Puerto Rico Oversight Board extends subpoena authority in its debt investigation

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The Puerto Rico Oversight Board has granted subpoena power to the firm handling its investigation of Puerto Rico’s debt.

Both the board’s special committee to investigate the debt and the board’s “independent investigator,” Kobre & Kim LLP, will now have subpoena power.

The subpoenas can be used to require “attendance and testimony of witnesses and the production of books, records, correspondence, memoranda, papers, documents, electronic files, metadata, tapes, and materials of any nature,” to quote from section 104 (f) (1) the Puerto Rico Oversight, Management, and Economic Stability Act.

On Wednesday members of the board’s special committee – Arthur Gonzalez, Ana Matosantos, and David Skeel Jr. – authorized the Kobre & Kim to issue the subpoenas, as long as certain conditions had been met.
The conditions include the start of a “formal” investigation.

The board announced its debt investigation on Aug. 2 and it hired Kobre & Kim in early September.

“The scope of work should include ... a review of the factors contributing to Puerto Rico’s fiscal crisis, including changes in the economy, expansion of spending commitments and entitlement programs, changes in the federal funding it receives, and its reliance on debt to finance a structural budget deficit,” according to the request for proposals.

In addition the board sought, “a review of Puerto Rico’s debt, the general use of proceeds, the relationship between the debt and Puerto Rico’s structural budget deficit, the range of its debt instruments, and how Puerto Rico’s debt practices compare to the debt practices of states and large municipal jurisdictions; and ... a review of Puerto Rico’s debt issuance, disclosure, and selling practices, including its interpretation of Puerto Rico’s constitutional debt limit.”

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