Vitriol Flies in Puerto Rico as FBI Is Said to Probe Treasury

(Bloomberg) -- The firing of Puerto Rico’s top Treasury official set off an extraordinary exchange of insults Tuesday, with the finance chief’s son calling Governor Ricardo Rossello corrupt and the governor questioning the mental state of his accuser.

The back-and-forth was the latest distraction for a U.S. commonwealth government already trying to navigate a massive bankruptcy and recover from the devastation of Hurricane Maria. The drama could hurt the government’s efforts to restore confidence in its management abilities as it prepares next year’s budget and tries to strike a deal with creditors that would spare its economy.

The imbroglio began Monday morning, when then-Treasury Secretary Raul Maldonado gave an interview to a radio station disclosing alleged crimes in his own department, including influence peddling, issuance of fake licenses, destruction of documents and accessing privileged taxpayer records. He said he had personally been targeted for extortion and threatened. He said the Federal Bureau of Investigation was looking into an “institutional mafia.”

The governor said in an afternoon news conference that Maldonado had never told him of any crimes, and he asked his long-time cabinet member to resign at once.

Hot Blast

Then, Maldonado’s son entered the fray. Raul Maldonado Nieves took to Facebook to excoriate Rossello as "corrupt."

Maldonado Nieves went on to say he attended a meeting at the governor’s mansion with officials from auditing firm BDO. El Nuevo Dia newspaper has reported BDO is being investigated by the FBI in connection with irregularities connected to its contracts with the territory’s government.

Maldonado Nieves said that at the meeting he saw Rossello order the audit firm to change a report on Hurricane Maria aid. Lapsing into profanity, he said the report would have shown mismanagement in a relief effort that involved Rossello’s wife, Beatriz Rossello.

BDO didn’t immediately respond to requests for comment.

Family Protector

On Tuesday morning, Rossello released an official statement from the governor’s office in which he called the allegations "absurd" and "disrespectful." He denied wrongdoing by himself or Beatriz Rossello and said he wouldn’t tolerate attacks on the "integrity of my wife and my family." He said she never had an administrative role with the relief charity, but rather served as a spokeswoman.

Rossello speculated that his former treasurer’s son must be “going through a moment of personal torment, whatever it may be.”

Puerto Rico is trying to extricate itself from both its long-running economic crisis and recover from Hurricane Maria, which ravaged the island in September 2017. Now at the center of the swirling controversy, the Treasury Department has been one of the chief conduits for the estimated $20.6 billion in aid that has flowed to the island.

On Tuesday, Puerto Rico’s secretary of justice, Wanda Vazquez, said that her office was summoning the elder Maldonado this coming Friday to explain his statements on corruption in the Treasury.

To contact the reporters on this story: Jonathan Levin in Miami at jlevin20@bloomberg.net;Michael Deibert in San Juan at mdeibert@bloomberg.net

To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Stephen Merelman, Robert Jameson

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