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Audit with adverse opinion reveals double payments, without quotations and without contract for vehicle rental in Río Grande

The Office of the Comptroller of Puerto Rico issued an adverse opinion on the fiscal operations of the Municipality of Río Grande. The tests performed and the evidence revealed that the fiscal operations related to the purchase of goods and services, payment of debts to governmental entities, and use of motor vehicles, among others, were not carried out in accordance with applicable law and regulations.

The Report reveals that the Municipality paid $279,501, from 2016 to 2020, for vehicle rentals in violation of current state and federal law. The Municipality did not request quotations from at least three representative suppliers in the market, did not prepare a cost analysis, nor document the reasons for renting the vehicles for a period in excess of 90 consecutive days.

The six-finding audit notes that the Municipality also did not formalize rental contracts for the vehicles, but rather the company presented lease agreements that did not have the signature of the mayor, nor that of the lessor. The charges indicated in the agreement did not match the totals of the invoices. In addition, the auditors did not identify the lease agreement for a refrigerated truck for which $62,268 was disbursed.
These acts could have constituted crimes of negligence in the performance of duty, embezzlement of public funds, and against the Organic Act of the Office of Government Ethics. These situations are attributed to the fact that the mayor and the then finance directors departed from the applicable provisions of law, and that the then property officer was unaware of the purchasing process.

The Report publishes that the Municipality made duplicate payments for vehicle rental, insurance, and AutoExpreso toll service. For example, it paid $5,126 twice for seven vehicles, of which $3,268 were federal funds, and paid $28,328 twice for 12 vehicles, during the audited period. In this regard, multiple deficiencies were also identified in compliance with the Municipal Code of 2020 and the Municipal Regulation of 2016.

These situations were referred to the secretary of Justice, the director of the Office of Government Ethics, and the then president of the Office of the Panel on the Independent Special Prosecutor (OPFEI). In addition, these findings were notified to the Federal Bureau of Investigation and to the Chief of the Federal Prosecutor's Office for the District of Puerto Rico.

On March 26, 2024, the secretary of Justice recommended to OPFEI the designation of an independent special prosecutor to investigate the mayor and the former director of Finance. The preliminary investigation of the Division of Public Integrity and Office of Comptroller Affairs concluded that there is sufficient cause indicating that these officials committed the crimes of failure to perform duty (article 262) and embezzlement of public funds (article 264), of the Penal Code of Puerto Rico. In this regard, OPFEI assigned independent special prosecutors on June 21, 2024.

The audit reveals that Río Grande owed in 2021, $192,479 to the company LUMA Energy ServCo, LLC for the consumption of energy in the municipal facilities. In addition, it disbursed $12,710 in interest and surcharges to the Department of Labor and Human Resources, for delays in the payments of contributions to the unemployment insurance.

The Municipality of Río Grande lacks a process for disposing of unusable municipal property. The auditors verified the existence of 77 units of motor vehicles abandoned and covered with vegetation on the grounds of the municipal property.

The Report indicates that the mayor did not comply with his duty regarding the control and administration of public documents. For the audited period, there were no rules on the disposal of documents, the position of document administrator was vacant, and they still kept in the file the documents authorized for disposal by the Institute of Puerto Rican Culture. The file in fact had no air conditioner, nor dehumidifier, and water leaks and humidity were observed in the roof, walls, and windows.

The audit notes that, as of September 27, 2021, nine civil lawsuits for $1,367,891 were pending resolution in the courts. In addition, the Municipality has not addressed the recommendation to recover $74,468 evidenced in Audit Report M-16-21 of 2016.

The general budget of Río Grande was $16,774,843, $16,273,953, $16,394,389, $16,430,167, and $16,447,576 for fiscal years 2018 to 2022, respectively.

In addition to the referrals indicated above, the Report recommends that the director of the Office of Management and Budget ensure that the Municipality complies with the Corrective Action Plan established by the OCPR.

This second and final report covers the period from July 1, 2017, to December 31, 2021. The Audit Report OC-24-65 can be obtained on our website: www.ocpr.gov.pr.