Fourth Puerto Rico Oversight Board member steps down

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Puerto Rico Oversight Board member Arthur Gonzalez became the fourth original board member to step down on Friday.

On Wednesday President Donald Trump appointed Justin Peterson to sit on the board. Effectively, this ended González’s tenure on the board unless a member of the Congressional leadership recommended him to the president. González’s announcement Friday seals his departure.

“During the four years I have served on the board, I have felt and seen firsthand the commitment of everyone involved in helping Puerto Rico move forward, not only by improving fiscal discipline and continuing our efforts to pull the commonwealth and other instrumentalities out of bankruptcy, but by working first and foremost for the good of the people of Puerto Rico,” González said.

David Skeel
The Puerto Rico Oversight Board has elected David Skeel to be its new chairman.

“We want to thank Arthur for the indispensable contributions he made during the past four years at the Oversight Board,” said David Skeel, chairman of the Oversight Board.

“In keeping with his background as judge and experience in bankruptcy, he was critically important in his role of guiding and informing the board throughout the Title III processes,” Skeel said. “Judge González also provided great insight into the underlying issues that brought Puerto Rico to this difficult situation, including poor financial controls, mismanagement and weak accountability, always placing the good of the people of Puerto Rico first and foremost.”

González teaches bankruptcy law at New York University School of Law. Prior to March 1, 2012 he was Chief Judge of the United States Bankruptcy Court for the Southern District of New York.

Former President Barack Obama appointed González to the board in the summer of 2016 for what was supposed to be a three-year term. Due to Congress’ desire to see the outcome of a legal challenge to the board appointments process, members were asked to remain on the board and Congress and the president did not work to replace the board members until late this summer.

Board members José Ramón González and Carlos García stepped down in August. Original board Chairman José Carríon ended his service Monday.

On Tuesday, the board announced it had voted unanimously to make Skeel the new chairman, replacing Carríon. The voting members were González, Skeel, Ana Matasantos, and Andrew Biggs.

“I am thankful to be designated for this role and continue the Fiscal Oversight Board’s mission for the good of the people of Puerto Rico,” Skeel said.

Positions on the Oversight Board don’t carry monetary compensation.

Skeel is the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School. He’s held the position since 2004 and has been at the university since 1999.

Skeel has been active in the negotiations with bondholders on the terms of central government debt bankruptcy. These negotiations continue.

In another development, on Friday the board put out a statement welcoming new board member Peterson. “We look forward to working alongside Justin Peterson to advance the board’s mission, as mandated by [the Puerto Rico Oversight, Management, and Economic Stability Act],” Steel said. “His wealth of experience should certainly prove to be an important asset in the Oversight Board’s continuing efforts to restore fiscal responsibility, transparency and economic growth for the benefit of the people of Puerto Rico.”

The board noted that Peterson, a managing partner at Washington, D.C.-based DCI Group, leads DCI’s energy practice and has advised senior executives in the oil and natural gas industry for more than two decades. It said Peterson’s portfolio includes directing campaigns for the successful development of energy-related infrastructure projects.

“He has more than a decade of experience advising clients in the financial sector, serving as an advisor to investors in several high-profile situations including Argentina, General Motors, Venezuela, and Puerto Rico,” the board said.

Others were not so welcoming.

Democratic Presidential Nominee Joe Biden’s campaign put out a statement on Peterson that said: “In a clear conflict of interest, Republican lobbyist Justin Peterson has been appointed to the Financial Oversight and Management Board for Puerto Rico, where it’s likely he will continue to profit off of the unsustainable debt problem that Puerto Ricans are facing.

“Puerto Ricans know corruption when they see it and this appointment is just another example of Donald Trump’s dangerously anti-Puerto Rican appeal,” the campaign said.

Puerto Rico’s non-voting representative to Congress, Republican Jenniffer González Colón, tweeted: “My record has always been clear: I believe that contracts are honored, that laws are respected, and that government processes have to be transparent. For this reason, I cannot support a candidate for the board that has even the appearance of a conflict of interest.”

On Tuesday Peterson told The Bond Buyer that DCI doesn’t currently represent any Puerto Rico bondholders. For several years Peterson and DCI represented the Ad Hoc Group of General Obligation Bondholders in the Puerto Rico bankruptcy in their relations with the press.

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