November 25, 2020

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Long the list of questions that Meléndez Altieri will have to answer

Among the issues to be discussed, the use that the municipal administration made of tens of millions of dollars in loans contracted between 2010 and 2014 stands out,
when the city council still enjoyed borrowing margin.

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Throughout the 12-year mandate of the mayor of Ponce, María Meléndez Altieri, requests for the disclosure of public information – made by journalists, minority municipal legislators and even union unions – were repeatedly ignored or rejected by the municipal administration.

The refusal of the city council to disclose specific information on the management of public finances, its payroll of employees and the hiring of external companies, has even resulted in legal lawsuits and concerted actions not to render accounts.

However, just hours after the official transition to a new municipal administration begins, La Perla del Sur reviews some of the topics that await transparency and, potentially, will emerge during the forensic audit that the elected mayor, Luis Irizarry Pabón, promised to perform.

Long-term debt

Among the main issues is the use that the municipal administration finally gave to tens of millions of dollars in loans contracted between 2010 and 2014, when the city council still enjoyed borrowing space.

In that period, Meléndez Altieri authorized a total of 13 loans, for the sum of $ 79.5 million, not counting interest. Of these, four for the lump sum of $ 52 million, or 65 percent of the approved credits, were processed for “operational activities”, as recorded in audit reports (Single Audit).

As La Perla del Sur has noted since then, for years the administration has assumed the harmful practice of borrowing to cover recurring operating expenses.

As an example, in September 2013 this weekly published how the Meléndez Altieri administration was preparing to use a loan of $ 10,040,000 to pay debts contracted with a long list of agencies and suppliers.

Among them, $ 3.2 million for the Retirement Systems Administration (ASR) and another $ 712 thousand for ASR pensioners.

Likewise, $ 2 million owed for non-payment to the Aqueduct and Sewer Authority (AAA), $ 2.8 million to Consolidated Waste Services, $ 140 thousand to the López-Vega CPA accounting firm, $ 135 thousand to Almacenes Peña, $ 49 thousand to the Port Rico Telephone Company, $ 43,000 to Microsoft Caribbean and $ 30,000 to McConnell Valdés LLC.

And although a few weeks ago Meléndez Altieri alleged in a press conference that he had already paid off the loans he adopted during his administration, the 2018 external audit (Single Audit) shows that at that time the mayor had not paid off any of the 13 loans.

In fact, it adds that all its loans have a maturity date between 2025 and 2038, and that nine of them expire between 2035 and 2038.

According to the audits of the council itself, 12 of the 13 loans have interest rates of between 6.0 and 7.5 percent, adding millions in interest payments throughout the contract.

Debt with suppliers and agencies

Another topic lacking in transparency centers on debts due to non-payment of various government agencies.

For years, the municipal administration accumulated debts for this concept, to later manage payment plans with which it committed future income. This practice was particularly common with the Retirement Systems Administration (ASR) and the AAA, resulting in multi-million dollar debts.

For not remitting millions of dollars to the ASR that retained hundreds of Ponce municipal employees, in June 2019 the mayor was referred to the Department of Justice -State and Federal- by the Fiscal Control Board.

Shortly after hearing the news, the city council managed – in a hurry – a payment of $ 4.2 million for Retiro.

However, by August 2016, its total debt with ASR climbed to $ 14.2 million, while its debt with AAA exceeded $ 10.6 million.

As of press time, the balance of these debts has not been disclosed.

In the same way, the city council has refused to reveal the balance of the debts that it carries with a long list of local suppliers: a situation that has forced the city hall to turn to companies outside the region to contract services.

As early as September 27, 2013, La Perla del Sur was already requesting, both Meléndez Altieri and his advisory team, a detailed list of the suppliers to whom the city council owed payments, but since then the mayor nor her assistants have responded upon request.

Restricted fund transfers

On the other hand, during the term of Meléndez Altieri there have been complaints about illegal transfers of public funds, between restricted accounts and current accounts in the town hall, without the mayor being accountable for them.

In September 2013, La Perla del Sur evidenced how the administration transferred $ 3.3 million of restricted funds to various city council checking accounts. This, in a period of 15 days prior to the general elections of 2012.

They had been assigned by the State Legislature for works in various Ponce communities.

The irregular transfers coincided with complaints made by the then New Progressive representative Luis “Tato” León Rodríguez, who revealed that the municipal administration had failed to comply with multiple works for which he had allocated hundreds of thousands of dollars in legislative funds.

The finding was later confirmed in an external audit (Single Audit). However, the matter was never investigated by the Office of the Comptroller, nor the Department of Justice.

As this weekly learned, this practice was part of a scheme that was managed by the Municipal Finance Office, to cover shortfalls in cash and to cover recurring operational costs.

Payroll movements

Another issue that is expected to be under discussion during the transition process is the management of the municipal payroll during the past 12 years.

Despite the 50 percent cut in working hours and salary that the mayor has maintained for years, her administration is accused of having continued to recruit personnel, contrary to legislation that she herself ordered.

Even complaints about the recruitment of temporary employees in the run-up to electoral periods, due to strictly political considerations, were reported more than once to the press, so in April 2015 the then municipal legislator and today elected mayor went to court to claim the delivery of public information on the municipal payroll.

Two years later, the Supreme Court of Puerto Rico issued a “final and firm” order for the mayor to deliver the required documents on the municipal payroll. Still, for months he dragged his feet to comply, submitting incomplete lists without employee names.

After receiving the requested information, Irizarry Pabón carried out an investigation that concluded that dozens of employees had been hired illegally.

Likewise, in December 2019 the Comptroller’s Office published the results of an investigation by its Office of Complaints and Fiscal Intelligence, where it was determined that the mayor illegally appointed eight heads of municipal departments, between December 2017 and November 2018 .

As a result, the appointments were declared void and Meléndez Altieri was ordered to manage the recovery of the wages earned, a sum that reached $ 174,723 in improper payments.

As of press time, it is still unknown if the money has been recovered.

The actual number of hires

Another question that must be answered is the actual expenditure incurred in contracting external services, including public relations, advertising and consulting.

For years, La Perla del Sur has documented the incessant hiring of outside figures to enhance the image of the mayor, and to grace political allies and campaign donors.

Minority legislators and municipal employee unions have repeatedly denounced the redundancy of many of these contracts, as there are parallel structures with municipal personnel trained to carry out the subcontracted work.

Despite this, the city council has not disclosed reliable data on all of these hires, nor details on the functions carried out and how much they have cost the treasury.

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