Economy

How Wall St.'s Greedy Plans to Fleece Puerto Rico Are Fueling the Island's Independence Movement

The ongoing financial crisis in Puerto Rico is likely to provide new ammunition for pro-independence groups.

Waving Puerto Rico Flag
Photo Credit: PromesaArtStudio

Serious allegations that multibillion-dollar frauds have contributed to the ongoing debt financial crisis in Puerto Rico have triggered an uprising of pro-independence groups on the island, including the Boricua Popular/People's Army and Los Macheteros group.

A 23-page legislative report, released by the government of Puerto Rico, outlines how government officials conspired with Wall Street firms to commit $11 billion in financial fraud. According to the report, Puerto Rico Electric Power Authority paid previous bondholders with capital received from new investors, otherwise known as a classic Ponzi scheme.

Last week, a U.S. District Judge overseeing a class-action lawsuit against PREPA and the world’s largest fuel oil suppliers for perpetuating an extensive fuel oil fraud upheld claims that the defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and denied motions to dismiss the suit.

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The suit states the defendants received kickbacks and payments for colluding to raise fuel oil prices that were directly passed to users of electricity, by agreeing to use non-compliant fuel oil and falsifying lab tests.

The court’s ruling may raise questions about the apparent failure of the local FBI office and the U.S. Attorney in Puerto Rico to pursue investigations into these allegations. The biggest concern is that the massive frauds apparently perpetrated on the island’s poor people may trigger unrest, particularly from the pro-independence movement.

Puerto Rico lawmakers approved a moratorium on debt repayments in hopes of lessening the imminent effects on the island’s economy. Efforts are still ongoing to persuade the U.S. Congress to grant the island bankruptcy protection it does not currently enjoy.

As recently as January of this year, Ruben Berrios, leader of the Puerto Rican Independence Party (PIP), proposed that the island's main political parties lobby Washington with a single voice to demand that a binding referendum be held to determine the island's status once and for all.

The Hostosiano National Independence Movement (MINH) endorsed the proposal.

"The PIP proposal should be backed by all independence movements, and even more, by all the Puerto Rican people," MINH said in a statement regarding the "need for unity among patriotic forces" to resolve the question of status. Pedro Pierluisi, the leader of the main opposition New Progressive Party (PNP), which supports U.S. statehood for the island, said he agreed with the PIP proposal.

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Marlena Fitzpatrick García is a writer for AlterNet and Latino Rebels. Follow her @MarlenaFitz