Press Releases

Comptroller reveals multiple findings of improper, duplicate and bid-less payments in an adverse-opinion audit of the Municipality of Maricao

The Office of the Comptroller of Puerto Rico (OCPR) issued an adverse opinion of the fiscal operations of the Municipality of Maricao. The tests performed and the evidence revealed that the operations related to the acquisition of goods and services, the contracting of legal services and debt payments, among other objectives, were not carried out in all significant respects in accordance with the applicable law and regulations.

The Report reveals that the Municipality did not formalize written contracts from 2018 to 2020, to rent heavy equipment and paint a municipal facility. For these services Maricao disbursed $269,200 to corporation A, which was the one that won the bid of June 27, 2019.

For the previous fiscal year, 2018 to 2019, the Municipality had not held a public bid to rent heavy equipment, for which reason each time it rented the equipment, corporation A presented it with a quote bearing the signature of the then mayor as evidence of his approval.

The audit, of nine findings, notes that the Municipality did not amend the contract with corporation A, before its expiration, for which reason it paid $250,220 in excess. The contract of December 21, 2020 was for $30,000. The then Finance director did not keep control of the invoices received, for which reason he was unaware that the amount invoiced was greater than that established in the contract.

The Comptroller's auditors identified disbursements for $137,062 without quotes. The then mayor and the Finance director did not protect the interests of the Municipality by not carrying out free competition processes required by law.

This and other situations were referred to the consideration of the Secretary of Justice so that he takes the corresponding measures.

The Report publishes multiple deficiencies such as: the duplicate payments for $23,600 in the rental of heavy equipment, the payment of $4,533 with the budget of the year following the debt, and the credits were not obligated for the payment of three contracts for $91,108 from 2018 to 2021. These situations prevent maintaining control of the budgetary allocations and may incur overdrafts and unnecessary litigation.

The debt payments to Federal Social Security and to unemployment insurance were not made on time or correctly. For penalties and interest, the Municipality paid $261,065 to the Internal Revenue Service (IRS) between 2017 and 2022, due to the delays in the Social Security remittances. In fact, the IRS seized $159,886 in the bank account of FEMA-Hurricane Maria funds in 2022. In addition, Maricao owes $2,060,283 to the Department of Labor and Human Resources, to the Aqueduct and Sewer Authority, to the General Services Administration and to the Institute of Puerto Rican Culture.

The Municipality paid $28,244 to a person who gave false information to occupy the position of internal auditor and did not meet the requirements of the position. She indicated that she had a bachelor's degree in office administration and a master's degree in accounting from the Pontifical Catholic University (PUCPR) in Mayagüez. In reality, she had a bachelor's degree from the Antillean Adventist University, 20 credits in accounting from PUCPR and did not have the required experience. Upon the evaluation by the Comptroller's auditors, the officials warned that she did not meet the requirements.

This situation could constitute the crime of usurpation of employment in addition to violations of the Act of the Office of Government Ethics.

The auditors found informative declarations not prepared for four suppliers for $391,080, and did not make the withholdings of contributions of $13,026 for services rendered. This situation was referred to the attention of the Secretary of Treasury on March 6, 2023 so that he takes the measures he deems necessary.

The Report reveals numerous deficiencies in the operations of pre-intervention and processing of disbursements such as: documents without the signature of the paying official, without the certification of the employee who received the goods, or without the suppliers' invoices. These situations reduce reliability in the processes and hinder the auditors' verification work.

The audit reveals that the Municipality of Maricao donated two excavators to the Municipality of Lares on January 25, 2023 without the approval of the Legislature. As of March 28, 2023, the property custodian had not removed them from the inventory. This lack of control encourages the improper use or loss of the municipal heavy equipment.

As of February 13, 2023, the Municipality had not updated the Purchasing Regulation of 2007, nor the Bidding Regulation of 2010, with the Municipal Code of 2020. In addition, the Regulation for the Use, Custody and Maintenance of Official Vehicles of 2007 did not include provisions for repairs to be carried out at private shops. In fact, as of December 21, 2020, the Municipality had paid $137,179 to a private corporation for these services.

The Report comments on the fine of $35,000 that the Office of Government Ethics (OEGPR) imposed in 2016 on the former mayor for giving an appointment to his brother on January 1, 2014. In 2018, the Panel on the Independent Special Prosecutor concluded that the acts of the former mayor showed a manifest conduct of abandonment and negligence, harmful to the best interests in the performance of his duties. To that effect, he was suspended from office for 30 days, served on May 30, 2018.

On April 25, 2023, the Office of Government Ethics filed a complaint against the current mayor for not recusing himself in the salary increase of his sister-in-law and without the authorization of the OEGPR. The mayor accepted the facts, and the payment of a fine of $1,000.

On the other hand, the Institute of Puerto Rican Culture imposed in 2016 a fine of $120,000 on the Municipality for demolishing two historic properties in the traditional urban center without the required permits. As of September 13, 2023, the Municipality had not paid the fines.

The Municipality's budget was $5,231,770, $4,941,559, $4,992,260, $4,992,260 and $4,544,356 for fiscal years 2018 to 2022, respectively. The financial statements reflected accumulated deficits in the General Fund of $5,687,440, $6,259,866 and $5,824,275, from 2020 to 2022 respectively.

The audit recommends that the director of the Office of Management and Budget ensure that the Municipality of Maricao complies with the Corrective Action Plan of the OCPR.

This second and final report of Maricao covers the period from July 1, 2017 to June 30, 2022.

The Audit Report OC-25-26 can be obtained on our website: www.ocpr.gov.pr.