Oversight Board Director Owns at Least $265,000 in Puerto Rico Bonds

The following article was originally published by BondBuyer.com.

Puerto Rico Oversight Board Interim Executive Director Ramón Ruiz owns at least $265,000 in Puerto Rico bonds and debt, in what some observers said may be a violation of federal laws on conflict of interest.

Ruiz’s holdings are revealed in financial disclosure documents the board posted to its web site on Feb. 28. The Puerto Rico Oversight, Management and Economic Stability Act required board members and staff to post the disclosures.

Ruiz owns from $250,001 to $500,000 in Puerto Rico bonds. He also owns from $15,001 to $50,000 in a Puerto Rico Investors Tax Free fund. According to federal regulations the reported values should be fair market values and not par values.

Related: Puerto Rico COFINA Bonds Default

Section 109 of PROMESA states that the board’s members and staff will be subject to federal conflict of interest requirements found in section 208 of title 18 of the United States Code. This section states that government employees who participate in deciding, investigating, or advising on matters that they have a financial interest in will be subject to penalties.

The section allows an exception for those who have very small financial conflicts of interest.

The PROMESA board has been set up to, among other things, put together fiscal plans that may determine the amounts of Puerto Rico debt to be paid. The board may also petition a court to seek the adjustment of Puerto Rico debts.

“It’s problematic that someone holding Puerto Rico bonds is the interim executive director, because that person should have no financial interests in the outcome of the reorganization,” said bankruptcy attorney Carlos Cuevas. Cuevas is associated with the Centro Roundtable group of academics and professionals commenting on Puerto Rico developments.

“It will be perceived that the judgements will be due to his monetary interests,” Cuevas said. “If he is a bond holder, then he should resign.”

Héctor Figueroa, president of Local 32BJ of the Service Employees International Union, a participant in the VAMOS4PR coalition, said members of the group “are quite troubled by the revelation that Ramón Ruiz Comas … holds more than a quarter of a million dollars in Puerto Rican bonds.” VOMAS4PR is a stateside coalition that supports debt relief and restructuring for Puerto Rico.

“This is a likely violation of the PROMESA law passed by Congress in 2016, and Ruiz Comas should either divest from these bonds or resign from this position immediately,” Figueroa said. “Not taking into account this clear conflict of interest when he was appointed to lead Puerto Rico’s Fiscal Control Board is part of a pattern we have seen in how the board was assembled and how it has carried out its business.

“Several board members have strong ties to banks that created the mechanisms that have plunged Puerto Rico into a humanitarian crisis and are harming the lives of millions of Puerto Ricans. This appointment reinforces the notion that the current board is more likely to look out for the interests of Puerto Rico’s debtholders than those of its people.”

Arnaldo Cruz, board member of Puerto Rico’s Center for Integrity and Public Policy, said he wasn’t particularly concerned about Ruiz’s holding of Puerto Rico bonds, since many people on the island hold them. Cruz said he was more concerned that Ruiz was chief executive officer for Triple S Management Corp. from 2002 to 2015. Triple S is the largest health insurer in Puerto Rico and is likely to be heavily affected by the major cuts in government healthcare spending that the board is proposing, Cruz said.

Ruiz gets pension income from Triple S, has more than $15,000 in stock in the company, and does paid consulting work for it.

Ruiz is being paid $5,000 a month while the board looks for a permanent executive director. According to the Caribbean Business news web site, Board Chairman José Carrión said that the board had spoken with over 100 people for the position as of late January and was finding the search more difficult than expected.

The PROMESA board didn’t respond to a request for comment on Ruiz and Carrion’s financial disclosures.

PROMESA and the Ethics in Government Act of 1978 requires the board members and staff to reveal the market value of their holdings in businesses or investments.

Carrión lists holdings of 223 assets. A few are real estate that might not require valuation. A few more are bank accounts that would not need to be declared unless their holdings exceed $5,000. Nearly all the rest are investments in commercial holdings and investment funds that would require disclosure of value unless they are under $1,000.

Carrión didn’t provide values for any of the 223 assets.

The disclosure forms indicate that the board members are well off, with all voting members apparently earning more than $200,000 per year. The salaries of board members David Skeel, Carrión, and Carlos García are unclear because they didn’t report their salaries in either their primary positions or in any of their positions.

PROMESA and the Ethics in Government Act of 1978 requires the disclosure of all sources of income above $200 in the previous calendar year and the amounts received.