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The Office of the Comptroller of Puerto Rico issued an adverse opinion on the fiscal operations of the Municipality of San Juan. The tests performed and the evidence examined demonstrate that the operations related to the purchases of goods and services, and the contracting of improvements and services, were not carried out, in all significant aspects, in accordance with the applicable law and regulation.

The Report reveals that the Municipality awarded purchases totaling $325,705 with 165 false quotations in total.

From 2011 to 2015, five officials of the Office for Child Development and of the Department for Social Development awarded purchases totaling $282,453 with 163 false quotations. Of these false quotations, 159 were prepared in the name of supplier F.

An official of the Institute of Forensic Sciences certified that none of the signatures was that of the owner of supplier F and validated that they were those of seller A in 90% of the quotations analyzed. In addition, the owner of business F had closed in 2008 and declared to the auditors that seller A had told her that he had a brother employed by the Municipality who would notify him about the bids and would help him with the payments.

The Municipal Secretariat also issued two purchase orders totaling $43,252 with two false quotations for the purchase of construction materials and locks.
In addition, on June 1, 2012, Child Development issued a purchase order for $500 to supplier G to replace a glass with a quotation that was prepared not by the supplier, but on the computer of purchasing officer 1. From 2011 to 2015, purchase orders totaling $23,718 were also awarded whose summary sheets included the false information that supplier F had submitted quotations.

These irregularities were reported to the Office of the Inspector General of the Federal Department of Health and Human Services on May 18, 2017. In addition, these situations were referred to the Department of Justice, and to the Office of Government Ethics on August 19, 2019 so that they would take the corresponding actions.
The six-finding audit notes that from 2011 to 2016, the Municipality awarded 81 purchase orders to six suppliers totaling $149,498 to acquire electrical, plumbing, and refrigeration services.

The examination revealed that three suppliers are linked to one another as father–son, brother-brother, and uncle-nephew. They held the positions of president, representative, and manager of suppliers B, H, and J, and gave the appearance of competition with one another to obtain the award of the work (see diagram on page 15 of the Report). In the processes for the award, carried out by purchasing officers 2, 3, 4, and 5, surnames were omitted and quotations were accepted without these being active in the Registry of Bidders.

This situation was referred to the Department of Justice and to the Office of Monopolistic Affairs of Justice on July 28, 2017, as well as to the Office of Government Ethics on December 5, 2017, so that they take the actions they deem appropriate.

The auditors identified another group of suppliers that also gave the appearance of competing with one another, but two of them are linked as uncle-nephew and the other, Person 3, occupies property of the nephew and shares his contact number. They hold the positions of president, vice president, treasurer of suppliers C, D, and K (see diagram on page 16 of the Report).

These situations were also referred to the Office of Government Ethics, to the Department of Justice, and to the Office of Monopolistic Affairs of Justice on August 19, 2019 so that they take the pertinent actions. In addition, these situations were reported to the Federal Bureau of Investigation (FBI) on March 15 and May 9, 2018.
Due to these irregularities, crimes classified in the Penal Code of Puerto Rico could have been configured, such as: fraud, conspiracy, and undue interference in government operations, falsification of documents, transfer of false documents, and ideological falsehood, among others.

Contrary to the laws and regulations in force, the Municipality carried out an irregular purchasing process in the acquisition of plumbing and electrical materials to improve the bathrooms of the Hiram Bithorn Stadium on the occasion of the celebration of the 2015 Caribbean Series. The Municipality paid in excess $82,545 in materials and $59,910 in excess of equipment and accessories for the bathrooms (see Exhibit 2 of the Report). These and other situations were reported to the Federal Bureau of Investigation (FBI) on March 15, May 9, and September 14, 2018.
The auditors found multiple irregular situations in the purchasing processes, such as: a payment of $10,100 more expensive to a supplier for school equipment moving services without justifying the reasons, a quotation received with a date prior to the service requested, and suppliers without files in the Registry of Bidders.

The acquisition, without a public bid, of uniforms for the Municipal Police and plumbing materials totaling $1,761,655 from 2014 to 2016, demonstrates the lack of planning in the Municipality of San Juan. These situations prevent free competition and do not comply with the processes of sound public administration.

The Municipality awarded four contracts and one amendment totaling $493,534 retroactively from 2012 to 2014 to improve the lighting of the Hiram Bithorn Stadium, cleaning of green areas, and maintenance of schools of the Department of Education. These situations, contrary to the legislation in force, prevent maintaining adequate control and foster the commission of irregularities in the disbursements.

The audit notes deficiencies with the payments for services that require a license. The Municipality issued payments to suppliers without the certification of work with the seal of the professional college. In fact, the presidents of the colleges of Master and Official Plumbers and of Refrigeration and Air Conditioning Technicians certified that three of the contracted suppliers did not have a license to provide services.

In San Juan, periodic inspections, based on samples, of the physical existence of the materials and supplies were not carried out from 2013 to 2017. Nor was a perpetual inventory maintained of the materials and supplies received, safeguarded, and dispatched.

The Report comments on the possible tax evasion by a supplier of goods and services of the Municipality. The corporation received $635,150 in 2014 and 2015, and only declared $116,616. This situation was reported to the Department of the Treasury on December 5, 2017.

The Municipality's Internal Audit Office (OAI) issued three reports on the irregularities found in the purchasing process in the offices of Child Development and Social Development. These reports included multiple deficiencies and situations of extravagant expenses, excessive costs, and irregular processes. The OAI submitted evidence of corrective actions taken to remedy and prevent the situations from being repeated.

This Report, the third of San Juan, covers the period from January 1, 2012 to June 30, 2017..

See the Audit Report M-21-20.

To view other published reports, visit our Audit Reports section.