OPINION: Puerto Rico’s debt must be audited now

Most people, after eating at a restaurant, will look over the bill to make sure that they were not charged for something they did not order. That’s just plain old common sense. But when it comes to Puerto Rico paying its bills, it is not so simple. Instead, time after time, the island has chosen to simply lay down its “credit card” without even the most cursory glance at a bill that now totals $74 billion.

This practice must stop now. Before the process mandated by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) unfolds any further, Puerto Rico needs a court-appointed committee to conduct a full and thorough audit of its debt. This should include a complete accounting of when the debt was incurred, how it has accumulated over the years and if it was legally issued. A court-mandated audit would put forth a process that delivers accountability for elected officials, bankers, underwriters and all those responsible for the public coffers. If the debt is found to be illegal, then a court could rule that the debt is not payable. Yes, these are legal questions, but also moral imperatives, as this debt now has a chokehold around the island.

{mosads}Inconceivably, the current Puerto Rican administration has abandoned these critical efforts to audit the debt. Yet this administration has carried out unimportant tasks such as changing out the flags that adorn all public offices. It has also called for a nonbinding plebiscite on the status of Puerto Rico’s political relationship with the United States, costing taxpayers an estimated $10 million, but lacking the endorsement of federal authorities that would need to take action on the results. Such moves cost the island’s residents real money  and will achieve nothing more than an act of political theater.

But in April, when the administration defunded a commission that was tasked to audit the debt, the residents of Puerto Rico took notice — and they are outraged. Why is it that we can find money to swap flags, pay exorbitant salaries to agency leaders and fund a nonbinding plebiscite, yet we can’t find money to audit the debt?

Yes, the commission was not equipped with the right authorities nor bandwidth to look at the debt in its full scope, but it was there, and the premise under which it was established continues to be reasonable. The people have a right to know under which authorities the debt was issued and its legitimacy.

Since then, on May 1, one of the main requests of the 50,000 people who took to the streets throughout the island was for a comprehensive audit of the debt. And as I have done before, I again add my voice to theirs. As stipulated in section 201(b)(N) of PROMESA, it is critical that the debt be fully audited prior to making any restructuring decisions.

I cannot help but feel suspicious of those who oppose the audit. The truth is many people will likely feel the backlash of exposing the truth. In a history of unjustified borrowing, it is clear that both of the main political parties on the island borrowed beyond their means.  As debt piled up, government officials somehow ended up numb to the long-term implications of that repayment. 

Beyond what was already a very attractive investment, under triple tax exemption, and a constitutional provision prioritizing debt service payments over essential services, crafty accountants and lawyers managed a way to issue debt beyond what was legal. Puerto Rico’s own Constitution forbade debt service surpassing 15 percent of annual government revenues. Yet, in the fiscal plan approved this past March, the debt service to revenue averaged 20 percent for the next 10 years. Furthermore, the island’s debt-to-GDP ratio is 70 percent, a higher ratio than any U.S. state.

Puerto Rico became a fertile ground for predatory banks and hedge funds to feed off its vulnerabilities. Creditors and citizens can both agree on this: There has been an “ongoing scheme of constitutional and statutory violations that can only be called theft,” as Ambac Assurance Corp. put it in its lawsuit against the Commonwealth of Puerto Rico. Therefore, how is it even fair for a judge to make final decisions on the debt restructuring, if she does not even have the full picture of how the debt was issued, the terms it was under, or if it was done so legally and under the blessing of U.S. law?

While there is plenty of blame to go around, at the very end, when the bills are due, those who suffer the most are the residents carrying the burden. Those who have continued living in Puerto Rico, day by day, raising their kids on an island that, while beautiful, is too often affected by the hardships of finding available medical care, of paying the most expensive utilities in the nation, of fearing cuts to the educational engine that transitioned the island to a highly educated society and of shouldering the fear of crime. Now is the time to end this injustice, and it can only be done by a full and thorough accounting of the island’s debt.

Velázquez represents New York’s 7th District. She is the first Puerto Rican woman elected to Congress.