The Puerto Rico Fiscal Corporation (CFSE) has referred allegations of irregularities in the approval of a multi-million dollar investment in The Phoenix Fund (TPF) to the Department of Justice, according to an announcement made Tuesday by CFSE Administrator Enid Inalbis Ortiz Rodríguez.
The referral follows an internal audit of loans approved by previous administrations, according to officials. The CFSE is seeking to recover approximately $100 million linked to financings granted in prior years, as revealed by Ortiz Rodríguez.
Ortiz indicated that the investments in question were not authorized during her tenure, but were decisions made by the board of directors under previous leadership. “These investments were in 2019,” she stated, adding that the CFSE has already filed a demand for the recovery of unpaid interest and the $80 million originally invested. “So we are in the process of that recovery.”
According to Ortiz, the current administration discovered the non-compliance with payment terms only months after assuming office, prompting regulatory complaints and internal investigations before initiating the debt collection process. She stated that no information regarding the Phoenix Fund’s non-compliance was provided during the transition period.
“When this administration entered in February, a few months later we became aware that Phoenix Fund was not complying with its interest payments. We did not receive that information during the transition process,” Ortiz said.
Following the identification of the issue, the CFSE filed a complaint with the Office of the Commissioner of Financial Institutions and activated its Audit Office, the findings of which have been submitted to the relevant authorities. Ortiz declined to provide specifics regarding the audit’s findings, citing ongoing investigations.
The CFSE is currently listed as the largest creditor in Phoenix Fund’s Chapter 11 bankruptcy proceedings, according to recent reports. Despite the legal challenges, Ortiz has affirmed that the CFSE maintains its solvency and that operations are not affected by the Phoenix Fund case.