition, the Board continues its established pattern of lack of full accountability, when it leaves out detail to 40% of the almost $300 million it has directly paid to consultants”.

In contrast, while the Board fails to report its disbursements fully, the data obtained from the court’s docket regarding disbursements made through the court (a total of $1,192,798,602) is more complete and detailed. This detail offers the opportunity to visualize the total disbursed by the court per case, per agent, and per type of service. Of this total, the five (5) main lawsuits under PROMESA have represented disbursements to consultants, advisers, and lawyers, by case, in the following percentages: the Commonwealth of Puerto Rico (72.98%), Puerto Rico Electric Power Authority (15.18%), Puerto Rico Sales Tax Financing Corporation (5.27 %), Highways and Transportation Authority (3.44%), Employee Retirement System (3.07%) and Public Buildings Authority (0.06%).  In addition, it was possible to classify the expense per service according to seven (7) categories of contracted services: legal advisors, financial advisors, consultants, strategic consultants, communication services, mediation, and administrative expenses. The highest expense among these categories corresponds to legal services (44.20%). While financial advisory and consulting firms represent 32.19% and 21.47% of spending, respectively. Leading the list in order of billing is McKinsey & Company and the law firm Proskauer Rose, followed by Ernst & Young (firm that recruited former Board CEO Natalie Jaresko), O’Melveny & Myers, and CITI Group (See graph in Annexes).

Espacios Abiertos’ Report also highlights that of a total of $1,220,029,476 in invoices submitted by consultants to the court for payment, the Fee Examiner­–in charge of supervising and auditing the billing of advisory services prior to their payment–only recommended the disbursement of $1,192,798,602, which constitutes a difference of $27,230,873 or 2.2% less than what was invoiced.

“The bankruptcy process that the United States Congress led through PROMESA, and that the Board and the Court execute by virtue of said law, should guarantee lessons learned to the people of Puerto Rico and its institutions. This requires that both the representatives elected by the citizens and the rest of civil society have timely access to a minimum of documents, which are not restricted solely to reports and spreadsheets. But to all the documents used and prepared by experts and advisors. Knowledge and information for which the people of Puerto Rico have paid more than $1.5 billion. The transfer of knowledge to our public institutions should be a non-negotiable priority if we want to prevent Puerto Rico from entering a cycle of over dependence on private consultants. It is imperative to eliminate the parasitic relationship with the state and promote a symbiotic one where we train our public entities so that all benefit,” concluded the report by Espacios Abiertos.

Link to Policy Brief: Their Advisors, Your Money: Lack of Access to the Data that Informed the Restructuring Process in Puerto Rico (August 2023)

Espacios Abiertos, the National Freedom of Information Coalition, the Iowa Freedom of Information Council and the Nevada Open Government Coalition file Amici Curiae in support of CPI (appellee) and affirmance.

SUMMARY OF THE BRIEF’S ARGUMENT

FOMB’s sovereign immunity defense rests on a fundamental conflation of the “two independent aspects” of sovereign immunity: “immunity from suit in a federal forum . . . and substantive immunity from liability.” New Hampshire v. Ramsey, 366 F.3d 1, 15 (1st Cir. 2004). FOMB concedes that if the claim is one for which it lacks substantive immunity from liability, there is no immunity from suit in federal court for those claims because PROMESA “creates federal jurisdiction over claims to which the Board is not immune.” (FOMB Br. 26.) By contrast, FOMB argues, PROMESA’s grant of exclusive jurisdiction in the federal forum does not waive or abrogate immunity “from claims under territory law” (id. 30)—in other words, waiving forum immunity does not waive substantive immunity under territory law. True enough. But the problem for FOMB is that Puerto Rico already waived substantive immunity from access to records claims in its own courts, and FOMB agrees it is part of Puerto Rico’s government. And

(Note 7.  Amici take no position on whether Puerto Rico enjoys Eleventh Amendment immunity following Puerto Rico v. Sánchez Valle, 136 S. Ct. 1863 (2016). The Court need not reach that issue because FOMB lost any immunity it might have had. Amici assume, like the parties have, that FOMB is the real party in interest, rather than Board members.)

because PROMESA abrogates, and FOMB waived, forum immunity, there is no Eleventh Amendment bar to these claims in federal court on either basis.

FOMB lacks both forms of sovereign immunity here. First, it waived substantive immunity. Puerto Rico, by creating a private cause of action against itself by statute and under its constitution for access to public records, waived substantive immunity from those claims in its own courts.

Second, FOMB argues (in a footnote) that PROMESA makes FOMB an arm of the Commonwealth for sovereign immunity purposes. But if FOMB steps into Puerto Rico’s shoes, it must take that immunity as it finds it. Because Puerto Rico waived substantive immunity for these claims, FOMB would, too.

Third, Congress abrogated, and FOMB waived, its immunity from suit in a federal forum. (See CPI Br. 34, 44-45.) PROMESA provides that the court below has exclusive jurisdiction in “any action against” FOMB, 48 U.S.C. § 2126(a), which is unmistakably clear in abrogating immunity from federal suit. And FOMB waived forum immunity for the added reason that it moved for the
Bankruptcy Court hear the case and bar the claims under the automatic stay, only raising the Eleventh Amendment defense after losing. (See CPI Br. 5-6, 11, 15- 17.) Having entreated a federal court to resolve these claims, FOMB cannot now claim immunity here.

A contrary holding would allow a state or territory to “selectively invoke its Eleventh Amendment immunity to gain litigation advantage.” Ramsey, 366 F.3d at 17; see also Lapides v. Bd. of Regents, 535 U.S. 613, 621 (2002). Worse, it would extinguish liability for sovereigns that chose to subject themselves to it: any exclusive federal jurisdictional grant would foreclose the state law claim in state court, and forum immunity would bar the same claim in federal court. The Court should instead hold FOMB to its concessions: if it is part of Puerto Rico’s government and PROMESA authorizes federal suit against it, it has neither substantive nor forum immunity for these claims, and the Court should affirm.

Access the full brief here.