The Jubilee Blog

Puerto Rico Debt Advisors Subject to Conflict Disclosure

February 20, 2019 Washington DC - After an investigation into potential conflicts of interest in Puerto Rico's debt restructuring, the island's oversight board notes it will increase disclosure requirements for advisors. The investigation began in response to a debt consultant whose affiliate company holds Puerto Rico debt.

"It's critical that any groups who are hired to advise on Puerto Rico's debt crisis disclose if they also own debt or have a conflict of interest," noted Jubilee USA Executive Director Eric LeCompte. LeCompte serves on United Nation debt expert groups and monitored Puerto Rico's debt crisis for the last 4 years.

"US bankruptcy law already requires this type of disclosure and it should also be required for the Puerto Rico debt restructuring." The 100-page investigation focused on the case of McKinsey and Company, hired to advise Puerto Rico's financial oversight board on the island's debt. The advisor's affiliate company MIO Partners owns Puerto Rico debt.

Puerto Rico Debt Deal Receives Court Approval

February 5, 2019

Washington DC - Judge Laura Taylor Swain approved a deal to restructure $17 billion of Puerto Rico's $72 billion debt on Monday. Court approval was the last hurdle creditors and the island's oversight board needed for a plan to address sales tax backed debt or "COFINA" debt.

"We are worried that not enough debt is being cut and that Puerto Rico's people are carrying heavy austerity burdens," said Jubilee USA Executive Director Eric LeCompte, who monitors Puerto Rico's debt. "The math isn't adding up. If plans to restructure the remaining debt fail to cut the majority of the island's debt load, Puerto Rico can't see sustained economic recovery and growth."

The ruling followed two days of hearings and weeks of deliberation. In Swain's "COFINA" ruling, she notes objections to the debt plan, such as sustainability and the lack of a complete debt audit.

"Nearly six out of ten kids live in poverty in Puerto Rico and if future debt deals don't cut enough debt, we won't address the child poverty epidemic on the island," noted LeCompte, who serves on United Nation finance expert groups.