Puerto Rico Ignored Lawyers Over Whitefish Energy Contract

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SAN JUAN, Puerto Rico >> Puerto Rico’s electric company disregarded its own lawyers’ advice when it signed a $300 million contract that offered so few protections that it allowed some workers trying to fix the battered power grid to bill for “nearly every waking hour” they were on the island, according to a House panel investigating the troubled contract.

Records released Monday night show that as the contract with Whitefish Energy Holdings was drafted and revised, the rates kept rising.

Several congressional committees are investigating the contract offered to the small Montana firm to help restore Puerto Rico’s power grid. The Puerto Rico Electric Power Authority, known as PREPA, was forced to cancel it after just a few weeks, when serious questions were raised about clauses that said the deal could not be audited.

A review by The New York Times showed the company was paying some subcontractors about one-seventh what it billed PREPA. The contract called for linemen to work 16-hour days and seven-day weeks at $319 an hour — 17 times the average wage of the Puerto Rican workers.

Gov. Ricardo A. Rosselló is expected to appear before the House Committee on Natural Resources on Tuesday, one day after he visited Washington to urge Congress to approve a $94 billion aid package. Ricardo L. Ramos, chief executive of PREPA, is scheduled to appear before the Senate Energy and Natural Resources Committee on Tuesday morning.

The House Natural Resources Committee received more than 2,000 pages of documents from the electric company’s lawyers in advance of Tuesday’s hearings.

Emails included in the records show that Whitefish’s chief executive, Andy Techmanski, struggled with logistics as much of the critical equipment needed for repairs got stuck in ports in Jacksonville, Florida. He asked Puerto Rican authorities if his workers could be exempt from the taxes required in Puerto Rico labor law and at one point offered to bring a generator for the family of one of PREPA’s executives.

PREPA’s lawyers had recommendations on everything from how the contract could be terminated to how the rates should be set. But the guidance was not followed — and the final provisions agreed to were tilted in Whitefish’s favor, the records show. Even the company’s own risk management office had balked, because it was never offered the opportunity to evaluate the terms, nor did the office receive proof of insurance.

“We are conscious of the urgency of the work to be done, however, there are high risks associated with the scope of this work,” Sammy Rodríguez Ortega, a PREPA executive, wrote in an Oct. 19 email to PREPA’s finance director and staff lawyer.

A spokesman for Whitefish, Ken Luce, said the company would cooperate with Congress.

“Whitefish Energy continues to make progress on our assigned work to restore electrical transmission infrastructure on Puerto Rico and our team of more than 500 workers remains fully committed to this mission,” Luce said in a statement. “We also remain committed to addressing any questions from Congress and are confident that the work we’ve accomplished to-date and will complete over the coming weeks has made a difference and provided Prepa and the Army Corps a solid foundation as they move forward.”

The Army Corps of Engineers is overseeing power restoration efforts in Puerto Rico. Nearly eight weeks after Hurricane Maria trampled the island and tore up everything from transmission towers to power poles and miles of lines, the grid is generating just 48 percent of its capacity.

PREPA, which filed for bankruptcy earlier this year, has been criticized for hiring Whitefish instead of entering into mutual aid agreements with other utility companies, which would have been less costly. On Monday, electrical workers from New York arrived in Puerto Rico to help with repairs.

PREPA has defended its decisions, saying Whitefish had offered to handle complicated logistics and did not demand a steep down payment or out-of-pocket costs.

“Confidence in the utility’s ability to manage contracts and time-sensitive disaster-related infrastructure work is long gone,” Rep. Rob Bishop, chairman of the House Committee on Natural Resources, said in a statement.

A spokesman for PREPA could not be reached for comment late Monday night.

The oversight board that manages Puerto Rico’s finances — because it too is in deep debt — had sought to appoint a trustee to take over PREPA. On Monday, the federal judge handling the government’s bankruptcy filing declined the request.

“It is obvious Prepa did not know how to draft a FEMA-compliant contract, nor did Prepa officials adhere to the advice of their own counsel on how to comply,” Rep. Bruce Westerman, chairman of the Subcommittee on Oversight and Investigations, said in a statement. “I believe this is precisely why the oversight board should be granted more authority. While we understand the sense of urgency for the people of Puerto Rico, oversight and transparency are vital to this recovery process.”

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Source : http://www.staradvertiser.com/2017/11/14/nyt/puerto-rico-ignored-lawyers-over-whitefish-energy-contract/



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