San Juan/Washington D.C. – With his intention to name Justin Peterson, President Donald J. Trump will join the Fiscal Oversight Board (JSF) to the representative of one of the companies that has hardest attacked the credibility of the government of Puerto Rico and the image of the island at the federal level in recent years.
For at least five years, according to previous reviews by El Nuevo Día and interviews with at least three separate sources, the firm co-founded by Peterson, DCI Group, was the architect of several strategies aimed at sowing doubts at the federal government level and public opinion. around the authorities of Puerto Rico.
El Nuevo Día tried to contact Peterson as soon as the White House informed the Board of his appointment and left a message, but as of press time he had not received a response.
The campaign for Doral Bank
The first of those strategies began in 2014, when the Department of the Treasury questioned a tax agreement that would have granted Doral Bank a refund of about $ 229 million.
Doral, which failed due to insolvency five years ago, used the resources of the DCI Group to discredit the government in the face of questions from then-secretary Melba Acosta Febo.
In short, Doral Bank intended to claim up to $ 232 million in withdrawals that it would use to capitalize. But in the legal dispute, it was never proven that Doral paid that amount in taxes and in February 2015, the Supreme Court declined to accept the controversy.
At the time, Doral Bank enlisted the services of the DCI Group while having Matthew McGill of the law firm Gibson, Dunn & Crutcher as lead counsel. In Puerto Rico, the legal representative of Doral Bank was Ramón Rosario Cortés, who later became Secretary of Public Affairs of the Ricardo Rosselló Nevares government.
The discrediting campaign against the government of Puerto Rico was first articulated through the American Future Fund (AFF), a political action group based in Iowa, where Peterson had political experience.
In full-page advertisements in The Wall Street Journal and Politico, in September 2014, AFF charged then-Governor Alejandro García Padilla with maintaining a “culture of corruption in Puerto Rico.”
In parallel to the Doral Bank campaign, once García Padilla considered it appropriate to seek a remedy for the fiscal crisis, which implied declaring a default on the public debt, DCI Group began to collaborate with certain General Obligations (GOs) bondholders, particularly with hedge funds that bought a good part of the $ 3.5 billion issue that the government sold in March 2014.
DCI Group also worked with the conservative organization Asociación 60 Plus, which – like former Governor Rosselló Nevares and the current resident commissioner – Jenniffer González– they opposed project 870 of the then resident commissioner in Washington, Pedro Pierluisi, to once again allow public corporations and municipalities on the island to file for Chapter 9 of the federal bankruptcy law.
Likewise, that company coordinated the campaigns of MainStreet Bondholders, which recruited bondholders from Puerto Rico, with the aim of pressuring the García Padilla administration so that the government would comply with the payment of the debt.
A good part of DCI Group’s strategies in Puerto Rico were implemented by Ryan Grillo, a partner of the firm very close to Peterson, as well as Steve Kupka, a lobbyist and member of the King & Spalding law firm, according to three sources. King & Spalding was later hired by the Rosselló Nevares administration as a lobbying company for the Electric Power Authority (PREPA).
Peterson, Grillo and Kupka are from the state of Nebraska.
According to the sources, the strategy of discrediting Puerto Rico due to the fiscal situation occurred in at least two ways. Along with the publication of advertisements in the media in Puerto Rico and the US to discredit the island, DCI Group also hired figures linked to the New Progressive Party (PNP) and the Popular Democratic Party (PPD).
When, in 2015, the federal Treasury was looking for a mechanism to restructure Puerto Rico’s debt and the federal Promise Act was passed, Peterson opposed the creation of the statute that created the Board.
One of the strategies to pressure Puerto Rico and that was articulated by DCI Group were the campaigns of the activist groups Asociación 60Plus and MainStreet Bondholders.
Thus, the group recruited bondholders from Puerto Rico to count the impact that the loss of their savings would entail. This with the aim of putting pressure on the García Padilla administration to make the government comply with the payment of the public debt.
In addition to announcements in the media, the bondholders’ campaign included a website known as mainstreetbondholders.org where, beyond the stories, information was offered about the measures adopted by the government and that would affect the payment of the public debt. . The website is now down.
The second component of the strategy, according to the sources, was to hire figures linked to the main political parties in Puerto Rico so that they could influence public opinion and public policy decisions regarding the restructuring of the island’s debt.
El Nuevo Día previously reported that DCI Group maintained contracts with PPD politicians such as Héctor Ferrer, who died in November 2018, and Roberto Prats, even though at the same time that firm was campaigning against the García Padilla government.
The three sources ensure that the people recruited by DCI Group on the island received monthly payments and that during the years 2015 and 2016, the organized group of General Obligation bondholders (Ad Hoc-GO) maintained a monthly budget of between $ 200,000 to $ 250,000 for comply with such strategies.
The sources, who request anonymity for fear of retaliation, assured that the payments made to the figures linked to the main political parties in the courtyard were not always made through DCI Group but through other entities, which would allow them to reject in any circumstance. to work for the communications and lobbying firm in Washington.
When Rosselló Nevares became governor and the strategies for the bondholders to collect the debt did not bear fruit, the new president asked the Board to restructure Puerto Rico’s public debt through Title III of the federal Promise Law.
In this way, the lobbying strategies were aimed at discrediting the island in obtaining federal funds after Hurricane Maria with controversies such as the hiring of Whitefish Energy and against statehood.
As they are territorial officers, as decided by the United States Supreme Court, the appointments of the directors of the Board do not have to go through a confirmation process in the federal Senate.
After learning that Peterson will be a member of the Board, the campaign of the Democratic presidential candidate, Joe Biden, and the Democratic congressmen Nydia Velázquez (New York) and Raul Grijalva (Arizona), in independent statements, affirmed that the appointment of the director of DCI Group is covered conflict of interest.
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