Friday, September 15, 2015
Commentary
Richard Lawless
The SEC opens investigation into alleged widespread financial manipulation,
theft and political corruption at PREPA.
It all started five years ago when PREPA announced the issuance of 75 new contracts worth 15 billion dollars that would up-grade their network with lower cost, cutting edge renewable technology. This major
announcement would result in a 20-25% reduction in energy costs, cleaner air, a lower reliance on oil and
energy independence for the island, according to PREPA.
Five years have gone by and no projects have been built.
As time passed the holders of these 75 new contracts started to wonder why PREPA was not moving forward with the projects. It made no sense, these projects were good for Puerto Rico and PREPA. The utility did not have to make any outlays of cash to get this new technology and the electricity would be 20-25% less than their current oil based production.
Here is where the law firm of Hegan’s Berman comes in (http://www.hbsslaw.com/cases-and-investigations/cases/PREPA). Hegan uncovered an alleged scheme where the executives at PREPA were taking kickbacks of up to $100,000,000 a year from their oil suppliers. It appears, according to the lawsuit that this has been going on for over a decade. Hegan claims financial reports were falsified, oil quality reports were falsified and the islands political leadership may have worked to keep it all hidden. The lawsuit specifies individuals, dates, times, Swiss bank accounts, documents and whistleblower interviews.
Hegan put together a web page referenced above where you can read their legal complaint.
You see, if lower cost renewables come in to play, the oil billings would drop and they could not keep up the alleged $100,000,000 a year scheme.
The big losers, the bondholders, PREPA recently defaulted claiming their energy costs were too high, almost comical knowing what is now claimed by Hegan. The other big loser is the PRESS, at best lazy and at worse, incompetent. The renewable developers have been screaming about this for years. Hagan’s filed the lawsuit in 2014 with enough specifics to suggest that one of the biggest thefts of tax payer money is history and one of the biggest cases of bond fraud may be real. I suspect the press didn’t have time to read the complaint.
The Boston Office of the SEC recently opened a preliminary investigation into these claims. Stay tuned….
Richard Lawless is CEO of Commercial Solar Power, Inc. in Temecula, CA.
The opinions expressed in the preceding article are exclusively his own