Tue | Oct 23, 2018

Unions sue board, claim it's unconstitutional

Published:Wednesday | April 25, 2018 | 12:00 AM

SAN JUAN (AP):

Several unions in Puerto Rico and other groups yesterday sued the federal control board overseeing the US territory's finances and demanded that it be declared unconstitutional.

The filing came just days after the board approved seven different fiscal plans that will serve as economic blueprints for Puerto Rico's government and public agencies in upcoming years. The plans contain new austerity measures the island's government has refused to implement, including a 10 per cent cut to a public pensions system facing nearly US$50 billion in liabilities.

The lawsuit filed in federal court also names the US government and Puerto Rico's governor as defendants. It asks that the fiscal plans approved last week be suspended along with debt renegotiations until the island's public debt is audited.

"That level of debt is incomprehensible," attorney Rene Pinto Lugo, who is also a bondholder, told reporters. "How are we going to lead and rebuild (Puerto Rico) if we don't even know what happened with the US$70 billion?"

He noted that Puerto Rico's government has not published audited financial statements since fiscal year 2014.

In addition, the lawsuit seeks to have the control board and local government temporarily barred from selling the island's power company as announced earlier this year. The suit also contends that two of the board's seven members should be removed because of an alleged conflict of interest.

Board spokesman Jose Luis Cedeno declined comment.

The board was created by Congress nearly two years ago in part to oversee the restructuring of a portion of Puerto Rico's public debt as part of a bankruptcy-like process.