November 9, 2009

A foggy political picture

With all the talk about government layoffs, rising crime and now - the break-up of Luis Fonsi and Adamari López - grabbing all the headlines of our fearless media, no one has brought to light the fact that the current legislative session ends on Thursday and most of Gov. Fortuño's economic packages have yet to go to a floor vote, not to mention the new Permits Law, the new Tourism Incentives Law and the ever-controversial Closing Law.

The backlog of key economic legislation is not just due to the Legislature's foot-dragging. A key element to the delay lies on the fact that Gov. Fortuño's leadership is badly eroded after only 10 months and both the House and Senate are basically operating like rudderless ships.

A great example of this is the Permits Law. Caribbean Business quoted House Socioeconomic Committee chairman José Chico this week saying that the bill is "about ready" to go to a floor vote, but the fact that the legislation neither has the votes from the New Progressive Party majority nor the support from industry leaders, who have time and time again filed through the House saying that the legislation is flawed.

While the Senate agenda has been a little more upbeat about moving administration bills through, they have been heavily amended - some of them ladened with poison pills - that even if they go to floor votes, it is unlikely that they will come out of Conference.

Adding more confusion to the already convoluted mix is the fact that, politically speaking, Gov. Fortuño does not have a hold on his Legislative conference - a fact that has already opened the door to massive speculation that he will be a one-term governor and should expect a challenge from within his own party once candidacy season opens midway through 2010.

In baseball terms, there's already movement in the bullpen and that has been validated by an already-busy fundraising season and an unprecedented amount of exploratory balloons being floated from many different sources.

It is going to be a very interesting week indeed in the Puerto Rico's politics. Stay tuned ...

November 3, 2009

Another sign of the times in Puerto Rico

El Vocero de Puerto Rico, one of Puerto Rico's last bastions of good hard-nosed reporting, is on the brink of collapse as the latest judgement from the federal government looms as a mortal blow to its already fragile state.

The U.S. Department of Labor issued this press release earlier today:

Caribbean International News Corp. has been ordered by a federal court to restore more than $1.2 million to the El Vocero de Puerto Rico Union Employees Savings and Investment Plan, a retirement plan established for the benefit of the company's unionized employees. The corporation does business as El Vocero de Puerto Rico, a newspaper based in San Juan.

A lawsuit filed by the U.S. Department of Labor simultaneously with the judgment alleges that El Vocero violated the Employee Retirement Income Security Act by failing to deposit into the plan contributions withheld from employees' wages and to collect matching employer contributions during the period from 2003 to 2006. The suit also alleges that the company owed $1,432,233 to the plan.

"Protecting workers' retirement funds is one of the highest priorities of this administration," said Secretary of Labor Hilda L. Solis. "The Labor Department's legal action orders El Vocero to restore more than $1.2 million to ensure that these workers are made whole and that money is set aside to pay benefits."

The court judgment orders the employer to pay immediately the full amount owed to the plan. The amount now due is $1,282,233, which is the original amount found due minus $150,000 already paid by El Vocero between December 2008 and July 2009 to reduce its obligation to the plan.

This case was investigated by the department's Employee Benefits Security Administration (EBSA) Miami District Office at the direction of the agency's Atlanta Regional Office. The legal actions announced today were filed in the U.S. District Court for the District of Puerto Rico.

Employers and workers can contact EBSA at 404-302-3900 or toll-free at 866-444-3272 for help with any problems relating to private sector pension and health plans. In fiscal year 2008, EBSA achieved monetary results of $1.2 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Solis v. Caribbean International News Corp. doing business as El Vocero de Puerto Rico

Civil Action Number: 09-CV-2064

Source: U.S. Department of Labor

October 24, 2009

The Emergency Fund balance is $0!!

The raging fire at the Caribbean Petroleum Company (CAPECO) has already cost the Puerto Rican taxpayer upwards of $6 million, according to figures handed out by Gov. Fortuño today. Luckily, once again, the federal government has shown up as the "knight night in shining armor" since President Obama decided to declare a "state of emergency" in Puerto Rico and granted federal funds to flip the bill to the tune of $5 million in FEMA funding and 75% of other costs.

We should count our lucky stars for this federal decision since, thanks to our irresponsible management of the island's Emergency Fund, there was absolutely no reserve to take care of this situation.

You see, back in 2007, former Gov. Aníbal Acevedo Vilá - seeing that his outlandish government spending would lead to a shortfall so grave that government payroll would not be met - tapped into the Emergency Fund using several Executive Orders and depleted the fund to less than $500,000 by mid-2008.

Rep. Johnny Méndez, today the chairman of the House Government Committee, held a press conference on July 21, 2008 to denounce this tactic and swore that a new Fortuño administration would make sure that the Emergency Fund would be replenished.

However, when the current budget was sent to consideration, the Fortuño Administration, as part of its budget pacakge sent Joint Resolution 361 which allowed the Office of Management and Budget to forego assigning the $160 million which was to be allocated to the Emergency Fund.

Oddly enough, the House majority voted IN FAVOR of this and left the Emergency Fund empty for fiscal year 2009-2010 as Gov. Fortuño signed the resolution into law on July 1, 2009.
Furthermore, and as this story develops, CAPECO's long-time history of shady actions in Puerto Rico should be taken into consideration. You see, back in the 2001, CAPECO owned the local Treasury upwards of $190 million in back taxes. Earlier in its existence, however, CAPECO had retained the services of Ramón Cantero Frau, who was appointed Secretary of Economic Development and Commerce under former Gov. Sila María Calderón.
Cantero Frau went on to become Gov. Calderón's third husband, but only after being instrumental in an agreement which lowered CAPECO's tax debt to only $32 million. And to make matters a little bit more complicated, CAPECO stopped refining oil in Puerto Rico in 2005 and used its facility only as a warehouse for all types of fuel, including the Bunker 6 diesel used by the Puerto Rico Electric Power Authority under a contract which paid CAPECO some $83 million.
Over the next week, we can expect a flurry of House Resolutions to investigate what actually happened in Cataño. Quite frankly, they should be investigating what has been going on in the dark rooms of government over the last nine years.

October 23, 2009

Is the Legislature really the problem?

I saw a column in this week's edition of El Expresso, penned by Adolfo Méndez Ríos - a veteran communications consultant - which I felt unfairly questioned the quality of today's lawmakers in Puerto Rico. While it is a certainty that today's Legislature is - at best - mediocre, I do not believe it is completely to blame for all of Puerto Rico's problems.
Puerto Rico is currently in the middle of a "perfect storm" in which both our political and private sector leaders have combined in a series of tactical blunders which have led to downward spiral - with eerie similarity to a toilet flushing - at both the economic and social levels. It is unfair to pin it all on the Legislature. Here are some of the reasons, I see. Can you think of other reasons?
The political leadership's inability to forge a consensus strategy to get Congress off its ass and resolve Puerto Rico's 111-year-old status quagmire certainly weighs heavy on the island's demise. Since the creation of the New Progressive Party in 1967, which marks the era of Puerto Rico's modern political age, partisan politics has raised its head in every attempt to decide once and for all what Puerto Rico really is to derail, contaminate or kill the process.
Puerto Rico's inability to steer its own ship has successfully kept it from being competitive regionally, paving the way for developing economies such as the Dominican Republic and even Jamaica to surpass it in key industries - such as manufacturing and tourism. What I find absolutely pathetic about this particular problem is that the pro-commonwealth Popular Democratic Party recognizes that the status quo is obsolete, yet it insists on torpedoing every attempt to move the congressional wheels.
I think we can stipulate that Puerto Rico's public education system is broken beyond repair, yet don't you find it completely offensive that government continues to put patches instead of doing something coherent to rebuild it?
For decades now we have been hearing about the breakdown of the Department of Education and the governmental monster that it has become, yet the problem is getting worse (a painful reminder was the beginning of the current school year... remember?)
As a former member of Puerto Rico's press corps, it is particularly painful to see how Puerto Rico's journalists have allowed themselves to be sold so short. Barring a few exceptions, investigative journalism has become non-existent in Puerto Rico. Media coverage is particularly driven by gossip, shallow coverage of events. Journalists often fail in asking questions, digging deeper and understanding what it is they're covering.
Granted, this does not all fall on the lap of the journalists. Publishers are even guiltier of selling out. The economic crunch has forced newspapers to ask the government for money in other to keep publishing and some owners wish to pursue their own interests instead of the interests of the greater good - which, at least in my book, should be the mission of all journalists.

The city is stressed out

San Juan woke up today under fire ... literally.

The explosion at the Caribbean Petroleum Company, which has put Puerto Rico on the front page of newspapers around the globe, is almost a metaphor to what the island has been living for the last six months.

As the global economic crisis has placed a particularly tight crunch on Puerto Rico. Massive layoffs in both the public and private sectors, a construction industry on the verge of collapse, unemployment nearing 20% and a crime wave that seems unabated, this morning's blast in San Juan Bay seemed to be sending a message - this island is on the brink!

I'm creating this blog to see if somehow, someway, we can start a dialogue in hopes of finding some answers. I will continue to post the little things I see ... I hope you will too