Puerto Rico has become the Wild West of Wall Street fraud, with the island’s politicians guiding the robbers. The latest scam – netting more than one billion dollars – was engineered by Goldman Sachs and executed by two governors from BOTH political parties: Alejandro Garcia Padilla (PPD) and Luis Fortuño (PNP).
They used the island’s most profitable highway, PR-22, in order to steal $1.25 billion dollars. Here is how…
PR-22, aka José de Diego Expressay, is 51 miles long. It runs from Santurce to Hatillo, passes through San Juan, and is the island’s busiest highway. Every day, more vehicles pass through PR-22, than any other road in Puerto Rico.
The annual toll revenues from PR-22 are $85 million.
In 2011, Luis Fortuño turned PR-22 into a “public private partnership” (aka “P3”) with Goldman Sachs and a Spanish corporation named Abertis.
This P3 gave Goldman Sachs and Abertis a 40-year lease on PR-22 and PR-5, for which they would receive 50% of the toll revenues (roughly $1.8 billion) in exchange for a $1.4 billion investment, for a profit of approximately $400 million.
AND THEN THEY GOT SLICK
The ROI (return on investment) on this deal seemed reasonable…but now in 2016, the deal suddenly changed.
In the immortal words of Johnny Guitar Watson, “Somebody doing something slick…downtown.”
Five years into the deal, in April 2016, Gov. Garcia Padilla quietly altered the initial contract.
LET’S DO THE MATH
Under the new terms, in exchange for an additional investment of only $115 million, the governor decreased the island’s revenue share on PR-22 from 50% to 25%, and extended the lease term for an additional 10 years.
So for 35 years, Goldman/Abertis will receive an additional 25% annually…
For 10 new additional years, they will receive 75% of 85 million.
The math works out like this:
25% additional of $85 million per year x 35 years = 21 x 35 = $735 million
75% of 85 million x 10 years = 63 x 10 = $630 million
The total added revenue is thus $1,365,000,000 ($1.365 billion), on an investment of $115 million…for a new, additional profit of $1.25 BILLION.
Did you hear about this?
I certainly didn’t.
Somebody doing something slick…downtown.
LET’S BRIBE THE $16 BILLION DOLLAR MAN!
Now eight months later, in December, a little news item emerges in Caribbean Business. Luis Fortuño was just named onto the board of directors of Abertis, because it wants “independent directors on its board…seasoned experts with a variety of professional profiles.”
Fortuño is certainly seasoned.
He marinated himself in public debt, during his brief stint as governor, by “borrowing” $16 billion from Wall Street. In just 4 years, Fortuño “borrowed” more money from Wall Street, than any other governor in Puerto Rican history.
So at the precise moment that a new $1.25 billion scam goes public, one of the key players hires Fortuño for a “board membership” that will provide elegant vacations to Spain for Fortuño’s family, and hefty board fees to Fortuño.
Fortuño is being bribed – some would say “hired” – to provide Abertis and Goldman Sachs some additional influence over the Financial Control Board (FCB), which is supposed to “investigate” these questionable deals.
A WORD TO THE JUSTICE DEPARTMENT
Puerto Rico allegedly “owes” $72 billion, and the FCB was allegedly created to help them pay it.
One of the best ways to do this is to investigate, annul and even prosecute any questionable deals which provide extraordinary and unexplainable profits to a few individuals and private entities, at the expense of the entire Commonwealth.
If the FCB does not investigate and prosecute this $1.25 billion scam which involves a foreign corporation, a US investment bank, two governors and both major parties in Puerto Rico, then the FBI and the US Justice Department should step in…and investigate the FCB, as well.
They can start by using the RICO statute.
For a history of the War Against All Puerto Ricans, read the book…
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