Originally appeared at Zero Hedge
Just a day after Puerto Rico’s cash-strapped power authority on Sunday canceled its controversial $300 million contract with Whitefish Energy, a small Montana company tasked with rebuilding the island’s power grid after it was completely destroyed by Hurricanes Maria and Irma, the WSJ is reporting that the FBI is looking into the circumstances surrounding the contract.
The contract was canceled on orders from Puerto Rico Gov. Ricardo Rossello, who pointed to the burgeoning controversy surrounding the company – including its relationship with Secretary of the Interior Ryan Zinke, who is from the same small Montana town where Whitefish is based.
Zinke issued a statement last week denying any involvement in the deal. Zinke is reportedly friends with Whitefish CEO Andy Techmanski.
The company has been criticized for moving too slowly in its efforts to restore power to the island. To date, only 30% of power customers on the island have had electricity restored, more than a month after Maria first made landfall along the island’s southeastern coast.
As WSJ explains, the firm had more than 350 workers and 2,500 tons of heavy equipment on the ground for rebuilding electrical lines destroyed in Hurricane Maria. But the firm’s small size and limited track record, as well as the terms of the contract, ignited concerns around Puerto Rico’s management of the flow of federal disaster-relief dollars to the island.
The Federal Emergency Management Agency, multiple congressional committees and local auditors also have raised concerns and begun requesting documents about the deal. Ricardo Ramos, the executive director of Prepa, had defended the selection of Whitefish and said the contracting process was done according to the utility’s regulations for handling emergency situations.
Tip of the iceberg. What the MSM is careful to avoid mentioning is that the US Federal Emergency Management Agency (FEMA) has always distributed disaster funds to local governments and utilities the exact same way. No auditing, no oversight, no accountability. FEMA awarded these funds to the thoroughly corrupt, incompetent and bankrupt Puerto Rican Electric Power Authority (PREPA) “Here’s a bag of US taxpayer cash, “We hope you spend it responsibly, even though you have NEVER done that with your cash in the past.”
PREPA is the one who negotiated this contract with Whitefish and has been paying them with the FEMA grant. Of course PREPA officials are stealing a lot of it – that’s why they insisted on a secretive, no fed audit, no financial details made public contract. The fact that Whitefish only had two employees really isn’t that big of a deal – everything is sub-contracted out anyway. The only companies solely capable of doing this are utility companies, and none of them has that much spare equipment or manpower to devote to a year-long major Puerto Rican transmission line contract. I doubt Whitefish can scrounge up the necessary equipment, but there are probably plenty of unemployed lineman and tower crews. Whitefish would be as good as anyone if the feds could constantly audit the billing and payment AND the US Army Corps of Engineers could regularly inspect the work and comment on performance.
Another myth propagated by the CNN brain trust is that tower guys and linemen are making $325 or whatever an hour and getting $250/day for housing. Those amounts are what Whitefish is billing PREPA, NOT what the contractors are getting paid. They probably get 60 – 70% of that amount and Whitefish takes the rest as profit. They need that much skim to pay the bribes PREPA execs probably demanded before they awarded Whitefish the contract.
ALL FEMA disaster relief contracts are like this. They have absolutely no capability to determine if the money is being spent wisely and no remedy if it isn’t. They leave that up to the recipients, who regularly rip-off and cash in on inept and irresponsible FEMA.
A perfect capitalist model – costs are borne by the society, profits are taken by private companies.