November 15, 2019 – During the most recent meeting of the National Association of State Latino Chambers of Commerce (NASLCC) on October 29, 2019, board members agreed by a vote of 12-0 to proactively extend their support for the Puerto Rico Recovery Accuracy Disclosures Act of 2019 (PRRADA) that establishes important conflict of interest disclosure provisions in Puerto Rico’s economic recovery process.
“As business leaders who care deeply about Puerto Rico, we are deeply disturbed by news reports of consultancies being paid millions of Puerto Rican taxpayer dollars to advise the Federal Oversight Management Board despite documented conflicts of interest. We believe PRRADA is an important step in ensuring that outside consultants who seek to advise Puerto Rico through its bankruptcy are free of conflicts and not engaged in self-dealing at the expense of taxpayers and the Puerto Rican people,” NASLCC Chairman Frank Garcia said. “Many of our members throughout the Association do business with others in Puerto Rico and we should all work to ensure that there are appropriate protections in place and that every tax dollar spent is done so prudently and with the appropriate oversight. PRRADA will help keep this process honest and the best interests of the Island a priority.”
PRRADA, currently being considered by this Congress with bipartisan support, will impose requirements on the payment of compensation to professional persons employed in voluntary cases commenced under title III of the Puerto Rico Oversight Management and Economic Stability Act (commonly known as “PROMESA”). This law will equalize the level of transparency required in an American bankruptcy with that required in the Puerto Rico bankruptcy.
Last year, the New York Times reported that one consultant to Puerto Rico’s bankruptcy – McKinsey & Company – was “advising the Puerto Rican government on a financial overhaul to lighten its crippling debts” despite not having disclosed that they own “bonds issued by Puerto Rico.”
As a result of the Times reporting and concerns raised by elected officials in Puerto Rico and Washington, D.C., the FOMB hired an outside firm to investigate McKinsey’s undisclosed conflicts of interest and issue a report. The so-called “Luskin Report” report found McKinsey’s undisclosed investments were “problematic” and issued eight specific recommendations to avoid conflicts like McKinsey’s. Earlier this year, McKinsey was forced by the Department of Justice to pay $15 million to remedy its inadequate disclosures in bankruptcy cases and just last week, the New York Times and Wall Street Journal reported that McKinsey’s bankruptcy practice is under federal criminal investigation.
“The greater business community in and out of Puerto Rico needs to stress the importance of equal standards to ensure the recovery process achieves its goal of rebuilding a strong economy on the island,” Puerto Rico-based attorney and former President of the Puerto Rico Chamber of Commerce Alicia Lamboy-Mombille said. “I urge the Association’s chambers and the thousands of their members to please reach out to their members of Congress to encourage them to support this important legislation.”
The National Association of State Latino Chambers of Commerce (NASLCC) is a tax-exempt organization, incorporated under and shall operate in conformity with, the California State Not-For-Profit Corporation Law (CANCPL) and Section 501 (c)(6) of the Internal Revenue Service code. The primary mission of the organization is to increase and build capacity of the State Latino Chambers of Commerce with resources to serve the growing Latino business community across the Country, foster relationships with governmental agencies, corporate America and other stakeholders, to promote employment and procurement opportunities for Latinos and Latina businesses, and to increase the number of State Latino Chambers of Commerce across the Country.