THE APPOINTMENT OF JUSTIN M. PETERSON TO THE BOARD – By John E. Mudd
Today, President Donald Trump appointed Justin M. Peterson to the Fiscal and Supervisory Board for Puerto Rico. I was alerted to the appointment by a source in DC and was told that he was appointed by the President to “bring transparency to the Board.” What does that mean?
From day one of its operation, the Board’s workings have been shrouded in mystery. Every so often it has meetings open to the public, but it is clear that all decisions have been made beforehand and rehearsed for public consumption. I have attended or watched all its meetings and only once has there been any public dissent. Ana Matosantos voted against one of the Board’s fiscal plans for the Commonwealth. We also know that the Board’s decision not to approve the PREPA RSA negotiated between the Government and bondholders was not unanimous but rather 4-3, but this was leaked weeks after the fact. Also, the Board has negotiated deals with creditors in secrecy, leaving the taxpayers who fund its operation in the dark. Many, including myself, have criticized this continued secrecy, even though PROMESA section 101(f)(4) makes executive sessions the exception rather than the rule.
Now the Board’s business will be more transparent. Although Mr. Peterson is only one member, nothing in PROMESA prohibits a member of the Board from speaking out about what he believes should be discussed. Other members have resorted to Twitter to espouse their ideas on what should be done in the Title III and their views on the Government’s actions. “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman” wrote Louis Brandeis in Other People’s Money And How the Bankers Use It (1914), a collection of his best essays. That is as true today as it was over 100 hundred years ago. Even if the Board was imposed on Puerto Rico, its inhabitants have a right to know how it conducts its business.
Also, this transparency will have to spill over into the Puerto Rico Government. Contrary to what the ample case law says, the island’s government is extremely opaque, something that the Board constantly criticizes. More transparency will help control corruption and waste, a major source of concern both for the President and for the island’s residents.
Finally, there are already voices criticizing Peterson for having advised GO bondholders. Need I remind them that many Puertorricans held and hold GO bonds? Need I remind them that GO bondholders settled their claims with the Board? Additionally, Andrew Scurria of the Wall Street Journal reported in his Twitter account that he spoke with Peterson and he said he did not work anymore for bondholders in the Puerto Rico case. If that is true, he would have no conflict of interest, especially since this is a known fact. Lest we forget, José Ramón González and Carlos García, both issued debt for Puerto Rico and were members of the Board.
My only hope is that this appointment will help the Board become a better entity and finish Puerto Rico’s Title III cases in a satisfactory fashion.
John E. Mudd is an attorney and legal analyst admitted to the practice of law in Puerto Rico, the P.R. Federal District Court, the First and Fourth Circuit Court of Appeals. He received his Juris Doctor from the University of Puerto Rico Law School in 1982. He also holds a Masters Degree from Boston University in International Relations focusing in Middle Eastern Studies.
Author of former johnmuddlaw.com, now JOHNMUDDLAW.NET a blog with more than 4,500 subscribers. Author of ControlBoardWatch.org a blog that follows developments in regards to potential members of the Puerto Rico Financial Control Board.
Has been studying the possibility of a Financial Control Board for Puerto Rico since 2013 and has conducted several seminars on the subject and of PROMESA.
He started his litigation career as an attorney in the federal division for the PR Department of Justice. After that, he worked for many years for Ortiz Toro-Ortiz Brunet where he participated in some of the most high profile cases in PR, including the Dupont Plaza Litigation, Rio Piedras Explosion, Tobacco Litigation (lead counsel) and the Airplane Crash in Cali, Colombia.
Now a solo practitioner for more than ten years, Mr. Mudd specializes in Class Actions, Bankruptcy , Constitutional Law , Mass tort litigation and Intricate Issues of Federal Jurisdiction. He also gives seminars for continued legal education.
In the past 4 years, Mr. Mudd has studied, discussed and written on the Puerto Rico Debt crisis from both a financial and legal points of view. He was the first analyst in the island to raise the probability of a Congressional imposed Financial Control Board on this blog and on various am radio programs and podcast.
He also makes occasional tv/radio appearances. In his free time, Mr. Mudd enjoys bread baking, reading and his blog. He currently resides in San Juan, PR with his wife Viviana, daughter Sara and two crazy cats.
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