UPR puts $15 million of Retirement into Vedanta despite Callan’s veto

On July 19, 2012, CPI reported that the UPR Board of Trustees ignored Callan Associates — independent portfolio advisers — and invested $15 million of the Retirement System in Vedanta Capital/McCoy II, a venture-capital fund tied to Facebook’s IPO. Callan, in a June 2, 2011 letter, “expressly DID NOT RECOMMEND” the proposal: cash-flow uncertainty, expensive fees and a private-equity allocation above the advised 1%. It preferred a diversified portfolio built over time, not a push into the riskiest strategy.

The Retirement Board, on June 29, 2012, unanimously asked for the criteria used “against Callan’s recommendations.” System sources estimated initial losses of about $4–5 million after Facebook drops (~17% from the June peak; ~27% vs. the May offering), with Wall Street awaiting the July 26 report. Vedanta (2006) concentrated organizational risk; Callan noted that of $2,000 million claimed under management, $1,400 million sat in New Silk Route (India), with no shared economics, and that two of four original investors did not reinvest. Certification 22 (Oct 15, 2011) cut the commitment from $20 million to $15 million.

Jerome Garffer Croly, who introduced Vedanta, also chaired PREPA’s Finance Committee until resigning that month over political allegations. Luis Berríos Amadeo and Agustín Cabrer Roig had defended the deal as an opportunity. Retirement’s liquidity need had risen from ~$11 million (2010) to an estimated ~$27 million (2011), partly due to Law 7-style fiscal emergency policy without staff replacement. Allegation of bad fiduciary decision ≠ judgment or conviction; market loss ≠ stolen disbursement.

Source: Centro de Periodismo Investigativo. https://periodismoinvestigativo.com/2012/07/upr-ignora-a-asesores-financieros-al-invertir-15-millones-de-retiro/