September 17, 2019

House Dems Want BDO Puerto Rico to Stop Shredding Documents Already

When a document shredding truck pulls up to an accounting firm whose former managing partner was just indicted for his role, and that firm’s role, in a massive corruption scandal in Puerto Rico, it’s going to raise some eyebrows.

And those eyebrows belong to U.S. Reps. Raúl Grijalva (D-AZ) and Nydia Velázquez (D-NY). Velázquez, a native of Puerto Rico, sent out these tweets yesterday regarding BDO Puerto Rico’s shredding activities:

Now, this could be nothing … or it could be something (re: Arthur Andersen). Who knows! But it seemed pretty fishy to both Velázquez and Grijalva, who said BDO needs to cease its shredding post haste:

“The Puerto Rican people are tired of corruption … and tired of bad actions going unpunished. If BDO Puerto Rico is shredding documents, at this time it does not matter if it is part of a routine process, it must stop now. This is a very precarious moment for the credibility of the island’s government and the main institutions. The priority now has to be transparency and integrity.”

The two lawmakers also sent a letter recently to Natalie Jaresko, executive director of the Puerto Rico Financial Oversight and Management Board (FOMB), asking the government agency to investigate the audits of government entities that have been conducted by Bravo Delta Oscar within the past two years, which include:

  • Department of Health
  • Department of Treasury
  • Fiscal Agency and Financial Advisory Authority
  • Health Insurance Administration
  • Teachers’ Retirement System
  • Office of the Puerto Rico Insurance Commissioner
  • Department of Work and Human Resources
  • Public Buildings Authority
  • Department of Agriculture
  • Corporation for Public Broadcasting
  • Highway and Transportation Authority
  • Department of Transportation and Public Works
  • Electric Power Authority
  • Municipality of San Juan
  • Infrastructure Financing Authority
  • Municipality of Guaynabo
  • State Energy Policy Office
  • Government Development Bank
  • General Services Administration

We urge the FOMB to undertake an investigation into the various audits and work products created by BDO Puerto Rico for local government entities to determine whether the alleged fraudulent activities of the managing partner and those under his supervision, the recent termination of several BDO contracts with Commonwealth agencies, and arrests have impaired the integrity of those audits and work products.

We further urge the FOMB to immediately and formally notify all stakeholders and relevant decision makers of the existence of this investigation and the FOMB’s intention to restore confidence by issuing the report and corrective actions within 90 days.

Well, it just so happened that the FOMB announced today that it issued a request for proposals for conducting a “financial examination of audit, accounting, and other services” performed by BDO Puerto Rico since 2016, Caribbean Business reported.

BDO Puerto Rico held more than 95 contracts, “subject to over 100 amendments,” with the island’s government and its instrumentalities during that period, the board said.

The purpose of the investigation, the board said, is to “determine whether the integrity of any of the services provided by BDO was affected by alleged fraudulent activities of the firm’s former managing partner,” who was recently charged by federal authorities.

Submissions for the RFP are due on Aug. 22. The FOMB stressed that the focus of the investigation is financial, so “legal actions or remedies are not within the scope of the investigation and are the responsibility of law enforcement,” according to Caribbean Business.

Fernando Scherrer

Fernando Scherrer, BDO Puerto Rico’s ex-managing partner, was one of six people arrested by federal authorities in Puerto Rico July 10 on corruption charges for participating in a scheme in which $15.5 million in federal contracts were unlawfully steered to politically connected consultants. A BDO contractor, Alberto Velázquez Piñol, was also arrested.

Contracts totaling $2.5 million were steered to BDO by Angela Avila Marrero, the former executive director of the Puerto Rico Health Insurance Administration, who provided internal information to the firm. BDO then subcontracted the work and paid unauthorized commissions, which inflated the cost of the contracts. Avila Marrero is also one of the six who were arrested.

Scherrer pleaded not guilty to charges of wire fraud, conspiracy, and money laundering. He stepped down as managing partner of BDO Puerto Rico on July 10.

Related articles:

BDO Puerto Rico Managing Partner Resigns After Indictment In Massive Corruption Scandal
All Fat Guys Can Relate to Ex-BDO Puerto Rico Managing Partner Trying to Put On a Belt

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