Oct 24

The Grifting of the Puerto Rico Recovery

The grifting of the American economy by the Trump administration is reaching new levels in Puerto Rico with the awarding contracts to close friends of cabinet members and allies of Trump himself. The Washington Post reported that the largest contract to repair the severely damaged electrical grid has been given to a two year old Montana company, Whitefish, that has only two permanent employees.

The company, Whitefish Energy, said last week that it had signed a $300 million contract with the Puerto Rico Electric Power Authority to repair and reconstruct large portions of the island’s electrical infrastructure. The contract is the biggest yet issued in the troubled relief effort.

Whitefish said Monday that it has 280 workers in the territory, using linemen from across the country, most of them as subcontractors, and that the number grows on average from 10 to 20 people a day. It said it was close to completing infrastructure work that will energize some of the key industrial facilities that are critical to restarting the local economy.

The power authority, also known as PREPA, opted to hire Whitefish rather than activate the “mutual aid” arrangements it has with other utilities. For many years, such agreements have helped U.S. utilities — including those in Florida and Texas recently — to recover quickly after natural disasters. [..]

“The fact that there are so many utilities with experience in this and a huge track record of helping each other out, it is at least odd why [the utility] would go to Whitefish,” said Susan F. Tierney, a former senior official at the Energy Department and state regulatory agencies. “I’m scratching my head wondering how it all adds up.” [..]

Whitefish Energy is based in Whitefish, Mont., the home town of Interior Secretary Ryan Zinke. Its chief executive, Andy Techmanski, and Zinke acknowledge knowing one another — but only, Zinke’s office said in an email, because Whitefish is a small town where “everybody knows everybody.” One of Zinke’s sons “joined a friend who worked a summer job” at one of Techmanski’s construction sites, the email said. Whitefish said he worked as a “flagger.” [..]

The House Committee on Natural Resources is examining Whitefish’s role in Puerto Rico, said Parish Braden, a spokesman for the committee. The hiring of the little-known company has been noted by the trade publications Utility Dive and E&E News.

“The size and unknown details of this contract raises numerous questions,” Braden said. “This is one of many things the committee is taking a close look at as it continues to work with the resident commissioner, governor’s office, and oversight board to ensure Puerto Rico’s recovery is robust, effective and sustained.”

(Puerto Rico Gov. Ricardo) Rosselló said Wednesday that the island would spend $490 million on the initial phase of repairing the commonwealth’s grid, adding that “a large portion of that would probably go to Whitefish” and another contractor. The utility gave Whitefish a $3.7 million initial payment for “mobilization of personnel and equipment,” the contract says. Whitefish could be paid as much as $300 million for up to two years of work.

Under the contract, the hourly rate was set at $330 for a site supervisor, and at $227.88 for a “journeyman lineman.” The cost for subcontractors, which make up the bulk of Whitefish’s workforce, is $462 per hour for a supervisor and $319.04 for a lineman. Whitefish also charges nightly accommodation fees of $332 per worker and almost $80 per day for food.

The company’s headquarters are located in Interior Secretary Ryan Zinke home town and he is close friend’s with Whitefish CEO Andy Techmanski who once gave Zinke’s son a summer job as a “flagman.” The Daily Beast reported that Whitefish is financed by HBC Investments, a private equity firm that was founded by Joe Colonnetta, who currently serves as its general partner. Colonnetta contributed heavily to [Trump’s campaign and the RNC

Federal Elections Commission data compiled by The Daily Beast shows Colonnetta contributed $20,000 to the Trump Victory PAC during the general election, $2,700 to Trump’s primary election campaign (then the maximum amount permitted), $2,700 to Trump’s general election campaign (also the maximum), and a total of $30,700 to the Republican National Committee in 2016 alone.

Colonnetta’s wife, Kimberly, is no stranger to Republican politics either; shortly after Trump’s victory, she gave $33,400 to the Republican National Committee, the maximum contribution permitted for party committees in 2016. [..]

Luis Vega-Ramos, member of the Puerto Rico House of Representatives, told The Daily Beast, “Whitefish’s most important expertise or assets seems to have been… having the U.S. secretary of the interior, Ryan Zinke, as their former congressman and current ally and having the wisdom to retain the services of key people close to the governor [of Puerto Rico].” [..]

“Whitefish seems to be nothing more than a glorified middleman to get the real providers of the services, with which PREPA [the Puerto Rico Electric Power Authority] could have contracted directly,” Vega-Ramos said. “It is a cozy sweetheart deal in which Whitefish gets a gratuity for subcontracting the actual providers.”

It’s very obvious why Whitefish got this contract. Meanwhile, 80% of Puerto Rico is still without power.