Chair Grijalva, Rep. Velázquez Call on Puerto Rico Oversight Board to Investigate Accounting Firm’s Contracting Work Following Recent Indictment

Washington, D.C. – Chair Raúl M. Grijalva (D-Ariz.) and Rep. Nydia Velázquez (D-N.Y.) sent a previously unreported letter to Natalie Jaresko, executive director of the Puerto Rico Financial Oversight and Management Board (FOMB), on Aug. 2 urging the Board to investigate BDO Puerto Rico, the firm contracted to prepare audits or accounting services for many Puerto Rican government agencies. The letter, available at http://bit.ly/2OIEHpd, comes shortly after BDO Puerto Rico managing partner Fernando Scherrer was indicted for wire fraud, conspiracy and money laundering.

In addition to providing financial services for Puerto Rico’s departments of health, education and treasury – among many other agencies – BDO Puerto Rico provides monthly financial reports for the Puerto Rico Electric Power Agency (PREPA), which is undergoing a bankruptcy-like process in a venue known as a Title III court under the terms of the Puerto Rico Oversight, Management, and Economic Stability (PROMESA) Act. If BDO Puerto Rico’s assessments were tainted by Scherrer or other BDO Puerto Rico personnel, those assessments would need to be reevaluated.

Grijalva and Velázquez write that BDO Puerto Rico’s services to PREPA “are critical to the accurate representation of PREPA’s financial position, which underlies the representations made to the FOMB, bidders in PREPA’s privatization process, as well as representations to the Title III court regarding PREPA’s bankruptcy and debt restructuring.” The Title III deliberations they note, “are currently at a highly sensitive stage,” underscoring the urgency of a thorough investigation of BDO Puerto Rico’s work on PREPA’s behalf.

In addition to Scherrer, an ongoing FBI probe of corruption in Puerto Rican government contracting has already resulted in the arrests of Alberto Velázquez-Piñol, a BDO contractor; former Education Secretary Julia Keleher; former Puerto Rico Health Insurance Administration head Angela Avila-Marrero; and education contractors Glenda E. Ponce-Mendoza and Mayra Ponce-Mendoza.

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