Corporate profiteers plunder Puerto Rico

December 20, 2017

Puerto Rican socialist and journalist Roberto Barreto documents the corporate rip-offs that have dominated reconstruction in the months following Hurricane Maria's devastation. Monique Dols translated this article from the original Spanish.

CORPORATIONS ARE making out like bandits from hurricane recovery efforts in Puerto Rico. The wheeling and dealing behind the scenes is enriching the few, to the tune of millions of dollars in government contracts, at the expense of the many on the island.

The vultures are making off with millions in contracts that include inflated rates of pay, which were agreed upon through a highly suspect and corrupt process. The elites are also trying to get away with privatizing the few public services that we have left.

But these aren't even the worst aspects of the whole contracting process in Puerto Rico today. The main problem with these deals and government-awarded contracts is that they hold back desperately needed reconstruction efforts at every step of the way. The politicians and business people are squandering time and resources while Puerto Rico continues to reel.


WE KNEW there was something off when the Whitefish contract first came to light, triggering alarm bells about the whole process.

Fallen power lines and debris on the streets of Humacao in Puerto Rico
Fallen power lines and debris on the streets of Humacao in Puerto Rico

On October 17, the Weather Channel first reported that the Puerto Rico Electric Power Authority (PREPA) had inexplicably turned down help from the American Public Power Association (APPA) and its more than 1,100 member companies.

Instead of taking advantage of the APPA mutual aid agreement to mobilize electrical companies from New York and Florida in the case of an emergency, PREPA hired the no-name Whitefish company, which had all of two employees when Hurricane Maria struck.

Asked about their role in the decision to hire Whitefish to rebuild the island's power grid, both FEMA and the U.S. Army Corps of Engineers denied having any part of the decision.

The first aspect of the $300 million contract that raised a red flag was the unusually high pay rates. For example, while an electrical line worker in Puerto Rico earns around $22 an hour at most, the contract charged $319 an hour for Whitefish subcontractors.

As time passed, Whitefish links with the Trump administration were revealed. "Whitefish Energy is based in Whitefish, Montana, the hometown of Interior Secretary Ryan Zinke," the Washington Post reported. "Its chief executive, Andy Techmanski, and Zinke acknowledge knowing one another--but only, Zinke's office said in an email, because Whitefish is a small town where 'everybody knows everybody.'" It was also revealed that one of Whitefish's main partners, Joe Colonetta, is a major donor to Donald Trump.

Eventually, Whitefish was tried in the court of public opinion, and the uproar forced Gov. Ricardo Rosselló to cancel the contract. Congress promised to conduct an investigation and the director of PREPA, Ricardo Ramos, was caught in the web of a thousand lies and forced to resign in disgrace.

After Rosselló canceled the contract, Whitefish threatened to abandon work it was obligated to do. According to El Nuevo Día, Ben Wilson, an executive with one of the companies subcontracted by Whitefish, said "Whitefish executives...asked him to stop their 'critical' repair work in order to put pressure on the Puerto Rican government to pay them."

Wilson's response: "Our company and its 115 workers in the field have rejected this request. We simply cannot in good faith stop this vital work because of a payment dispute."


WHILE THE government of Puerto Rico scrambles to disentangle Whitefish from the reconstruction efforts and replace it, a key piece of the electrical puzzle is still missing.

The Palo Seco Power Plant, which has the capacity to produce 250 megawatts of electricity and is located in the part of the island that consumes the most power, is still shuttered.

In the days after the storms, the Electrical Industry and Irrigation Workers Union (UTIER by its initials in Spanish) pointed out the urgency of restoring Palo Seco. But this message was ignored.

The government has flatly refused to get Palo Seco back online, arguing that a study by a private company called Island Structuring Engineering warned that the plant would crash on startup. The same study predicted that the plant couldn't withstand winds of more than 60 miles per hour. But the reality was that it survived hurricane-force winds from Hurricane Maria.

A College of Engineers and Surveyors study published in October concluded that had the government started repairs to the plant immediately, it could have been up and running within about three weeks.

Instead of fixing Palo Seco, the Army Corps of Engineers subcontracted the rental of two massive power generators through Western Solutions, a Pennsylvania-based company. The contract awarded the company $35 million for the two generators that create 50 megawatts of electricity, a small fraction of what is needed to power the metropolitan area.

The government has chosen General Electric (GE) to repair Palo Seco, even though GE has no experience with this kind of repair. GE subcontracted the work to another company, repeating what had happened with Whitefish.

Adding insult to injury, the GE contract isn't an "emergency" contract. This means that the purchase of parts and labor time are being handled slowly, without any sense of the scope of the emergency. The worksite is open Monday through Friday until 3 p.m.

As New York Times columnist Paul Krugman commented on Twitter, "Puerto Rico story has echoes of early Iraq occupation: key contracts given to politically connected firms, with disastrous results."


THE DEPARTMENT of Education also granted contracts that significantly delayed the reopening of schools in Puerto Rico.

Weeks and weeks passed, and schools that were ready to open remained shuttered. Teachers, parents and students cleaned and repaired schools, readying them to reopen. The DOE simply refused.

Puerto Rico's Education Secretary Julia Keleher argued that only the Army Corps of Engineers could authorize the reopening of schools once it certified that they were safe. The Army Corps denied this, and later, it came to light that the true impediment to the reopening of schools was another private contract.

It turns out that a company called CSA Architects and Engineers delayed the certification and reopening of schools due to a lack of personnel. "CSA is our local Whitefish," reported the newspaper Metro. "They do not have the capacity to do everything that they are being asked to do. The difference is that, unlike Whitefish, [CSA is] very professional and trained, but they are too small a group. They want to take on doing everything and they simply can't...They will have to subcontract."

CSA is a Puerto Rican company with links to previous administrations and officials, including Carlos Vivoni, former Secretary of Housing, and José Ortiz, former director of PREPA. Its purpose has been to certify the damages caused by hurricanes in order to file claims with FEMA.

Though many schools were ready, the government postponed reopenings to ensure the collection of federal funds. The government preferred thousands of students to remain isolated and inactive, in semi-destroyed homes without running water, electricity or communication for weeks on end, in order to collect FEMA funds.

Citing the violation of children's educational rights, parents, teachers and students organized protests and pickets in order to pressure the government to reopen their schools.

In a weak attempt to appease the parents, Keleher then proposed a slew of solutions, including floating a proposal on social media to cancel the whole semester, mainly to judge the public's reaction. Keleher also proposed a virtual school program in the state of Florida for people who had left the island to be able to keep up with their studies. The protest of families continued and got stronger.

The Federación de Maestros de Puerto Rico (FMPR) helped to organize teachers, parents and students in many regional struggles for the restarting of schools. These protests forced were largely successful--as of the first week of December, 97 percent of schools have been opened, albeit on a part-time basis.

This is a victory that was hard fought and won by those who struggled under very difficult conditions.


THE FMPR and others involved in these struggles have been raising for months their fear that the government's reluctance to open schools had to do with its goal of privatizing the educational system.

In recent years, many public schools have closed because of emigration from the island. And while the fiscal crisis has caused many thousands of families to leave Puerto Rico, at the same time, the Department of Education continues to propose the replacement of public schools with private ones.

Both the federal government and the Puerto Rican government want to get rid of local school districts and replace them with regional governing bodies that are open to competition from private education service providers.

Under this scheme, Puerto Rico's Department of Education would have to compete with private companies to receive federal education funds. The final decision on whether to transfer the funds to public schools or private institutions would be in Washington.

Donald Trump's head of education, Betsy DeVos, visited Puerto Rico, supposedly to evaluate the reconstruction process and reopening of the schools. She met with Gov. Rosselló and Secretary Keleher to discuss the federal government's position on the future of public schools.

The newspaper El Vocero asked Keleher if the Department of Education was considering using the charter school model and voucher system in Puerto Rico. Keleher admitted that the granting of federal funds for education is linked to the acceptance of privatization schemes.

"The federal Secretary of Education has her line and the Trump administration also has its line," Keleher said. "The federal government does not impose, but they have their priorities. That's their line, so if you don't play by their rules, then you won't get the funds."

The Hurricane Maria catastrophe has provided a gigantic business opportunity for the profiteers and their politician friends. They have plundered emergency funds for their own enrichment, to the tune of millions of dollars. They do this while millions of people suffer as the reconstruction of the country is delayed.

Businesses and government officials try to lie to cover their tracks, falsifying statistics to make it look like they are making progress. They do whatever they need to do to line their coffers and get rich at the expense of the many. They turn the misery of the many into the privilege of the few.

Driven by greed, they can't even plan for their future interests, because in their short-term selfishness, they are even destroying the investment climate that they depend on over the longer term. They are a parasitic class--and like any parasite, if they aren't stopped in time, they will end up killing the organism off which they live.

Translation by Monique Dols

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