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Home / Government / Trump administration disavows Puerto Rico power contract amid investigations (UPDATE)

Trump administration disavows Puerto Rico power contract amid investigations (UPDATE)

Whitefish Energy Holdings employees work on Oct. 15 in Barceloneta, Puerto Rico, to restore power lines damaged by Hurricane Maria. The Federal Emergency Management Agency said on Friday that it had no involvement in the decision to award a $300 million contract to the tiny company in Interior Secretary Ryan Zinke’s hometown in Montana. (AP Photo/Ramon Espinosa, File)

Whitefish Energy Holdings employees work on Oct. 15 in Barceloneta, Puerto Rico, to restore power lines damaged by Hurricane Maria. The Federal Emergency Management Agency said on Friday that it had no involvement in the decision to award a $300 million contract to the tiny company in Interior Secretary Ryan Zinke’s hometown in Montana. (AP Photo/Ramon Espinosa, File)

By MICHAEL BIESECKER and MATTHEW DALY
Associated Press

WASHINGTON (AP) — The Trump administration said on Friday it had no involvement in the decision to award a $300 million contract to help restore Puerto Rico’s power grid to a tiny Montana company in Interior Secretary Ryan Zinke’s hometown.

Raj Shah, White House spokesman, said Friday that federal officials played no role in the selection of Whitefish Energy Holdings by the Puerto Rico Electric Power Authority.

Separately, the Federal Emergency Management Agency said Friday it had no involvement in the decision to award a $300 million contract to help restore Puerto Rico’s power grid to a tiny Montana company in Interior Secretary Ryan Zinke’s hometown.

FEMA said in a statement that any language in the contract saying the agency approved of the deal with Whitefish Energy Holdings is inaccurate. The contract, which was awarded by the Puerto Rico Electric Power Authority, said the utility would not pay costs unallowable under FEMA grants, but it also said, “The federal government is not a party to this contract.”

FEMA said it has not approved any reimbursement requests from the utility for money to cover repairs to the island’s power grid following Hurricane Maria.

The agency said its initial review raised concerns about how Whitefish got the deal and whether the contracted prices were reasonable.

The 2-year-old company had just two full-time employees when the storm hit Sept. 20. It has since hired more than 300 workers.

The Interior Department has denied that Zinke, who once represented Montana in Congress, played any role in the contract award.

Zinke knows the CEO of Whitefish, Andy Techmanski, “because they both live in a small town where everyone knows everyone,” a spokeswoman said. Zinke’s son had a summer job at a Whitefish construction site.

More than one congressional committee has started an investigation into the deal, the terms of which have elicited questions from both Republicans and Democrats.

Sen. Claire McCaskill of Missouri, senior Democrat on the Senate Homeland Security and Governmental Affairs Committee, said the Whitefish contract “raises every red flag in the book.”

The homeland security panel will hold a hearing on the deal next week and said officials should be ready to answer tough questions, the senator said. She said she also wants the inspector general of the Department of Homeland Security, which includes FEMA, to investigate, adding to the list of possible investigations.

“We need answers from Whitefish, the Puerto Rico Electric Power Authority and the federal government – and we need them soon,” McCaskill said.

Ricardo Ramos, director of Puerto Rico Electric Power Authority, has praised the work performed by Whitefish so far, saying the company’s was the only offer the utility received that did not require a down payment. The power company is $9 billion in debt and was already struggling to provide service amid power outages before hurricanes Irma and Maria hit last month.

“There is nothing illegal going on here,” Ramos said Thursday.

A federal control board that oversees Puerto Rico’s finances said this week it had appointed a former military officer to oversee the work. Retired Air Force Col. Noel Zamot will be responsible for speeding up reconstruction efforts and overseeing coordination with the board, Puerto Rico’s government and the federal government.

It was not immediately clear whether Zamot would have the authority to void Whitefish’s contract. But under the contract, the utility can suspend or terminate the contract “for any or no reason” after providing written notice to Whitefish and compensating the company for actual expenses.

Jose Luis Cedeno, a spokesman for the board, did not return calls or messages on Friday from The Associated Press seeking comment.

Carlos Monroig, a spokesman for the power company, also did not respond to requests for comment.

Even now, more than a month after the Category 4 storm made landfall, bout 75 percent of the U.S. territory is without power.

Zamot told the Puerto Rican radio station WKAQ 580 on Friday that once a judge confirms him as chief transformation officer of Puerto Rico’s Electric Power Authority, he will review all the agency’s contracts.

“We’re going to be incredibly transparent,” he said, declining further comment on any matters related to Whitefish.
Ramon Rosario, Puerto Rico public affairs secretary, told reporters on Friday that he wasn’t familiar with the contract’s details when asked why it includes a clause that prohibits an audit or review of “the cost and profit elements of the labor rates.”

Rosario said only that Puerto Rico’s governor already has requested an audit and that the government will turn over all pertinent documents.

“There are some legitimate claims,” Rosario said. “If anyone did anything illegal, let them fry in jail.”

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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