Puerto Rico - Corruption

One aspect of Puerto Rico’s economy, of which little is known, is the informal, unregulated, and illegal underground economy. This is mostly a cash and service economy. The illegal trade of drugs, for example, has an estimated gross cashflow of $20 billion per year according to the Drug Enforcement Agency. An estimated 20 percent of all cocaine imported into the U.S. enters via Puerto Rico and the U.S. Virgin Islands. Four billion dollars remain in Puerto Rico and surface in the economy. For example, the largest Puerto Rican bank (Banco Popular) was fined $21 million for not reporting hundreds of millions of dollars in questionable cash transactions in one of its banks in Old San Juan.

Some Puerto Ricans take the view that it does not pay to work in the official economy and that they are better off getting welfare payments, food coupons, and taking part in the underground economy. The underground economy may be as high as one third (or more) of the total island economy. All of which is untaxed and unregulated.

For many years Puerto Rico enjoyed an impeccable reputation of clean government. for many years Puerto Rico enjoyed an impecable reputation of clean government and true public service. Leaders such as Luis Munoz Marin, Roberto Sanchez, Rafael Hernandez Colon, and Luis Ferre, earned the trust and respect of the people for their honesty in the management of the public treasure.

But this tradition was tainted by former Governor Pedro Rossello and his administration. During his administration, as Puerto Rico later discovered, there were many corruption schemes and rotten administrators pocketing millions of Federal and local funds. The irony is that the leadership of the Statehood Party, the party led by Governor Rossello for almost 10 years, became the leaders of the first corrupt government in the history of Puerto Rico.

In 1992 Pedro Rossello took office with a platform of government reform and ambitious public projects. He governed until the year 2000. During his administration, as Puerto Rico later discovered, there were many corruption schemes and rotten administrators pocketing millions of federal and local funds. The irony is that the leadership of the Statehood party--the party lead by Governor Rossello for almost 10 years--became the leaders of the first corrupt government in the history of Puerto Rico.

A party that claimed to admire American democracy, a party that wants Puerto Rico to become a State of the union, was the party that embezzled Federal funds that belonged to elders, sick, and children. As a result of the Federal and local investigations of the statehood corruption scheme, during 2003 there were the conviction and indictment of many of the highest-ranking statehood leaders.

1. Speaker Edison Misla-Aldarrondo, Speaker of the House, convicted.
2. Jose Granados-Navedo, Vice President of the House, resigned under scandal.
3. Norberto Nieves, legislator, convicted.
4. Jose Nunez, legislator, indicted.
5. Anibal Marrero, Vice President of the Senate, resigned under scandal.
6. Senator Victor Marrero, convicted.
7. Senator Freddie Valentin, convicted.
8. The personal assistant to the Governor, Angie Rivera, the person that had the key to the Governor's office, convicted.
9. Marcos Morell, secretary-general, executive director of the party, disbarred by the Supreme Court of Puerto Rico because of conflict of interest doing business with the government.
10. Bernardo Negron, president of the Federation of Statehood Party Mayors, convicted.
11. Andres Barbeito, director of the Pensions Administration, indicted.
12. Luis Dubon, the owner of the Statehood Party headquarters building, convicted.
13. Angel Luis Ocasio, deputy chief of staff to the Governor, convicted.
14. Eduardo Burgos, another deputy chief of staff to the Governor, convicted.
15. Jose Cobian, deputy finance director of the Statehood Party, indicted.
16. Victor Fajardo, Secretary of Education, convicted.
17. Oscar Ramos, administrator of the State Insurance Fund, under special prosecutor investigation.
18. Daniel Pagan, secretary of the Natural Resources Department, indicted.

Although Governor Pedro Rossello was not indicted, the extension of the corruption led to one or two possible explanations: 1) he was part of the corruption scheme; or 2) he is such an inept administrator that he should not be trusted again with the duty of managing a government. Rossello disregarded for years pleas by the opposition, by the press, by the civil society in general to investigate his government and his party. Instead of looking into the allegations he decided to conceal the facts, to protect his friend and to defend the corrupt members of his administration. Fortunately the federal authorities did their job in investigating and prosecuting the criminals and the people of Puerto Rico judged the statehood party in the polls.