CPI: García and González under scrutiny over Santander

On December 16, 2016, CPI put two Fiscal Control Board members — Carlos García and José Ramón González — under scrutiny for their past at Banco Santander and as chairs of the Government Development Bank (GDB). Both, as Board members with control over Puerto Rico’s finances, would face decisions on bonds they helped process from GDB and from Santander, a bank that as of March 31, 2016 still held Government debt. Hedge Clippers called for their resignations; neither García nor González agreed to a CPI interview.

COFINA topped the Top 10 of Santander’s “First Puerto Rico Tax Exempt Fund” (36.27% of that portfolio; Commerce and Export 2.86%). The “Pirates of the Caribbean” report holds that Santander ran a “revolving door” with GDB: under González and García, Santander Securities consolidated as underwriter; in 2004 it helped issue more than $6.1 billion (incl. $1.2 billion for the Public Finance Corporation); it took part in at least 90 transactions (GO, COFINA, GDB, PREPA, Retirement, AAA, AFI and others). García, a shareholder, received productivity bonds of $1,150,000 (2006–2008, SEC document). During his GDB tenure, Santander Asset Management obtained $270,000 from the Retirement System he chaired as trustee.

García appointed at least six former Santander executives at GDB (Álvarez, Juan Carlos Batlle, Méndez, Lockwood, Joyner, Canto). OEG inquiries found no conflict in what was submitted. Via José Luis Cedeño, the Board neither commented on the report nor delivered financial disclosures required by PROMESA; federal Ethics said it had not received them; local OEG said it lacked jurisdiction; Treasury referred to the White House with no reply to CPI.

An NGO report and prior employment ≠ a judgment. Bank portfolio bond holdings ≠ theft. This note does not allege a crime.