Democracy Now! goes to Puerto Rico, where the FBI is investigating the $300 million contract between Puerto Rico’s electric power company and the tiny Montana-based company Whitefish, named for the hometown of Interior Secretary Ryan Zinke. “It truly is unnerving that people can just swindle, swindle an entire population when they are at their most vulnerable,” says San Juan Mayor Carmen Yulín Cruz. We also speak with Vice Mayor Rafael Jaume about the Whitefish contract.
JUAN GONZÁLEZ: We turn now to Puerto Rico, where United Nations experts are warning of alarming conditions, now more than five weeks after Hurricane Maria. In a report released Monday, U.N. experts also condemned the United States’s handling of the disaster, saying the response was ineffective and that the mainland states of Florida and Texas had received far more support after being struck by hurricanes than Puerto Rico did. Leilani Farha, the United Nations special rapporteur on housing, said, quote, “We can’t fail to note the dissimilar urgency and priority given to the emergency response in Puerto Rico, compared to the U.S. states affected by hurricanes in recent months.”
AMY GOODMAN: This comes as The Wall Street Journal is reporting the FBI is investigating the $300 million contract between Puerto Rico’s electrical power company, known as PREPA, and the tiny Montana-based company Whitefish, which is linked to Interior Secretary Ryan Zinke. I mean, that’s his hometown. On Sunday, under enormous pressure, Puerto Rico’s governor, Ricardo Roselló, instructed Puerto Rico’s power company to cancel the controversial contract with Whitefish Energy.
Well, we were there in Puerto Rico when that was announced. But our first stop on Friday afternoon was the Roberto Clemente Coliseum, where the San Juan mayor, Carmen Yulín Cruz, and her vice mayor, Rafael Jaume, were analyzing the details of two contracts—yes, the $300 million deal with Whitefish and another $200 million contract between the power company and Cobra, which is an Oklahoma-based company. Now, we had actually come into the Roberto Clemente Coliseum because there had been a news conference that the San Juan mayor held with Bernie Sanders, who had come into town for a few hours to express solidarity with the mayor and the people of Puerto Rico. And afterwards, I got to sit down with the San Juan mayor. But just as we finished this interview, the vice mayor came in with the contracts and all of the caveats. And they were just shocked.
AMY GOODMAN: So you just got a hold of the—both the Whitefish contract—
VICE MAYOR RAFAEL JAUME: And the Cobra contract. Both of them this morning, we got, opened them.
AMY GOODMAN: Three hundred million-dollar contract for Whitefish—
VICE MAYOR RAFAEL JAUME: And the other one, $200 million. It’s $500 million for both.
AMY GOODMAN: Two hundred million for Cobra, an Oklahoma-based company.
VICE MAYOR RAFAEL JAUME: Yes.
AMY GOODMAN: And this is the FEMA’s statement from this morning?
VICE MAYOR RAFAEL JAUME: Well, FEMA’s statement of this morning says clearly, “The decision to award a contract to Whitefish Energy was made exclusively by Puerto Rico Electric Power Authority, PREPA. FEMA was not involved in the selection. Questions regarding the awarding of this contract should be directed to PREPA.” Following says, “Any language in any contract between PREPA and Whitefish that states FEMA approved that contract is inaccurate.” Strong words. What I’m—I’ll tell you this one.
AMY GOODMAN: And this is a part of the contract.
VICE MAYOR RAFAEL JAUME: This is Article 59 in Whitefish contract. It says, “In the event shall PREPA“—
AMY GOODMAN: “In no event.”
VICE MAYOR RAFAEL JAUME: “In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA administrator, the Comptroller General of the United States or any other authorized representatives have the right to audit or review the cost and profit elements of the labor rates specified herein.” That is—you can read about it yourself. That’s it. There’s no other thing that—that’s black and white.
AMY GOODMAN: And this?
VICE MAYOR RAFAEL JAUME: And this one says—this is Article 68, penalties, fines and disallowed costs.
AMY GOODMAN: Disallowed costs.
VICE MAYOR RAFAEL JAUME: Disallowed costs. “By executing this contract, PREPA hereby represents and warrants that FEMA has reviewed and approved of this contract and confirmed that the contract is an acceptable form to qualify for funding from FEMA and other U.S. government agencies.” Totally the opposite in contrast to what FEMA is saying.
AMY GOODMAN: Of what FEMA is saying.
MAYOR CARMEN YULÍN CRUZ: You know what that means? That means that, right there, that contract is null and void.
VICE MAYOR RAFAEL JAUME: Yes.
MAYOR CARMEN YULÍN CRUZ: It contradicts the laws of the United States of America, and it should be voided right now by the Puerto Rican government. And if the Puerto Rican government does not have the nerve to do what they have to do in order to do things right, then the U.S. government should do it, because what this means is that we will not get reimbursed for a $300 million contract awarded to a two-employee company that did not have the expertise nor business getting into this business.
AMY GOODMAN: FEMA says PREPA wholly approved this.
MAYOR CARMEN YULÍN CRUZ: Yes.
VICE MAYOR RAFAEL JAUME: Yes.
AMY GOODMAN: PREPA, of course, is the Puerto Rico Electric Power Authority. Did PREPA approve this?
MAYOR CARMEN YULÍN CRUZ: PREPA approved it. I have asked for—actually, the director of PREPA signed it. I have asked for PREPA to release the minutes of the meeting where this was discussed. But certainly, FEMA did not approve this. That means we are not going to get reimbursed by this. And by declaring that in fact FEMA approved it, they were lying when they signed the contract.
AMY GOODMAN: The head of PREPA was lying.
MAYOR CARMEN YULÍN CRUZ: Both parties.
VICE MAYOR RAFAEL JAUME: Both parties.
MAYOR CARMEN YULÍN CRUZ: Both parties, because if I was getting a $300 million contract based on the fact that I would get reimbursed by FEMA, I would have liked that in writing. Amounts much less than that and decisions much less than that, I’ve said, “No, until I have it in writing.” So that is null and void right there. Right there. There is nothing. You cannot tell a governmental entity that you cannot audit a contract, that you have no right to request a time frame, and you cannot represent things that are not true in contracts. That is just basics of contract law. So this right here, it’s null and void.
AMY GOODMAN: So, you want this—do you want the Whitefish contract nullified?
MAYOR CARMEN YULÍN CRUZ: It should be nullified. It is scandalous. It is an affront on our people. And frankly, again, when I called for this two days ago, their response, from the Whitefish Twitter, was threatening to take away the 44 men and women—I don’t know if they have women working, they said men—and 40 more that were coming that day. So they have 84 people working in San Juan, which is the largest city in Puerto Rico. Not only that, now I want—I would want to know: What is the work plan? Well, they don’t have to have a work plan. You know why? Because in the contract it states that they don’t have to finish anytime soon. So this is a gift of $300 million to two people. That’s what this amounts to.
AMY GOODMAN: Do think the head of PREPA should be fired?
MAYOR CARMEN YULÍN CRUZ:Yes. He should have been fired a long time ago. A long time ago. What is beyond me is why the governor continues to say that this man has his support.
AMY GOODMAN: And the head of PREPA is?
MAYOR CARMEN YULÍN CRUZ: Ricardo Ramos. Very, very, very, very, very ineffective. Very inappropriate. And frankly, somebody that doesn’t even know what he’s signing.
AMY GOODMAN: And the other contract? This is a $300 million contract. Then there’s a $200 million—
MAYOR CARMEN YULÍN CRUZ: With Cobra. That one—
AMY GOODMAN: —what’s called Cobra contract?
MAYOR CARMEN YULÍN CRUZ: That one, I haven’t had a chance to look at it. We got it this morning.
VICE MAYOR RAFAEL JAUME: Here’s the paperwork.
MAYOR CARMEN YULÍN CRUZ: We went to the controller’s office.
AMY GOODMAN: This also signed be the head of PREPA?
VICE MAYOR RAFAEL JAUME: Yes.
MAYOR CARMEN YULÍN CRUZ: Yes, also signed by the head of PREPA. So, it’s very interesting, because when you look at these contracts, they’re already, some of them—I don’t know if it’s—I think it’s this one, already has addendums to it. There have already been changes.
VICE MAYOR RAFAEL JAUME: This has addendums, yes.
MAYOR CARMEN YULÍN CRUZ: There have already been changes. You haven’t even started.
VICE MAYOR RAFAEL JAUME: These are the rates—these are the rates per hours, $400, $500 per hour.
AMY GOODMAN: Now, Cobra is an Oklahoma-based contract.
VICE MAYOR RAFAEL JAUME: Yes, in Oklahoma.
AMY GOODMAN: I don’t know if there’s any relationship between Scott Pruitt, who’s the former Oklahoma attorney general and now the head of the Environmental Protection Agency.
MAYOR CARMEN YULÍN CRUZ: I don’t know, either. But what I do know is that two and three is five, and there’s $500 million in here, one of which is utterly null and void. And it’s, you know, very difficult to understand that in the United States contract law would allow one of the parties to be taken for a ride, because this is—this PREPA contract is so odious and so not good for the Puerto Rican people.
AMY GOODMAN: You’re holding the Whitefish contract.
MAYOR CARMEN YULÍN CRUZ: Yes, yes. And not only that, look, it was signed October 17th. This, I had the page this morning. October 17th. This is a $300 million contract. I hope to God that it has a lot more than these little tiny pages that we have here, because it’s—it’s unnerving. It truly is unnerving, you know, that people can just swindle, swindle an entire population when they are at its most vulnerable.
AMY GOODMAN: So that’s San Juan’s mayor, Carmen Yulín Cruz, and San Juan’s vice mayor, Rafael Jaume. We were in the Roberto Clemente Coliseum, where the entire mayor’s staff is staying. It has electricity. Most of Puerto Rico, the overwhelming number—population in Puerto Rico, does not have it. It was the room in which she had just had her news conference with Senator Bernie Sanders and union leaders, decrying what was happening right now in Puerto Rico and the U.S. government’s response. But they’re standing there just having gotten the actual paper contracts of both Whitefish Energy, the $300 million contract that was signed by Ricardo Ramos, who is head of PREPA, the Puerto Rican power authority, the largest public power authority in the United States, and the Cobra contract, which isn’t talked about as much, the Cobra contract, an Oklahoma-based company, for $200 million. Juan, you’ve been following this very closely.
JUAN GONZÁLEZ: Well, Amy, yes. I raised a couple of weeks ago this whole issue of the—of this Whitefish contract. And the problem is that the pillaging of Puerto Rico is still continuing, even in the midst of this enormous crisis. Not only is this contract with Whitefish indefensible—the rates that they were paying private contractors, essentially, to do work that the Puerto Rico electrical workers could be doing or that electrical workers from other parts of the United States could be doing from utilities—but there was pillaging going on beforehand. Most people are not aware, this guy, Ricardo Ramos, was appointed as the head of PREPA just in February by the new governor. He’s only been in office a few months. And—
AMY GOODMAN: And used that time now to sign these contracts.
JUAN GONZÁLEZ: Right. And before that, there was a woman named Lisa Donahue, who had been the—
AMY GOODMAN: Donna?
JUAN GONZÁLEZ: Donahue, who was the chief restructuring officer of PREPA. She had been brought in about a year and a half earlier to restructure all the debt of PREPA. She never was able to finally get a final deal with the bondholders on PREPA, but yet she walked away in February with $46 million for 18 months of work, her and her—the other partners in her firm that were brought in to restructure Puerto Rico’s debt. Forty-six million dollars for 18 months of work. This is the kind of—
AMY GOODMAN: And let’s remember PREPA is bankrupt.
JUAN GONZÁLEZ: Right, it’s bankrupt. The firm is bankrupt, but that doesn’t mean that there’s still not cash coming in, cash coming in from the rates that utilities users are paying, customers are paying. So there’s a huge cash flow. The question is: Where does the money go? And this example of these contracts now in the midst of this enormous calamity in Puerto Rico is an example of how the money is being wasted. And it’s being wasted now supposedly when PREPA is not only under new management, but is also under oversight of the U.S. board, fiscal control board. This kind of money, the fiscal control board also has to approve these kinds of major expenditures.
AMY GOODMAN: Well, we’re going to go to break and then come back to my conversation with the San Juan mayor, Carmen Yulín Cruz. This is Democracy Now! Again, the FBI is now investigating how this Whitefish deal, that the Puerto Rican government says they’re in the process of canceling, was accomplished. Stay with us.