Puerto Rico's Corruption Scandal, Federal Funding and PROMESA
This is an important moment for the people of Puerto Rico because the federal government, the Federal Oversight Board and the government of Puerto Rico can use this crisis to resurrect Puerto Rico.
July 12, 2019 at 11:45 AM
6 minute read
On July 10, 2019, the Federal Bureau of Investigation made arrests in connection with a 32-count indictment alleging that Julia Keleher, the former Education Secretary of Puerto Rico, and Angela Avila Marrero, the former Executive Director of the Puerto Rico Health Insurance Administration, illegally steered millions of dollars in federal contracts to politically connected consultants (the Arrests). Patricia Mazzei, Puerto Rico Ex-Officials Accused of Steering $15.5 Million in Contracts to Consultants, The New York Times (July 10, 2019). The Arrests are another tragic chapter of Puerto Rico's history of public corruption. FBI: Puerto Rico cops protected cocaine dealers, CNN (Oct. 7, 2010).
Consequences of the Arrests. The Arrests will have profound consequences for Puerto Rico and the PROMESA bankruptcy cases. An immediate consequence of the Arrests is that Congressman Raul Grijalva, Chairman of the Natural Resources Committee that has jurisdiction of Puerto Rico, has called for the resignation of Governor Ricardo Rossello. Jeff Stein, FBI Makes Arrests in Puerto Rico Corruption Scandal, Prompting Calls for Governor's Ouster and Concerns about Billions in Storm Aid, The Washington Post (July 10, 2019). Congressman Grijalva's lack of confidence in the government of Puerto Rico will adversely affect federal funding for Puerto Rico. After approximately two years Puerto Rico still has not recovered from Hurricane Maria. Greg Allen & Marisa Peñaloza, I Don't Feel Safe': Puerto Rico Preps for Next Storm Without Enough Government Help, NPR (July 3, 2019). The Arrests will probably create a moratorium for federal funding for Puerto Rico until the Congress and President are comfortable that effective anti-corruption measures have been implemented in Puerto Rico.
Another consequence of the Arrests is the impact of Medicaid funding in Puerto Rico. Historically, the Medicaid program in Puerto Rico has been under-funded. Jaime R. Torres, 2019 Medicaid funding cliff could cause mass migration from Puerto Rico, The Hill (March 30, 2019). The arrest of the former head of Puerto Rico's Medicaid program will most likely impede federal funding for Medicaid in Puerto Rico. Medicaid is an important medical program in Puerto Rico because Puerto Rico has a high poverty rate. The lack of Medicaid funding has compelled doctors to leave Puerto Rico. Mariela Patron, Puerto Rico's Exodus of Doctors Adds Health Care Strain to Dire Financial Crisis, NBC News (Aug. 8, 2017). The Arrests have further jeopardized the medical care of those Puerto Ricans that are dependent upon Medicaid.
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