Articles

The Office of the Comptroller of Puerto Rico (OCPR) issued an adverse opinion on the fiscal operations of the Municipality of Cataño in Audit Report OC-25-57.

The tests performed and the evidence revealed that the operations related to the award, contracting, and disbursements, 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 paid $841 thousand to five corporations without a license to operate the motor vehicle and heavy equipment leasing business from 2017 to 2021, for which the contracts were null. Of these, four corporations did not have a franchise to operate rental vehicles, and two were not authorized by the Bureau of Transportation and Other Public Services. The then deputy mayor and director of Purchasing and Supplies indicated that they were unaware that they had to verify the licenses of the bidders.

In addition, the municipality leased 10 vehicles for $1,800 to $2,500 monthly between 2018 and 2021, and did not ensure that the contracted corporation was not the owner of the vehicles, but rather that they were vehicles rented from a financial institution whose transaction did not permit subcontracting. The municipality paid $224 thousand for this lease, which cost the corporation $116 thousand. This constitutes an overpayment of $108 thousand.

On none of the invoices or contracts were the vehicles identified with the vehicle identification number (VIN number). In contravention of the Act to Regulate Lease Contracts, the former directors of the Office of Legal Affairs and of Public Works did not seek to include this information.

These situations were referred to the consideration of the secretary of the Department of Justice, the executive director of the Office of Government Ethics, the president of the Bureau of Transportation, the Commissioner of Financial Institutions, and the banking institution in October 2023.

The audit of eight findings notes that a former special assistant and the former director of Municipal Housing instructed employees A and B to perform work at a private business owned by the first cousin of the then mayor, and to charge the time worked to their compensatory time, vacation, or overtime leave. The former special assistant recommended that employee C work at the private business charged to compensatory time, and the business owner paid him per day worked. Employee D agreed to work two Saturdays under threat of dismissal, and upon declining to continue working at the private business, the official vehicle assigned to him was taken away.

These situations were referred for the corresponding action to the secretary of the Department of Justice and the executive director of the Office of Government Ethics in August 2024. Through these actions the crime of unlawful enrichment, classified in the Penal Code of Puerto Rico, may have been configured.

The report shows evidence that the municipality incurred extravagant and unnecessary expenses of $4,500 monthly for the lease of a 2021 Cadillac Escalade Premium Luxury SUV from a corporation. The Bidding Board did not protect the municipality's interests since it included specific descriptions in the bid such as having three rows of seats, a second row of bucket seats, four-wheel drive, and 22-inch rims. The same vehicle was available at the General Services Administration for $2,500.

The audit indicates that the municipality invested $369 thousand in two projects that were abandoned, deteriorated, and incomplete. In the recreational area of the Pradera-Almira development, four columns provided for in the project were not installed, nor were two wire fence gates. In addition, La Esperanza Park has water leaks, detached acoustic panels, slime, and fungi on the floors and walls. In fact, the contractor of the La Esperanza Park roof project pleaded guilty on August 2, 2022 to charges of conspiracy and bribery with federal funds in exchange for the awarding of contracts to his company.

“This situation, which is attributed to the former mayor and the former director of Public Works not protecting the Municipality's interests, leads to additional resources having to be used to repair the damages,” the report explains.

The examination of three other construction projects for $596 thousand revealed that the municipality did not obtain the construction permit for three projects from the Permit Management Office. This situation exposes the municipality to having the regulatory agencies impose fines and penalties.

Also, the audit published multiple administrative control deficiencies, such as, for example, that the director of Finance did not obligate the budgetary credits for the payment of 14 contracts and three amendments for $779 thousand related to the leasing of motor vehicles from 2017 to 2021. In addition, disbursements were authorized without the supplier's certification regarding the absence of interest on the part of the employees, and the invoices of the leased vehicles were not marked as paid.

The report comments in detail on the judicial process against the former mayor, four contractors, and the former director of Public Works. The then mayor pleaded guilty on November 25, 2021 to conspiring in a bribery scheme. Between 2021 and 2022, four contractors pleaded guilty to charges of conspiracy and bribery with federal funds in exchange for the awarding of contracts to their companies. On May 12, 2022, the former director of Public Works pleaded guilty to participating in a conspiracy scheme.

Cataño's budget rose from $33.7 million in 2019, to $34.2 million in 2020, to $35 million in 2021, and to $36.7 million in 2022. The financial statements reflected accumulated surpluses of $4.6 million in 2019, $3.9 million in 2020, $9.9 million in 2021, and $15 million in 2022.

The audit recommends to the director of the Office of Management and Budget that he ensure that the Municipality of Cataño complies with the OCPR's Corrective Action Plan.

This first report covers the period from January 1, 2019 to December 31, 2021, and is available at www.ocpr.gov.pr.