Puerto Rico Gives Millions to Sketchy Firms With Government Ties

Puerto Rico Gives Millions to Sketchy Firms With Government Ties.

by Ethan Barton · August 9, 2017

Bankrupt Puerto Rico has awarded nearly $11 million in consulting contracts to various businesses, including marketing, lobbying, and public relations firms, some with ties to government officials.

The U.S. territory, which filed for bankruptcy in May, recently closed nearly 200 schools to save $7 million. Yet officials on the Caribbean island also issued 107 consulting contracts since January to questionable recipients, according to government documents and media reports compiled by QE Intelligence, a research firm.

Puerto Rico spent $256 billion in federal funds from 1990 through 2009, but collected only $74 billion in tax revenue, according to an Economist report. Additionally, Puerto Rico is required to prioritize payments to creditors, except to fund essential services.

About $4.7 million in consulting contracts went to companies with ties to government officials, more than $800,000 of which were public relations groups.

Two consulting contracts totaling nearly $389,000, for example, were awarded to the marketing consulting firm KOI Americas, records kept by the Puerto Rico comptroller show. Edwin Miranda—a friend of former Puerto Rico Gov. Luis Fortuno—owns KOI, which has received a large number of high-value contracts.

KOI also received millions more in Puerto Rican government funding for advertising contracts over the same time.

Similarly, Rafael Cerame, press secretary for former Gov. Pedro Rosello, formed the public relations and marketing firm RCD International, which has received three consulting contracts worth a total of $298,000, records show.

More than $2 million in consulting contracts went to other lobbying, market research, and public relations firms without apparent government ties. More than $700,000 went to businesses with histories of shady dealings in government contracts.

The Municipal Consultants Group, for example, has received three consulting contracts for a total of nearly $250,000 since January, comptroller records show. The firm faced scrutiny and requests for investigations after it was discovered it shared office space and personnel with a group hired to audit Municipal Consultants’ government contracts.

Another four consulting contracts worth more than $350,000 total were awarded to firms founded by Oscar Santamaria, who previously faced investigations regarding other contracts and Rosello’s pension.

Little information exists about two companies that received three consulting contracts. Arroyo-Flores Consulting Group received nearly $391,000, yet has an almost blank Facebook page with only three likes. Its website provides little information and doesn’t list the group’s executives.

The other, the MAC Group, which received more than $364,000, seems to have no actual website and little information is included in its founding documents.

The bulk of another $2.6 million in consulting contracts went to the Ankura Consulting Group. The firm’s Puerto Rico office opened Feb. 14, and it received a $2.4 million award nine days later.

The Puerto Rico Senate awarded a $30,000 consulting contract to singer Glenn Monroig. The author of a book about Puerto Rican corruption, Antonio Quinones Calderon, took a $65,000 consulting contract. Few other details are available about either contract.

Another group received a $40,000 contract, which was 10 times more than the company’s worth. One business got a consulting contract of more than $34,200 the same month the firm was formed, documents from the Puerto Rico secretary of state and comptroller show.

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