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Former Puerto Rico official denies any role in Whitefish deal

(Reuters) - A former Puerto Rico official who has been mentioned in connection with a controversial contract to restore electricity to the bankrupt U.S. territory after Hurricane Maria has denied having any role in securing it.

FILE PHOTO: Workers from Montana-based Whitefish Energy Holdings help fix the island's power grid, damaged during Hurricane Maria in September, in Manati, Puerto Rico October 25, 2017. REUTERS/Alvin Baez/File Photo

In papers filed on Friday in federal court in San Juan, Elias Sanchez, a friend and one-time adviser to Governor Ricardo Rossello, said under penalty of perjury that he “never had any kind of relationship” with contractor Whitefish Energy or its principals.

Rossello has come under fire for his handling of cleanup efforts since the September hurricane, the most powerful storm to hit Puerto Rico in 90 years.

After Maria knocked out electricity, the Puerto Rico Electric Power Authority, which is also in bankruptcy, awarded a no-bid, $300 million repair contract to Whitefish, a small Montana company with no experience in handling large-scale destruction.

Rossello canceled the contract after an uproar over its provisions.

But the saga was not over. Island creditors and federal lawmakers have questioned how the deal got done, with some speculating it was facilitated by lobbyists, namely Sanchez, a lawyer who ran Rossello’s 2016 gubernatorial campaign.

In court papers earlier this week, holders of PREPA’s $9 billion in debt cited local news reports mentioning Sanchez in connection with the Whitefish deal and asked the judge overseeing the utility’s bankruptcy for permission to investigate it.

Sanchez asked the court to strike references to his name in that filing, saying he had no contact with PREPA about Whitefish. Ken Luce, a spokesman for the company, said on Friday that its chief executive officer, Andy Techmanski, never met Sanchez.

The U.S. House of Representatives’ Energy Committee on Wednesday said it wanted the Federal Emergency Management Agency to explain how it is overseeing contracts for rebuilding Puerto Rico’s power grid.

Another contract, one PREPA signed with Mammoth Energy’s Cobra Acquisitions subsidiary, is also being scrutinized by Congress. Sanchez noted in his statement that he had no role in that deal, either.

Six weeks after the hurricane, only about 37 percent of homes and businesses on the island have had power restored.


Sanchez has said he no longer works in Rossello’s administration and has largely moved off the island since Maria.

Rossello called Sanchez a friend in an interview with Reuters on Thursday.

“He makes no government-related decisions, period,” the governor said. “But he was my campaign manager, and he’s a good friend.”

After Rossello won office in 2016, Sanchez became his liaison to the federal board overseeing Puerto Rico’s troubled finances. Sanchez helped shape Rossello’s financial policy as the island entered bankruptcy in May to restructure $72 billion in debt. He resigned from that position in July.

Investors had criticized Sanchez for making sparse financial disclosures and speculated that he was concealing income that would present a conflict of interest.

Sanchez said his decision to resign was personal and that he was “very comfortable with everything” he did on the board to represent the island’s best interests.

Reporting by Nicholas Brown; Additional reporting by Jessica Resnick Ault; Editing by Lisa Von Ahn