CEO Who Didn’t Get Arrested Says He Just Wants to Get Paid

(Bloomberg) -- Whitefish Energy Holdings LLC, which found itself mired in controversy over a $300 million contract to repair the hurricane-ravaged power grid in Puerto Rico, still wants to get paid.

In an exclusive interview, the CEO of the company -- based in the Montana hometown of former Interior Secretary Ryan Zinke -- says it’s owed more than $100 million. That’s for work it completed before the island’s bankrupt utility terminated the deal in 2017, when hurricanes Irma and Maria wreaked havoc in Puerto Rico.

Whitefish was swept into a political storm after winning the no-bid contract, with critics questioning whether the tiny firm managed to land the deal because of a connection to Zinke. While numerous rivals and government officials were ensnared in fraud charges related to restoration efforts, the company’s chief executive officer -- who wasn’t implicated -- says he did nothing wrong.

Whitefish got “gobbled up in the swamp,” CEO Andy Techmanski said. “Carrying over $100 million in deferred income on your balance sheet is the perfect way to try to destroy your business.” The lingering stigma and overdue payments are weighing on the company, which still owes millions to subcontractors, he said.

Techmanski is now seeking court help for repayment after the Puerto Rico Electric Power Authority, called Prepa, said it reached a potential agreement with bondholders and bond-insurance companies on how to reduce over $8 billion of debt. Whitefish wants the court to ensure that Prepa will still repay current administrative claims, such as payments to vendors, suppliers and contractors, according to a filing Friday.

Hurricane Devastation

The company takes its name from its location, Whitefish, Montana. Questions about a link to Zinke were raised almost immediately after the firm, which only had two employees at the time, got the contract. Techmanski and Zinke, who resigned last year while under investigation for a string of ethical violations, have both said the former cabinet official had nothing to do with the deal.

Hurricane Maria slammed into Puerto Rico on Sept. 20, 2017. It came two weeks after Irma had passed the island, and months after the utility and the commonwealth fell into bankruptcy. Maria destroyed the island’s aging power grid and killed thousands of residents.

Techmanski says he reached out to Prepa after Irma and was already in contact with the company by the time Maria struck. On Sept. 26, he was touring Puerto Rico with the utility’s executives and negotiating a deal to repair the damage. The contract was finalized Oct. 1, and the next day Whitefish workers began arriving, he said.

While Whitefish linemen were on the ground, Techmanski was defending his business against allegations of cronyism. The controversy led Puerto Rico’s then-Governor Ricardo Rossello to ask Prepa’s board to invoke a cancellation clause in the contract at the end of October.

Federal Inquiries

Despite federal inquiries into its contract, Whitefish wasn’t formally accused of wrongdoing. Last week, two top Federal Emergency Management Agency officials were arrested on fraud and conspiracy charges linked to recovery efforts from Hurricane Maria. The indictment also included the former president of Cobra Acquisitions, one of the companies that handled work on the power grid after Whitefish left.

Whitefish pulled out of Puerto Rico at the end of November 2017, but it had already completed the work it had been hired to do -- repairing the island’s five main transmission lines. That’s what Techmanski is still waiting to get paid for.

Prepa has acknowledged that Whitefish did its job, and that it owes the company $106.8 million, according to the utility’s most recent cash-flow report. Whitefish also claims Prepa owes an additional $21.6 million in finance charges, according to the court filing.

Pending Payment

Those funds should ultimately be paid by FEMA, but Techmanski said the agency is sitting on the invoice. He’s heard nothing from FEMA or the utility about when the payment might be issued.

FEMA hasn’t yet determined how much of the Whitefish expenditures it will cover with federal disaster funding, and Prepa will pay the company once it receives those funds, Fernando Padilla, Prepa’s project management officer, said in an email. FEMA didn’t immediately have comment.

There were no significant problems with the quality of Whitefish’s restoration work, Padilla said. The company completed power restoration services immediately after Maria and in the most difficult of circumstances, he said.

The outstanding payment is a drag on Whitefish’s balance sheet, and Techmanski said he’s had trouble lining up new work since the Puerto Rico job. “That’s had a huge adverse affect on my business,” he said. “It’s been an ordeal.”

To contact the reporters on this story: Will Wade in New York at wwade4@bloomberg.net;Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Pratish Narayanan, Reg Gale

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