October 30, 2017 / 5:30 PM / in 2 months

UPDATE 2-FBI investigating Puerto Rico power contract -WSJ

(Adds FBI declines comment)

Oct 30 (Reuters) - The Federal Bureau of Investigation is investigating a $300 million contract that Puerto Rico’s government power company awarded to a U.S.-based energy startup, the Wall Street Journal reported on Monday, citing people familiar with the matter.

The contract between Whitefish Energy Holdings and Puerto Rico’s bankrupt power utility was widely criticized after media reports showed it was awarded without a competitive public bidding process.

On Sunday, Puerto Rico’s government announced it would cancel the $300 million contract.

Whitefish had more than 350 workers and 2,500 tons of heavy equipment on the ground for rebuilding electrical lines destroyed in Hurricane Maria, raising concern about Puerto Rico's management of federal disaster-relief funds to the island, the WSJ reported. (on.wsj.com/2zjM0vi)

The Federal Emergency Management Agency, multiple congressional committees and local auditors have begun requesting documents about the deal, according to the WSJ.

A Whitefish spokesman, Ken Luce, told Reuters the company was not aware of any such investigation and that it “is committed to full cooperation with any inquiry or investigation.”

An FBI official in San Juan, who requested anonymity, told Reuters “we can neither confirm nor deny” the Journal’s story.

A number of U.S. lawmakers have raised questions about Interior Secretary Ryan Zinke’s connections with Whitefish.

Democratic Representatives Raul Grijalva and Peter DeFazio asked the Department of Homeland Security’s inspector general in a letter to investigate the contract’s execution, its terms, and “whether there was any political impetus behind the contract.”

The representatives said in the letter that Whitefish is based in Zinke’s hometown in Montana and that Zinke’s son once worked for Whitefish.

Zinke previously said in a statement that “I had absolutely nothing to do with Whitefish Energy receiving a contract in Puerto Rico.” After the initial contract was awarded, “I was contacted by the company, on which I took no action,” he said.

Reporting by Anirban Paul in Bengaluru; Additional reporting by Emily Flitter in New York; Editing by Daniel Bases and Lisa Shumaker

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