U.S. Contractors Put Their Money into Re-electing Puerto Rico Governor

Many government contractors living in the United States have donated to Puerto Rico Gov. Pedro Pierluisi. The only apparent relationship that most of them have with Puerto Rico is working for a company with a government contract.

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Governor Pedro Pierluisi, center, celebrates at a fundraising activity in December 2023.

Photo taken from Facebook

On Friday, December 8, 2023, Governor Pedro Pierluisi held a Christmas party called “Blue Christmas,” a fundraising event for his re-election campaign. In one of the ballrooms at the Fairmont El San Juan Hotel, he raised more than $579,000, of which $6,000 was contributed by five executives from Hill International, a project management firm with offices in 42 countries.

Although none of Hill’s five executives live in Puerto Rico, they felt compelled to donate money to Pierluisi, a pre candidate for reelection as Governor. It isn’t the first time that officials from this company want to support the Governor. Since December 2022, there are at least $12,600 registered with the Office of the Electoral Comptroller (OCE, in Spanish) as political contributions from Hill International officials in favor of the Governor’s political campaign.

In Puerto Rico, Hill International has an $11.8 million contract with the Highways and Transportation Authority as a consultant in the Urban Train operation. It is also a subcontractor in the Department of Housing’s Repair, Reconstruction and Relocation (R3) program, in which it inspects, oversees and controls the quality of work, according to the company.

During this four-year term, the Pierluisi Committee has received at least $115,000 in political donations from people who work for U.S. companies contracted by the government of Puerto Rico, according to an analysis by the Centro de Periodismo Investigativo (CPI). This represents around 20% of the more than $556,000 the Governor has received in donations from stateside residents during the same period, according to OCE data.

The Pierluisi Committee’s Finance Director, Andrés Guillemard, told the CPI that “no one has ever been asked for a donation in exchange for something” and that the campaign has not received any findings from the OCE over the donations that the Governor has received.

The list of U.S. contractors with political donations registered with the OCE mainly includes law firms, lobbyists, consulting firms and companies working with federal recovery funds, the CPI found.

“A contractor, like any public or private employee, has a constitutional right to favor the public policy of a party. The donations received by the Pierluisi campaign are from people identified according to law,” Guillemard said.

The federal government prohibits its contractors from making financial contributions to incumbents or candidates for elective positions, while at least 15 states have similar limitations.

“[In Puerto Rico] it isn’t illegal for natural people who work with a legal entity that has a [government] contract to contribute to political campaigns,” said Puerto Rico Electoral Comptroller Walter Vélez in an interview with the CPI.

However, the official favors changes to the Political Campaigns Financing Act, Act 222 of 2011, to ban donations from government contractors in Puerto Rico, since he believes this encourages illegal practices such as “pay for play,” in which a company contributes with the expectation of receiving a public contract or benefit. This scheme was precisely at the center of recent corruption cases of former Popular Democratic Party (PPD, in Spanish) and New Progressive Party (PNP, in Spanish) mayors related to the contracting of asphalt and garbage collection in the municipalities.

At the beginning of this four-year term, in early 2021, House Bill 320 was presented to ban this practice in Puerto Rico. It has been shelved for almost three years, despite having been the subject of public hearings and being approved by the legislative commission that evaluated it.

Why Do They Donate?

O’Melveny and King & Spalding, two U.S. law firms that represent the Puerto Rico government in bankruptcy cases under the federal PROMESA law, have amassed more than $270 million combined in government contracts in the past seven years. Since 2020, more than 20 lawyers from both firms, and some of their relatives, have registered at least $27,000 and $39,000, respectively, in donations in favor of Pierluisi.

The CPI separately contacted a dozen of these lawyers to find out what motivated them to donate money to Pierluisi. At press time, none responded.

John Rapisardi, from the O’Melveny law firm, is listed as one of the donors to the Pedro Pierluisi Committee.
Photo by Juan Costa | Centro de Periodismo Investigativo

Almost all the attorneys of these two firms who donated reside outside of Puerto Rico, in places such as New York, Maryland, Virginia, Connecticut and Texas, according to OCE data. Beyond a visit for an event related to the PROMESA bankruptcy case — sometimes they fly in and fly out on the same day, according to their invoices — most have no other apparent relationship with Puerto Rico. They charge fees around $1,000 per hour and their biographies include high-profile financial restructuring cases such as Enron, Lehman Brothers, General Motors, Chrysler, Blockbuster and Pacific Gas & Energy Co.

Since 2017, O’Melveny has led the government of Puerto Rico’s legal representation in all processes related to PROMESA, while King & Spalding does the same with the Puerto Rico Electric Power Authority (AEE, in Spanish), including the privatization of the electrical system.

These attorneys made their political campaign contributions on three occasions: the months prior to the 2020 general elections that Pierluisi won; at the end of 2021 and beginning of 2022; and in July 2023, during a “gathering” with the Governor in Washington, D.C. in which $22,697 was raised.

This is not the first time that O’Melveny has contributed to a governor’s political campaign. At OCE, there are at least $30,000 in registered donations in favor of former Governor Ricardo Rosselló Neváres from a group of lawyers from the firm and some family members during a fundraising activity in 2018.

But it is not only these stateside attorneys who try to ensure that the Governor has money for his campaign. A group of lobbyists has also donated at least $20,000 to Pierluisi from the United States. Most work for firms contracted by the government for lobbying and legal services, such as Venable ($730,000 in contracts), Cornerstone Government Affairs ($750,000), Capitol Counsel ($480,000), Tonio Burgos ($570,000) and Squire Patton Boggs ($168,000).

Political Donors in the Disaster Recovery

In a gathering in Washington in July 2023, a donation of $3,100 was registered as made by Plexos Group, which was returned months later, as the Pierluisi Committee reported. Companies cannot donate to political campaigns unless they do so through an independent expenditure committee, better known as a Super Pac.

According to the Plexos Group website, the company worked on the R3 program, which would assist Puerto Rico residents who lost their homes after Hurricane María and the 2020 earthquakes. The recovery project has been questioned for its slowness and bureaucracy, as the CPI investigated in August 2020.

In addition to R3, Plexos Group has two other contracts with the Department of Housing totaling more than $47 million, to work on the City Revitalization Program and the Home Energy Resilience Improvement Program. The company manages federal recovery funds at the Department of Transportation and Public Works (DTOP, in Spanish), under a $2.7 million contract.

During this four-year period, both the president of Plexos Group, Bob Roberts, and two of its main executives in Puerto Rico, appear as having donated $5,350 to the Governor’s Campaign.

A company spokesperson did not answer questions from the CPI about its support for Pierluisi through a donation in its name, as well as those of its executives.

Another reconstruction company with executives on the Governor’s political donor list is DCMC LLC. It arrived in Puerto Rico in September 2017 to offer “disaster management” services after hurricanes Irma and María.

Since then, DCMC has been awarded more than $66.7 million in contracts with the government of Puerto Rico, some of which have been subject to findings from the Comptroller’s Office.

The company currently has a $10 million contract with the Central Office for Recovery, Reconstruction and Resiliency (COR3), to administer the multibillion-dollar federal hazard mitigation program. It also has two other contracts, for $9.8 million and $2.7 million, with electric power utility’s private operatorGenera Puerto Rico, and the Department of Transportation and Public Works (DTOP, in Spanish), respectively, to manage reconstruction projects with federal funds.

As recently as January of this year, amid the primary campaign, three senior DCMC executives donated $3,000 each as part of a fundraising activity for Pierluisi called “Sellando el Triunfo,” at a restaurant in San Juan.

In total, at least four DCMC executives have contributed more than $15,000 in a five-month period. There is also a donation of $3,100, the maximum allowed per person, registered in the name of Seth Lemoine, chief operating officer of Lemoine, the company that owns DCMC.

Another reconstruction contractor on the list of political donors is Horne LLP, whose top company officer in Puerto Rico, Samir El Hage, and Scott Keller, a government services partner at Horne, have donated $7,600 to Pierluisi. In this four-year period, Horne has had more than $210 million in contracts related to managing the CDBG-DR funds granted in Puerto Rico by the US Department of Housing and Urban Development (HUD) after the Irma and María disasters.

Meanwhile, last April, the Pierluisi Committee reported three donations of $500 each, in the name of Derrick Stensrud, vice president at consulting firm ICF. The company, which is one of the main reconstruction contractors, has more than $621 million in contracts with the government.

Bill Banning this Practice has been Shelved

In June 2021, the House Government Commission, chaired by Representative Jesús Manuel Ortiz, approved PC 320, with some amendments. Since then, it has remained shelved, despite having been approved by the commission and receiving the OCE’s support.

“In my opinion, instructions came from the House leadership that this bill had a deficiency or affected some type of interest and should not be approved, or at least held until further notice,” said Rep. José Bernardo Márquez, co-sponsor of the measure, along with Rep. Mariana Nogales.

PDP House Majority Spokesman, Rep. Ángel Matos, did not answer questions from the CPI about why the bill has not been brought to a vote.

PC 699 — a bill from the Pierluisi administration that would impose limits on donations from contractors but only if they occurred 90 days before the elections, or 90 days before and after obtaining the contract — was on the verge of going to a vote in June 2022. But an amendment to the bill to extend the ban throughout the election cycle, as sought by PC 320, stalled consideration of the bill.

At that time, PNP Rep. Gabriel Rodríguez Aguiló said an absolute prohibition of these donations would be unconstitutional, violating the right of people to make political contributions. But courts in the United States have upheld limits on political donations from government contractors, including an absolute ban like the one that exists at the federal government level.

“It has been validated because it is believed that the interest in fighting potential risks of corruption or the appearance of conflict outweighs the interest in allowing these donations freely,” Rep. Márquez explained.

In March 2023, it was Electoral Comptroller Vélez himself and his office who presented a bill, PC 1676, to add controls on the financing and supervision of political campaigns. At that time, the OCE again expressed its support for prohibiting political donations from government contractors. After being approved in committee, the measure was shelved like the previous ones.

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