PR gov. threatens 'hell to pay' as probes of Whitefish contract begin
The Puerto Rico governor promised "hell to pay" if any wrongdoing is uncovered.
— -- Puerto Rico Gov. Ricardo Rossello said there will be "hell to pay" if any wronging is uncovered in the awarding of multimillion-dollar contracts after Hurricane Maria devastated the island.
With more than 75 percent of Puerto Rico still without electricity in Maria's wake, U.S. lawmakers are calling for an investigation into why the island turned to a small, for-profit company instead of the mutual-aid network of public utilities usually called upon to coordinate power restoration after disasters.
Rossello made the warning on Thursday amid mounting controversy. On Wednesday, he asked the DHS inspector general to complete a review of the Whitefish contract by next week to answer questions, though he noted in his letter that the contract appeared to comply with FEMA regulations.
A spokesperson for the DHS inspector general's office confirmed that they have started an inquiry into the contract and will look for any "inappropriate relationships."
Eight congressional Democrats wrote to the Interior Dept. inspector general asking for a separate investigation, specifically mentioning concerns about any possible Whitefish connection to Interior Secretary Ryan Zinke -- who is from Whitefish, Mont., the same town where the company is based -- or any other ties to the Trump administration.
"Whitefish is primarily financed by a private equity firm that is run by a contributor to the presidential campaign of Donald Trump. We're concerned that Whitefish might have overstated its connections with the Trump administration to obtain the contract," the Democrats wrote in the letter sent Wednesday afternoon.
Complicating matters are concerns over the relationship between Whitefish founder Andy Techmanski and Interior Secretary Zinke.
Zinke and Whitefish have confirmed the families know one another -- in their small hometown, "everyone knows everyone," the Interior Department said.
Zinke and Whitefish have confirmed the families know one another -- in their small hometown, "everyone knows everyone," the Interior Department said.
Both parties also insist that Zinke did not advocate on Whitefish's behalf. In a statement Friday, Zinke said he had "absolutely nothing to do" with the company's receiving the contract and that claims to the contrary are "baseless."
"Only in elitist Washington, D.C., would being from a small town be considered a crime," the statement read. "Neither myself nor anyone in my office has advocated for this company in anyway. After the initial contract was awarded, I was contacted by the company on which I took no action."
The secretary further noted that he welcomes "any and all investigations" into the matter.
Whitefish Energy lists Dallas-based HBC Investments as one of its investors on its website. One partner in that company, Joe Colonnetta, along with his wife, has donated to the Republican party and Republican campaigns over the years, according to FEC filings. In 2016 Colonnetta donated at least $25,000 to committees supporting Donald Trump's presidential campaign.
A spokesman for Whitefish Energy and Colonnetta said Thursday that his donations had "no influence whatsoever to impact the contract."
Colonnetta and his wife also gave more than $60,000 to Energy Secretary Rick Perry's campaigns for Texas governor between 2008 and 2012. Perry appointed Colonnetta trustee of a $130 billion investment fund for Texas teachers in 2013. A spokesperson for Perry did not respond to ABC News' questions about the Whitefish contract.
Montana-based Whitefish Energy was awarded a $300 million Puerto Rico Electric Power Authority (PREPA) contract to repair downed transmission lines crisscrossing the mountains, the company confirmed to ABC News.
Founded in 2015, Whitefish -- which had just two full-time employees when the contract was signed -- says it has mobilized a team of nearly 300 subcontractors in Puerto Rico, with more on the way.
"Our rates are competitive and our work is top rate," spokesperson Chris Chiames told ABC News, adding that the company is uniquely qualified to tackle the situation in Puerto Rico due to the CEO's experience in "rugged and remote terrain."
But officials are questioning why PREPA chose to work with Whitefish instead of reaching out to the American Public Power Association (APPA), which normally matches states hit by disasters with nearby public power utilities who offer up crews and equipment to assist.
"To date, PREPA has not requested aid from the association," the association confirmed. "The entire electric utility industry is standing by to send help as requested."
PREPA Executive Director Ricardo Ramos said Tuesday he ruled out APPA assistance because it would have required the agency, which is currently bankrupt, to handle logistics for crew lodging and food.
Other power restoration companies were ruled out because they required a large upfront deposit, which PREPA cannot afford to pay, he said.
Under the Whitefish contract, the agency paid $3.7 million for initial "mobilization of personnel and equipment," with further advance payments not being required.
"Whitefish was the only company -- it was the first that could be mobilized to Puerto Rico. It did not ask us to be paid soon or a guarantee to pay," Ramos told reporters in Spanish. "For some reason, someone in the United States has to be upset, because they aren’t here, that I have hired Whitefish -- but that is their problem.”
The company says it called Puerto Rico before Maria hit to pitch its own services.
Whitefish "showed up at the right place at the right time and that's how they got the contract," Sen. Marco Rubio, R-Fla., told ABC News. "We want to see restoration pick up. Every day that they're without power is a day that economy isn't functioning and it's another day people are suffering."
Hiring a company like Whitefish, which relies on subcontractors rather than a staff of trained personnel "didn't make a lot of sense," Sergio Marxuach, policy director at the nonpartisan Center for a New Economy, told ABC News. "This is one of the reasons people down here really hate PREPA -- they do business behind closed doors and it ends up costing a lot of money."
How Whitefish rates compare with competitors remains unclear.
The Federal Emergency Management Agency says it was not involved in the selection and the White House said Friday the decision to award the contract to Whitefish came from "local authorities."
"[The awarding of the contract was] not something that the federal government played a role in," White House press secretary Sarah Sanders said at Friday's press briefing. "But as we understand, there is an ongoing audit and we'll look forward to seeing the results of that later."
FEMA has "significant concerns" how PREPA procured the Whitefish contract and it "has not confirmed whether the contract prices are reasonable," the agency said in a statement.
FEMA said it has not reimbursed PREPA for any money spent on the Whitefish contract, and that it will verify that PREPA followed regulations "to ensure that federal money is well spent" before handing over any payment.
Directly contradicting a clause in the Whitefish contract that reads, "PREPA hereby represents and warrants that FEMA has reviewed and approved of this Contract, and confirms that this Contract is an acceptable form to qualify for funding from FEMA," FEMA insists the agency was not involved in PREPA's decision and that the clause is inaccurate.
FEMA issued the following statement:
The decision to award a contract to Whitefish Energy was made exclusively by the Puerto Rico Electric Power Authority (PREPA). FEMA was not involved in the selection. Questions regarding the awarding of the contract should be directed to PREPA.
Any language in any contract between PREPA and Whitefish that states FEMA approved that contract is inaccurate.
FEMA has not provided any reimbursement to Puerto Rico to date for the PREPA contract with Whitefish Energy. Regardless, FEMA will verify that the applicant (in this case PREPA) has, in fact, followed applicable regulations to ensure that federal money is properly spent.
Based on initial review and information from PREPA, FEMA has significant concerns with how PREPA procured this contract and has not confirmed whether the contract prices are reasonable. FEMA is presently engaged with PREPA and its legal counsel to obtain information about the contract and contracting process, including how the contract was procured and how PREPA determined the contract prices were reasonable.
It is important for all applicants for FEMA Public Assistance to understand and abide by Federal requirements for grantee procurement. Applicants who fail to abide by these requirements risk not being reimbursed by FEMA for their disaster costs.
FEMA continues to focus on the expedited restoration of essential services in support of the Governor’s recovery goals.
ABC's Jennifer Metz and Joshua Hoyos contributed to this report.
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