Two Government Development Bank for Puerto Rico directors leave board

By Caroline Salls

Pittsburgh, April 19 – Government Development Bank for Puerto Rico (GDB) directors Fermín Contreras Bordallo and Iván Méndez López submitted their letter of resignation effective April 21, according to a news release.

“We are aware of the gravity of the financial situation facing the commonwealth and its public corporations and instrumentalities, including the GDB,” the directors said in their letter of resignation addressed to Puerto Rico governor Alejandro García Padilla.

“We are also aware of the need for passing the [Puerto Rico Emergency Moratorium and Financial Rehabilitation] Act and issuing the Executive Order [2016-10] in order to ensure that essential services are provided and to protect the health, security and wellbeing of the residents of the commonwealth.

“However, the act and the executive order limit the functions and responsibilities of the GDB – which were already limited due to the GDB’s delicate financial situation – dictating the manner in which the operations of the bank will be carried out and transferring duties to the fiscal agent and financial advisor of the Fiscal Authority.

“Therefore, the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act and the executive order have restricted the scope of our authority to make important decisions for the GDB and other government entities, even though we would remain accountable for such decisions.”

Specifically, the resigning directors said the act establishes the Puerto Rico Fiscal Agency and Financial Advisory Authority, a new independent public instrumentality that would assume the duties of fiscal agent and financial adviser to the commonwealth, its public corporations, instrumentalities and municipalities, which the GDB used to carry out.

On April 10, the governor issued an executive order under the act to protect the liquidity of the GDB, declaring a state of emergency for the GDB, prohibiting the disbursement of loans and imposing restrictions on the withdrawal of funds deposited with the GDB, among other measures.

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