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By Francisco Javier Cimadevilla

November 28, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

Good morning private sector. This is your wake up call.

If you haven’t stopped laughing at the ridiculous idea of imploding the Millennium, then do, and sober up to the gruesome prospects that your private business may be next.

Whether or not the building is actually demolished is not the point. With its latest report, the Independent Citizens Committee for the Evaluation of Governmental Transactions (so called Blue Ribbon Committee) has issued fair (read unfair) warning that it could investigate any private business it wishes.

If you thought they were only going to investigate government projects and transactions by government agencies, like the Coliseum, the Superaqueduct, or the Urban Train, think again. Have you ever gotten a government permit for your business? If you have done any transaction whatsoever with the government, you may be in David Noriega’s hit list.

Worse yet, the Committee’s report on the Millennium shows that you and your business don’t have to have done anything wrong to have that pathetic band of hitmen destroy you, your reputation and your business. You see, all the goodfellas have to do is to publish a report. It doesn’t matter whether it’s hogwash. Most sectors of the press, the political opposition and even the Governor could not, or would not tell the difference. Whether the Secretary of Justice will remains to be seen. Judging by her track record thus far, I would not bet on it.

But make no mistake about it. The Committee’s report on the Millennium is pure, unadulterated hogwash. Coming from David Noriega you would expect it. Coming from the rest . . . let’s just say, what a sorry, embarrassing way to end their careers.

The report contains two basic allegations. First, that the developer obtained the land from the government at less than fair market value. Second, that the government permits that were issued allowed variances on the project that should not have been granted. Let’s take them one at a time.

The report does not say that the land was sold below appraised value. It couldn’t. A well-respected real estate firm, Robert McCloskey & Associates, did the appraisal when the sale was negotiated in 1994. The sale price was the appraised value. The report says that two more recent appraisals are higher so, therefore, the value in the 1994 appraisal must not have been "fair market value".

Never mind how the neighborhood has changed after 1994 and how property values all around went up after the government announced its Golden Triangle master plan for the urban redevelopment of the area, building new bridges and roads. Who the heck do David Noriega and his sorry cohorts think they are to say what fair market value is and in the process smear the reputation of Robert McCloskey and Pridco technicians who had earlier valued the land? Neither Noriega nor the rest have the chutzpah to say it, but the inference they want you to draw is that McCloskey and others were on the take. Never mind evidence, they don’t care about that.

They also blast former Pridco president Juan Woodroffe for having sold the land in the first place. Pridco had owned that lot since 1960 and had done nothing with it. The zoning classification would not have allowed the agency to develop it for industrial purposes as it might have been when first acquired. Selling it to a private developer with a viable project of obvious merit (high density housing in the metro area) that created hundreds of jobs during construction was definitely better than the alternative of doing nothing with it.

As we reported a few months ago (CB June 6), Pridco is one of four government agencies sitting on more than 88 million square meters of idle property worth $7 billion dollars. That’s your money, you know. And they are not doing anything with it. Why doesn’t the Blue Ribbon Committee do a report on that? Or has is it not been gross dereliction of duty over the years for these agencies, some of which don’t even have an inventory of the land they own, to be sitting on those valuable assets without putting them to productive use. Our Blue Ribbon ‘defenders’ of the public trust and the best interest of the people don’t think that way. But for my money, I would rather have those government agencies sell all those idle buildings and vast landholdings that they know will never be used to private sector businesses with viable projects that would create jobs and spur economic development.

With respect to the government permits, the report cannot point to any deficiency. The developer got all the required permits over an arduous five-year period. In fact, the final construction and use permits were issued by the Calderon Administration barely a couple of weeks before the Blue Ribbon report was issued. The report points to a number of variances from regulation that were approved at the request of the developer and that, in the opinion of the Committee, should not have been granted. Therefore, these magistrates of terror conclude that the only way to possibly explain the fact that the developer got the permits with those variances is that there was political patronage or pay offs, as if variances were not a common occurrence in most projects. Ludicrous, yes, but it has gotten our local construction industry really nervous. Read all about it in our Special Report this week.

So with respect to both basic allegations, that the land was sold at less than fair market value and that the permits issued allowed variances that should not have been granted, the Committee’s report proves no crime, no irregularity, no malfeasance, no dereliction of duty. At best, it points to differences of opinion as to matters of public policy or how to execute it. In other words, if David Noriega had been Pridco chief, he would not have sold that land. OK. If Ileana Colon Carlo had been DTOP secretary, she would not have granted the temporary access from Ponce de Leon Ave. OK. If Carmen Rita Velez Borras or Angel Hermida had been in charge of ARPE, they would not have allowed the building to be 16 stories high. OK.

Yet based on mere differences of opinion, these Inquisitors conclude that there must have been crimes for the Justice Department to investigate. Mind you, the report’s authors offer not a scintilla of evidence to support their allegations. (Can you believe this quartet of wiseguys include two former judges?) In their customarily irresponsible way, they just throw the refuse up in the air, sure that the political machinery and the press will provide the fan to spread it around.

If up to now you had dismissed any concern about this Blue Ribbon Committee because

you thought they would meddle only in government projects to politically embarrass the last administration, think again. And if you think you have nothing to worry about because this is only partisan politics and you’re covered, read the report. Then ask yourself whether you trust David Noriega? And then try to remember when was the last time they took your call at La Fortaleza?

What may have started as Puerto Rican style partisan political McCartheism has become a worrisome onslaught against the private sector, particularly the construction industry.

This report, the Blue Ribbon Committee members and the Governor, who reviewed and accepted the report and referred it to the Justice Department, have made a mockery of the notion that Puerto Rico is a place of law and order.

In so doing they are sending a terrible message to the world about Puerto Rico’s business and investment climate. The damage will take years to repair.

Locally, this is the kind of message that reinforces the conclusion many have arrived at perhaps long ago about the challenges of doing business in Puerto Rico. That when it comes to dealing with the government, you better do it to them before they do it to you; that you ought to find your own devices to stay one step ahead of the government, prone as it is to wielding its overwhelming, quasi totalitarian power to crush you lest you succeed and make a profit.

That’s sad. Because the moment one abdicates the notion that ours is a system of law and order, where you can set up a business and prosper; where the legal system will protect you from governmental abuse; where you can rest assured that the courts will vindicate your rights and protect your investments; at that moment all hope of progress is gone.

The history of the world is filled with examples of the sad consequences of remaining silent in the face of governmental abuse.

Wake up private sector?

This Caribbean Business article appears courtesy of Casiano Communications.
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