On April 1, Puerto Rico Secretary of Education Julia Keleher (who received a $250,000 base salary), resigned from her post. Keleher’s decision came after reports of a federal investigation into alleged irregularities found in contracts awarded to corporations she had previously worked with or owned. Local newspapers uncovered her hiring of Jay Rosselló Nevares, Governor Ricardo Rosselló Nevares’ brother, as a contractor for the Department of Education—a textbook case of nepotism.
The news came just weeks after Noel Zamot, Revitalization Coordinator under Title V of the Puerto Rico Oversight, Management & Economic Stability Act (PROMESA), left his position on March 15. Zamot had been paid a $325,000 annual salary in an impoverished and bankrupt country facing a violent austerity campaign, fiscal stability policies, and structural adjustments imposed by the local government, the Puerto Rican Fiscal Agency and Financial Advisory Authority (FAFAA), and the Fiscal Oversight and Managed Board (FOMB).
Though the news of his resignation resulted in little fanfare, his comments at the Pursuit of the 8% conference did. Zamot described how the Puerto Rican government systematically hindered his efforts for attracting investments and establishing projects of revitalization in the Island did. He also pointed out, among other things, irregularities in the local government’s process of awarding critical revitalization projects; mismanagement of information and leaking of proposals to members of the government’s friends; some instances in which the government slowdowns efforts for granting critical revitalization projects; and some attempts by the government to monopolize recovery and revitalization efforts. My contention is that these cases he described can be constructed as examples of textbook cases of political and economic corruption.
Similarly, during an interview with Bloomberg in March 31, 2019, Natalie Jaresko (FOMB executive director and recipient of a $650,000 annual salary acknowledged a “history of non-transparency” in the procurement of certain kinds of contracts in Puerto Rico.
Yet a year and a half after Hurricans Irma and Maria, interest among Puerto Ricans has waned when it comes to cases of corruption and the lack of transparency in reconstruction and recovery processes. Consequently, news about corruption scandals, debates about the role of the private sector and corporate power in the rebuilding of Puerto Rico, the revolving door between government officials and the private sector, and lack of regulation and transparency did not carry the same urgency for the general public as they initially did in the immediate aftermath of the hurricanes.
All of this news surfaced as the Puerto Rican government attempted to reframe the corruption scandals surrounding the state’s mismanagement of Hurricanes Irma and María. As part of this process, the local government has introduced the slogan “Puerto Rico is open for business,” that is, it is trying to promote the Island as an safe tax-haven for investment as a solution to the fiscal crisis—a problematic gamble at best. Puerto Rico, however, has already been blacklisted by the European Commission as a money laundering high-risk jurisdiction.
Preying on Corruption of the Weak
The government has also launched a “transparency and anticorruption” campaign that includes the newly created Central Office of Recovery, Reconstruction and Resilience (COR3), and the Anticorruption Code for the New Puerto Rico, established January 4, 2018. COR3 was created in October 2017 under the guise of the state of emergency declared after Hurricane María, and placed under the umbrella of the recently created Puerto Rico Public-Private Partnership Agency. As an example of the so-called “transparency efforts”, COR3 is paying $88 million to CGI Technologies to create and maintain a “Transparency Portal”, in which all of the information concerning funds and contracts for post-María recovery are logged. However, the system is barely functioning.
All of these cases reveal a history of corruption and state-corporate crimes—one that is often understood as the product of isolated cases of corrupt individuals lacking moral judgment and commitment of the Puerto Rican taxpayers, not the product of systemic corruption and colonial neoliberalism. This was the rationale behind the legislation of the Anticorruption Code for the New Puerto Rico was established, reinforcing and whitewashing the disastrous and corrupt state mismanagement in the aftermath of the hurricanes and the economic crisis.
It is important to note how quickly the Anticorruption Code was enacted. It bears recalling that in November 2017, roughly two months after Hurricane María devastated the Island, many Puerto Ricans were living without power, telecommunications and water; recovery efforts were underway; and a strong debate about the death toll generated by state-corporate negligence after María was dominating the stage. Therefore, the possibility of holding public debates on new legislation was limited, thus revealing another dimension of what Naomi Klein has termed the “shock doctrine,” or the use of a disaster to advance legal, economic and political reforms, while taking advantage of the general disorientation and lack of information. At the same time, Puerto Rico began to receive some federal recovery funds, which generated the need to portray itself as tough on corruption, especially after the many scandals surrounding the recovery.
The new law aims to unify existing anticorruption laws and codes in Puerto Rico in order to strengthen “the tools to fight corruption and broaden the protections available to individuals who report acts of corruption, ” as the law’s preamble states. Yet the law focuses more on doling out punishments for petty corruption of the weak, while giving elites a free pass to continue their abuses, fitting in with the neoliberal trend of anticorruption measures promoted by the World Bank and the IMF. Such institutions therefore reproduce colonial and neoliberal understandings of the state, private sector, and corruption—and insist on privatization or the private sector as a solution to corruption in the public sector, according to David Whyte.
The law does not look at the root causes of economic, political, racial, and social inequality. For example, it does not address the obscene salaries granted to public officials; revolving doors between the government and banks and law firms; the predatory, and illegal debt deals with Wall Street; the fact that there has been no audit of the debt; the development of a tax-haven economy, the normalization of corporate welfare; and the lack of governmental accountability.
Ignoring the Role of the Private Sector
The law normalizes corrupt acts by the powerful in its definition of corruption itself, as the “abuse of a public authority to obtain undue advantage, generally secretly and privately.” It goes on to argue that other forms of corruption in Puerto Rico that reinforce a narrow and restrictive definition of corruption, which sees it as a problem of the public sector, bureaucracy, individuals with personal interests, and as a result of the unnecessary concentration of economic decision-making in the hands of governments. It thereby leaves out the role of the private sector, outsize in the case of the Puerto Rican crisis. The law goes on to argue,
Puerto Rico has a considerably high rate of corruption which is mostly related to the misuse of public funds. The most common type of corruption in the Island is bribery between private companies and public officials. Most of the cases heard in court, and certainly those that are most noteworthy, are in relation to the awarding of contracts. However, corruption is not limited to the process of contracting services; hence, other acts of corruption go unnoticed.
The artificial distinction between the private and public sector goes further in Title III, which introduces a “Code of Ethics for Contractors, Suppliers and Applicants for Economic Incentives of the Executive Agencies.” This section defines the way the public and private sector should interact, and how the private sector should interact with public officials. A telling instance of the misleading anticorruption measures is that the Code of Ethics, on the one hand, emphasizes the responsibility of the “private contractor” to maintain a higher standard—therefore assuming that public officers are more corruptible—and that the private sector should maintain a higher moral ground. On the other hand, it hyper-emphasizes petty corruption and/or the propensity of public officers of lower ranks to engage in corruption. It is only in Section 3.7 that we can see the penalties and fines that might apply to “noncompliance persons,” in the private sector, which include being subject to charges of “felony punishable by imprisonment for a fixed term of three (3) years and by a fine of five thousand dollars ($5,000). In addition, the Court may order restitution, community services, the suspension or revocation of a license, permit, or authorization.”
Meanwhile, the government is promoting the neoliberal understanding of how the public sector ought to work as a private corporation. In doing so, the distinction between private and public has blurred to the point that, paradoxically, the Law only emphasizes penalizing members of the public sector without discussing or even acknowledging corruption in the private sector. As David Whyte has pointed out, “it is precisely because the constitutional distinction between ‘public’ and ‘private’ can be so spectacularly breached that corruption cannot be defined naïvely as ‘the abuse of public office for private gain.’ We live in a social system in which the unity of interest between the government and corporations is now assumed.”
In tandem with this, the law promotes zero-tolerance policies and emphasizes punitive approaches by expanding the list of offenses that are excluded from the benefits of the Suspended Sentence Act; restoring the Office of the Inspector General; increasing the mandatory training on sound administration; facilitating access to public information and transparency; and broadening the rights of whistleblowers. Once again, we can see the hyper-emphasis on the public sector and the lack of problematization of the structural nature of corruption in the neoliberal colonial system.
Title V of the legislation provides the mechanisms for the State to claim damages and be compensated by those prosecuted for corruption. Moreover, the Law includes a 15-year statute of limitation after conviction or guilty plea. However, it is unclear about how this will be implemented and if there will be a special office within the Department of Justice to handle these cases. This is another telling instance of how the law is used to portray an image of transparency and anticorruption, without actually taking the necessary steps to address corruption.
Furthermore, Section 6 of the law establishes that the Department of Justice must create a public/ online Registry of Persons Convicted of Corruption and Related Offenses. At the time of this piece’s publication, the registry was unavailable. As a result, there is a lack of information regarding the number of people that have been convicted under this new Law, and whether in fact the Registry has been created, or if it is even in progress.
Finally, the law created an Anticorruption Interagency Group made up of members of the Puerto Rican government and the U.S. Government. So far, there is no news regarding this Group such as whether or not the Group has held any meetings or if they are working to implement the law as they are mandated.
When Donald Trump lashed out at Puerto Rican politicians, calling them corrupt and incompetent on Twitter on April 2, 2019, many U.S. and Puerto Rican politicians and public figures reacted indignantly and called out the president, especially because of the false claim that Puerto Rico had received $91 million in recovery funds. In fact, rather than focusing on individual cases of corruption, Trump’s tweets direct our attention to the ingrained nature of corruption inherent within U.S. colonialism in Puerto Rico—and more importantly—the ways the local government has normalized the elite corruption.
That is, the colonial and neoliberal design of the state provides the conditions for the colonizer and local/global elites to profit from colonial territories, while the racialized, gendered, and impoverished colonized subjects struggle with multiple dimensions of inequality, social harm, and structural violence—including the violence of austerity. As a result of these power dynamics, it is evident that the Anticorruption Code does not address the key issues that generate corruption and state-corporate criminality. The Law focuses on the corruption of the ‘weak,’—or the kind that stems from inequality and lack of access to resources and state services—while ignoring the corruption of the powerful, or the kind that generates dispossession and inequality. Rather than passing a law without transparency and “opening Puerto Rico for business,” we must decolonize and de-privatize Puerto Rico, and in so doing, rethink the ways in which its economy, politics, and government can justly serve its citizens.
José Atiles-Osoria is a Visiting Assistant Professor of Legal Studies at the University of Massachusetts-Amherst, and Researcher at the Centre For Social Studies of the University of Coimbra. His is author of Apuntes para abandonar el derecho: estado de excepción colonial en Puerto Rico (Editora educación emergente, 2016) and Jugando con el derecho: movimientos anticoloniales puertorriqueños y la fuerza de ley (Editora educación emergente, 2019).