Oversight Board sues Puerto Rico Senate president

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The Puerto Rico Oversight Board filed suit against the territory's Senate President Thomas Rivera Schatz, saying that he was illegally withholding Senate financial information from the board.

The board filed suit as an adversary proceeding in United States District Court for Puerto Rico on Thursday in Puerto Rico’s Title III bankruptcy.

The suit is against Rivera Schatz, "in his official capacity and as a representative of the Senate of Puerto Rico."

The board has been seeking a list of the Senate’s bank and investment accounts, their balances, liens or encumbrances on the accounts, and deposited fund sources as part of its mission to restore fiscal stability in the island's government.

“The Oversight Board sent more than eight official requests, made multiple calls, and had informal conversations with the Senate to join the other 163 public entities in this exercise of transparency and financial accountability,” the board said in a press statement.

“It seemed like a routine request in the scheme of things and I didn’t think it would come to this,” Board Executive Director Natalie Jaresko said in a conference call on Thursday.

The board claims that Section 104(c)(2) of the Puerto Rico Oversight, Management, and Economic Stability Act gives the board the right to access any Puerto Rico government information.

Based on this section, the board filed its adversary complaint seeking the information it has been seeking.

The board is working on a comprehensive inventory of all local government bank accounts and any restrictions on the cash positions. It is planning to create a public report on this topic.

Arturo Porzecanski, distinguished economist in residence at American University, said the suit against Rivera Schatz shows the importance the board places on cooperation from local government.

“It doesn't strike me that it augurs lawsuits against the [Gov. Ricardo] Rosselló administration, though it will serve as a reminder to it, and to all other governmental jurisdictions on the island, that the Oversight Board was granted a number of extraordinary powers that such financial-control agencies must have in order to get to the root of the problem and to craft durable solutions.

“As the announcement says, 163 public entities have already complied with the board's request; the Senate's non-compliance is a lamentable exception; but they've now offered themselves as an easy target for the board to demonstrate that it has teeth,” Porzecanski continued. “Good for the board!”

In August 2017 the board filed an adversary complaint against Rosselló and his government seeking to force the local government to introduce a furlough program and to follow planned cuts on government pension benefits.

In the aftermath of Hurricane Maria’s destruction in September 2017, the board withdrew the suit.

The board is expected to clash with the local government concerning the budget for the coming fiscal year. According to the board’s approved fiscal plan, this would include a 10% cut in government pension benefit spending.

Meanwhile, Rivera Schatz has an active suit against the board. That suit along with a similar suit from Puerto Rico House of Representatives President Carlos Méndez Núñez was heard in the First Circuit Court of Appeals on Feb. 6. Both suits claim that the board has been illegally usurping the legislature’s powers in various ways.

Neither a spokesperson for Rivera Schatz nor one for the Puerto Rico Senate responded to a request for a comment.

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