The Case Against the Federal Supervisory Fiscal Board of Puerto Rico


By Franklin D. López

Former UPI and The Associated Press news writer

Revised August 5, 2017

International Criminal Law: Article 7 (1) (d) “Crime against humanity of deportation or forcible transfer of population.”

One of the biggest crime committed by men is to remain passive and silent before injustice. This is more relevant when the nation that projects to be the beacon of Freedom and Democracy, the United States of America, builds a framework to deal with Puerto Rico’s debt with a clear and agressive economic and austerity policies that forces the population of the U.S. Territory into a massive exodus to the states of the Union. Last June 27, 2016, the U.S. Congress and President Barack Obama approved and signed a law called “PROMESA” (Promise) that effectively takes over the powers and autonomy of the Puerto Rico government, including municipalities and all public agencies.

PROMESA” was approved, with bi-partirsan support, in 6 weeks, a record breaking period to pass the complex ‘coup d’etat’ legislation greased by extraordinary donations by Wall Street hedge funds and bond holders to the campaign coffers of members of Congress. I supported the approval of the “PROMESA” legislation provided that the 3.4 millions American citizens living in the territory are treated equally, like the citizens of New York City, Washington, D.C. And Detroit. Their debt restructuring was done in part with Federal grants, guarantees and strong economic development policies in order to neutralize the contraction and devastating effects of austerity measures.

Yesterday the Federal Fiscal Board approved, unanimously, cuts and measures reducing the work schedule of 150,000 public employees by 10% and the pensions affecting 125, 000 between 5 and up to 25%. This was done by the members of the Board knowing that Puerto Rico’s economy is in coma care and that this decisions will ignite even more massive population exodus to the United States from the territory. These austerity measures were presented by Natalie Jaresko, the Board’s $625,000 a year executive director and with an abysmal record as a former Finance Minister of the Ukraine and the subject of an extensive journalist investigation by Consortium News. (See How Ukraine’s Finance Chief Got Rich at ) This week it was announce by the territory’s Education Department that the system has lost 55,000 students for the school year beginning August 6, 2017 and Puerto Rico has more than 300,000 houses units emptied causing the biggest deflation of real estate values since the Great Depression.

The Federal “Supervisory” Fiscal Board is integrated by 7 members of which four are PuertoRicans. The four members of Puerto Rican origin were appointed to diffuse and neutralize that Washington has effectively taken over the day to day operations of the territorial government and giving the impression that FSFB is “controlled” by a majority of Puerto Ricans.

In an interviewed with journalist the President of the FSFB, Jose Carrión III, brother in law of the former Resident Commissioner of Puerto Rico in Congress, Pedro Pierluisi 2009-2016 made a very revealing statement. He said, “When I come to Washington and meet with staffers the first thing they say to me is ‘Don’t come here asking for Federal funding or bail outs‘.” Mr. Carrión went further by expressing that the debt crisis will be dealt without any financial assistance instead of the U.S. Government and that the weight of promoting economic development activities will be primarily done by the private sector and creativity. Several others, Puerto Rican member of the board echoed Mr. Carrión statement.

The Puerto Rico government presented a fiscal plan at the request of FSFB for the year 2017-2018. The FSFB also requested cuts for two years of approximately $3.5 billions per year. Among those cuts the FSFB included more than $ 1 billion in health care cuts for low income families and education. In simple words, the FSFB is punishing the people of Puerto Rico for depositing their trust to corrupt politicians in territorial election. In their yearly report to Congress the Fiscal Board recommends using the Food Stamps, rent subsidies under Section 8 and Temporary Assistance to needy family funding to create a job tax credit efectively taking more than $ 1.4 billions from the dying economy. The Board decided to punish the people of Puerto Rico instead of going after the investment bankers who promoted bond issues knowing that Nobel Economic Prize winner, James Tobin warned against issueing additional debt in November 1979. The Fiscal Board should use the Assistant Attorney General under the Obama administration who wrote a memo establishing a policy of going after the culprits by imposing fines in the billions of dollars rather than prosecuting the criminals. The Board should go after UBS, RBC, CityCorp, J.P. Morgan-Chase, Banco Popular, Banco Santander and demand restoration and damages for promoting bond issues that were designed to default. The Office of Comptroller of Puerto Rico estimates that more than $ 22 billions have been stolen by corrupt politicians since 1973 to 2016 based on the loss of 10% of the territory’s annual budget! Just like investment bankers and bankers responsible for the 2008 financial collapse none will be prosecuted criminally. It seems that crime does pays!

The contrast in the restructuring of the debt and economic crisis in New York City, Washington, D.C. and Detroit with the disparate and discriminatory of Puerto Rico’s plan is unconstitutional. In a meeting with Senator Tom Harkin (D-Iowa)in March 2010 he told me, “You know Franklin that Congress has the power literally to discriminate against U.S. Citizens in the territory. For example U.S. Citizens residing and retired in the Republic of Costa Rica receive Supplemental Social Security income while that benefit is denied to U.S. Citizens in the territory of Puerto Rico.” His statement blew my mind! The three major cities that went through the debt crisis received loan guarantees and multiple Federal funding to deal with economic stimulus and development in coping with the challenges of serious austerity measures.

The United States has given hundreds of billions of dollars to the International Monetary Fund and the World Bank to provide economic assistance and bail outs to countries like Portugal, Greece, Tunisia, Italy, Ukraine and many others. The European Union Commission has demanded, just like the FSFB, strong austerity programs together with bail outs. Some of the countries received multiple bail outs. See the table below.

Bail Outs given by the European Union through funds of the IMF, WB & Others

EU member Time span IMF[1][2]
(billion €)
World Bank[2]
(billion €)
(billion €)
(billion €)
(billion €)
(billion €)
(billion €)
(billion €)
(billion €)
Bailout in total
(billion €)

Cyprus I1

Dec.2011-Dec.2012 2.5 2.51

Cyprus II2

May 2013-Mar.2016 1.0 9.0 10.02

Greece I+II3

May 2010-Jun.2015 32.1 out of 48.1 52.9 130.9 out of 144.6 215.9 out of 245.63

Greece III4

Aug.2015-Aug.2018 (proportion of 86,
to be decided
(up till 86) 864


Nov.2008-Oct.2010 9.1 out of 12.5 1.0 5.5 out of 6.5 15.6 out of 20.05


Nov.2010-Dec.2013 22.5 4.8 22.5 18.4 68.26


Dec.2008-Dec.2011 1.1 out of 1.7 0.4 0.1 0.0 out of 2.2 2.9 out of 3.1 4.5 out of 7.57


May 2011-Jun 2014 26.5 out of 27.4 24.3 out of 25.6 26.0 76.8 out of 79.08

Romania I9

May 2009-Jun 2011 12.6 out of 13.6 1.0 1.0 5.0 19.6 out of 20.69

Romania II10

Mar 2011-Jun 2013 0.0 out of 3.6 1.15 0.0 out of 1.4 1.15 out of 6.1510

Romania III11

Oct 2013-Sep 2015 0.0 out of 2.0 2.5 0.0 out of 2.0 2.5 out of 6.511


July 2012-Dec.2013 41.3 out of 100 41.3 out of 10012
Total payment Nov.2008-Aug.2018 104.9 6.05 1.1 7.3 13.4 52.9 46.8 175.3 136.3 544.05

The austerity measures and cuts demanded by the FSFB will not solved the debt crisis neither the economic mess of the U.S. Possession. Nobel Economic Prize winner, Mr. Joseph Stiglitz recently said that the “economic fiscal and austerity demands by the FSFB will only deepens the crisis.” This means that the population exodus will expand to biblical proportions. There are 5.2 millions American citizens from Puerto Rican origin residing in the United States. This is a direct result of political, economic and social policies implanted by Washington in establishing a colonial regime since the invasion of the 1898 Spanish-American war. The Treaty of Versailles gave primary responsibility to the well being of the citizens of the conquered possession to the U.S. Congress. During 119 years, the U.S. Government established a segregated, discriminatory and apartheid regime in the “enchanted islands of Puerto Rico.” This disparate and colonial treatment has forced the archipelago’s population to leave.

The FSFB members believe that they are creature of a lesser god and that they are above the law.Adding injury to pain, today is the 320 day that the seven members of the FSFB have not complied with Section 102 of the Ethics in Government Act of 1978 (5 U.S.C. App.) by making public as mandated detailed audited financial statements.

What is more fascinating in the formulation and structure of the PROMESA Act and the FSFB. Both follows the same conduct adopted by the George W. Bush and Barrack Obama administrations with financial crisis, big bankers and the culprits that caused it. That policy can be summarized in the following manner: “Let’s bail out the to big to fail banks and let the people pay. No banker will go to jail!” In Puerto Rico’s case tens of billions of dollars of public bonds issues made with questionable financial statements and fraudulent financial projections. The Security and Exchange Commission is presently conducting an investigation of the 2009-2014 bonds issues made by the two previous administrations. The FSFB policy is to squeeze as much tax monies from a decaying and dying economy before injecting any Federal funds. They want the anemic private sector to bear the responsibility of reviving a dying economy. They want to increase the tax burden on the citizens of the territory.

The U.S. Government, by legislating PROMESA and creating the FSFB and by demanding austerity, cuts and economic policies are coercing and forcing the massive exodus of the Puerto Rican society to stratospheric levels. Dismembering families and pushing them to seek “the American dream” in the states of the Union. The International Criminal Court recognizes coercive acts and public policies that forced massive numbers of population to move from their place of origin. Specifically, Article 7 (1) (d) “Crime against humanity of deportation or forcible transfer of population” classifies it as a crime against humanity.

Where is the International community, Human Rights organization and watchdogs while Puerto Rico as a society is dismembered and force to leave their place of origin? There are primitive ways to destroy a people and to force them to flee. There are sophisticated political and economic policies that can achieve the same objectives. The International Community is in the same place watching the Syrian people being slowly destroyed by a civil war sponsored by the major powers of the planet.

The People of Puerto Rico will voted on June 11, 2017 and  chose statehood. Every Puerto Rican that moves to the Union will cost the U.S Tax payer at least twice as much as servicing their needs in the territory. Statehood is the only way that we can bring Puerto Ricans back to fill the 332,000 empty housing units. In 2016,  5,509 housing units were foreclosed. This year 17,000 are in the judicial foreclosing process. When Hawaii entered the Union had a population 0f 620,000 and in 2015 it had 1,442,000. Only statehood will bring Puerto Rico back from the brink of dying. But the Fiscal Board ignores what many presidential task forces have concluded that the economy of Puerto Rico is linked to solving the status issue. The Board’s coercive austerity measures, imposed by the powers delegated by Congress, will continue to dismember the Puerto Rican family and forcing them to move to the United States. This simply constitute a crime against humanity. Is anybody in the International community listening?