The administrative chaos within the Electric Power Authority (PREPA) after the sudden resignation of Walter Higgins and the mass resignation of the directors of this public corporation has led the National Public Finance Guarantee (NPFG) and other creditors to renew their interest in appointing a trustee in the public corporation.
In an attempt to gain control of PREPA and remove the political interventionism that has allegedly contributed to its bankruptcy, NPFG expressed to the Board its interest in working together to appoint a trustee in the public corporation or reach some other appropriate solution.
"The departure of the independent members of PREPA’s (Governing) Board forced by Governor (Ricardo) Rosselló has demolished and reversed the leadership structure of the utility and has plunged PREPA into a crisis," reads a letter signed by lawyer Marcia L. Goldstein and addressed to the Board and Jaresko.
According to the letter that El Nuevo Día could access, the possibility of a trustee for PREPA or some other solution in order to restore an independent leadership in the public corporation has already been discussed with PREPA’s advisers.
"In the lack of immediate action to solve this crisis, PREPA's history of administrative and operational dysfunction, tied to excessive governmental bureaucracy and politicization, will continue in this critical situation for PREPA, its stakeholders and the people of Puerto Rico," Goldstein told the Board.
Goldstein, a partner of Weil, Gotshal & Manges, sent the letter dated July 17. It is the first concrete response to the chaos that has prevailed in PREPA since last week. This happened after a political struggle, personal matters and changes to the contractual terms agreed with Higgins that ended up in his resignation, the appointment of his successor, Rafael Díaz Granados, and the resignation of the majority of the members of the PREPA’s Governing Board when Rosselló asked to adjust Díaz Granados´ salary. Ernesto Sgroi, Rosselló´s campaign treasurer, was among those who resigned.
According to four separate sources, although Higgins resigned due to personal reasons and because of PREPA's refusal to comply with the productivity bonus negotiated as part of his hiring only four months ago, the last straw for him was the request to fire any officer in trust positions who may have links to Senate President, Thomas Rivera Schatz.
That order that might have come from La Fortaleza was not only to Higgins, but also to the Executive Director of the Aqueduct and Sewer Authority, Elí Díaz Atienza, who was appointed by Rosselló Nevares as part of PREPA’s Governing Board last week.
In view of the accusations, the Secretary of State, Luis G. Rivera Marín, said that whoever made such allegations "does it to create discord where there is no discord".
"This administration works daily so that every government agency or entity promotes and achieves the savings required both by Law 26 and Governor Rosselló´s different executive orders," said Rivera Marín.
"All personnel actions, especially in trust positions, including recognition and appointments, are consistent with our budgetary reality and the challenges we have to face in the future," he said.
Just when Rosselló appointed José Ortiz as new PREPA director, the public corporation faces the possibility that creditors and the Board seek to appoint a new trustee, as provided by the organic law of the public corporation and current bond contracts.
Last year, the Board did not succeed in requesting Judge Laura Taylor Swain to validate Noel Zamot as PREPA’s Chief Transformation Officer.
Similarly, last September, Swain rejected an order from NPFG, Syncora Guarantee and Assured Guaranty to lift the suspension on litigation provided in PROMESA and appoint a trustee for PREPA.
However, and due to recent events in PREPA, NPFG move could gain space, since last year when Swain rejected its request, she established that "the only trustee" that the government has, according to PROMESA, is the Board.
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