In preparation for a possible debt crisis, Puerto Rico Gov. Alejandro García Padilla is seeking legislation to grant immunity from some lawsuits to the leadership and staff of the Government Development Bank.
Unlike the directors of most corporations and banks, the GDB's leadership lacks immunity from lawsuits over their decisions. The bill would give GDB's leaders immunity to lawsuits if they chose to default on particular GDB debt obligations. The GDB leaders could still be sued for embezzlement or other illegal actions.
A Senate staff person said the move to grant immunity stems from concern that the GDB leadership may choose to resign rather than risk being sued over their decisions.
García Padilla has said that the commonwealth is in the greatest financial crisis in its history. In March the commonwealth issued a report saying that it might not be able to pay all obligations coming due in July and August. There is about $72 billion in public sector debt in the commonwealth. Historically, the GDB has financially supported many of the debt issuers.
GDB President Melba Acosta Febo is trying to get the immunity bill passed quickly.
A bill to provide immunity was first submitted in early April. There are now two immunity bills in the legislature. One has little chance and the other is in conference between the Puerto Rico House and Senate right now.
Lilliam Maldonado, spokeswoman for Puerto Rico Representative Jesús Santa Rodríguez, said that the conference committee was very close to approving the measure.
Six House Representatives who are members of Popular Democratic Party voted against the governor's proposed 14% value added tax measure on April 30. The governor is the leader of the PDP. The six have become a "sort of coalition," a second Senate staff member said.
Members of the opposition New Progressive Party have consistently voted against García Padilla's proposals. This has forced the governor to agree to some of the demands of this group of six to get their votes, the second Senate staff member said.
Members of the group of six have been demanding the creation of a committee on the commonwealth's debt. Three of the group of six had in mid-March called for a referendum on a constitutional amendment allowing for the restructuring of the debt of the commonwealth and the public corporations. The second Senate staff person said committee might consider debt restructuring.
In order to gain enough votes to approve immunity, the PDP legislators will probably approve the creation of this committee on debt, the Senate staff person said.
The first Senate staff person said that he thought House President Jaime Peréllo Borrás would try to get the measure passed without creating a committee to study the debt.
In other news about the Puerto Rico legislature, a House staff person said that the House probably would approve a budget on Friday or Saturday. Once approved the fiscal plan would be sent to the Senate for its consideration.
