I.

Introduction

We have summarized the Santander revolving door

scheme with the objective of identifying the culprits of
the immense debt that the government of Puerto Rico
owes. We intend to strengthen a strategy for those who
struggle by visibilizing the hidden faces of power
particularly those in financial capital, which have the
local government and the Financial Oversight and
Management Board of Puerto Rico as spokespersons.
Targeting the public image they possess as responsible
financial institutions, we will exert pressure in order to
reach our demands.

This is the first vignette in the story of the greatest

sacking of public funds in our country. In this vignette
we tell the story of the Santander Bank, it’s executives,
and how they latched onto the main public bank in
order to design multimillion dollar government loans, all
of which where unpayable, with the purpose of lining
their pockets and those of their allies. This story has
been divided in three chapters: Moving the Pieces, The
Plan Implementation and The Strategic Retreat.
 II. Characters  

Carlos M. García Rodríguez: Affectionately known as

Kako, García is the protagonist of our first vignette as leader
of the revolving door scheme between the Santander Bank
and the Government Development Bank (Banco
Gubernamental de Fomento- BGF). Ivy league disciple and
former athlete, he coursed his undergraduate studies in the
University of Pennsylvania. His first job, after graduating in
1993, was as a financial analyst under the mentoring of José
Ramón González in the Credit Suisse First Boston Bank. By
1995, when Banco Popular bought Credit Suisse First Boston
and transformed it into Popular Securities, Carlos García was
promoted to the rank of Vicepresident of Investment
Banking.1 In 1997 he was recruited again by José Ramón
González to work in the newly created Santander Securities
as the Executive Director and member of it’s Board of
Directors. He was President, Chief Executive Officer and
Vice-president of the Board of Directors at Santander
Securities between 2001 and 2005. Between 2004 and 2008

1
On October 10, 1996 a registered donation made to Carlos Romero Barceló by Carlos García for
the sum of $250 appears. At that Banco Popular) Capital Markets.
 he served as Vice-president and Chief Operating Officer at
Santander Bancorp and, in September 2008, he was
promoted to the position of President and Chief Operating
Officer at Santander Bank. He had a short stay in this
position since he was appointed president of the
Government Development Bank (BGF) and formed part of
it’s Board of Directors from January 2, 2009. In 2014 Carlos
García established a private equity firm, Bay Boston
Managers LLC, with it’s various connected
corporations. In 2005 his company created a banking
syndicate in order to purchase a Boston bank, Radius
Bank2. Since then he serves as member of the Board of
Directors of such bank.3 He is one of the first seven
members appointed to the Financial Oversight and
Management Board of Puerto Rico by the federal
government of the United States.

José Ramón González: An Ivy league disciple as well,

González studied Economics in Yale and Law in Harvard.
Between 1980 and 1983 he worked at O’Neill and Borges law
firm. In 1983 he went on to occupy the Vice-presidency of
Investment Banking at Credit Suisse First Boston, he filled
this position during three years before being designated
president of the Government Development Bank in 1986. In
1989 his term in the BGF culminated and he returned to the
Credit Suisse First Boston, where he was promoted to the
position of Chief Executive Officer and President of this bank
until 1995. From this post he recruited Carlos García in 1993.
2

https://www.bostonglobe.com/business/2015/10/06/radius-bank-turns-private-equity-investor
s/qmqWopIkthXY784W2kiyAP/story.html
3
https://www.radiusbank.com/about/board-of-directors
 After the purchase of Credit Suisse First Boston by Banco
Popular in mid 1995, González worked as Vice-president and
Chief Financial Officer of MOVA Pharmaceuticals until his
return to banking in 1996 when he became President and
Chief Executive Officer of the then budding Santander
Securities. In 1997, he again recruited his pupil, Carlos
García, to serve as Chief Executive Officer of his new project.
González occupied the highest executive positions in
Santander Bank until August 2008, where subsequently
Carlos García went on to be the successor of his positions
(President and Chief Operating Officer) in September. He is
one of the first seven members designated to the Financial
Oversight and Management Board of Puerto Rico by the
federal government of the United States.

Moving the pieces

1. On November 4, 2008 Luis Fortuño won the general

elections.4 The New Progressive Party (Partido Nuevo
Progresista) won the executive power and both the
legislative cameras. Five days after that victory
(November 9), Carlos García, who at the time served as
president of Santander Bank,5 met with Luis Fortuño,
secured the commitment to be named upcoming
president of the Government Development Bank and
4
PPD (Aníbal Acevedo Vilá), 793,735 (41.28%); PNP (Luis Fortuño Burset), 1,014,852 (52.78%)
5
http://www.gdb-pur.com/pdfs/public_corp/gdb/2008-12-22-GDB-OS-1.23MilMillones.pdf
 set the foundation of his fiscal strategy.6

2. On the following day (November 10), Fortuño made

an announcement to the country introducing the
creation of the Advisory Council of Economic and Fiscal
Reconstruction (CAREF in Spanish), the group in charge
of assessing the government finances and making
official recommendations.7 On November 13, 2008
Fortuño made his intention public he would be
designating Carlos García president of the Government
Development Bank.

3. On a preliminary report dated December 19, 2008, CAREF

proposed emitting more debt in order to finance the central
government’s gigantic operational deficit and, subsequently,
increased the quantity of the sales tax revenue (IVU)
destined to COFINA8 Puerto Rico Urgent Interest Fund
Corporation (also known as the Puerto Rico Sales Tax

6
As expressed by García in an interview with El Nuevo Día, Fortuño and himself had “spoken at that
moment that more than a perit’s path.” Quoted from:
http://elnuevodia.com/noticias/locales/nota/essumamenteduroytemarca-895748/
7
Members: Richard Carrión (Presidente) de Banco Popular; Alejandro Ballester, de Ballester
Hermanos; Rodolfo Colberg from Ernst& Young; Atilano Cordero Badillo, from Cordero
Badillo Enterprises (Empresas Cordero Badillo); Gilberto del Valle, Deloitte & Touche;
Daneris Fernández, from Merck; Teresita Fuentes, from Ernst & Young; Attorney at law José
Ramón González, president of Banco Santander until August 2008, president of the BGF in
2005 and executive of the BGF 1986-1989 and practiced at O’Neill & Borges lawfirm
1983-1986; William Lockwood, president of the BGF in 2005 and executive of the BGF
1987-1993; Luis Miranda from Universal; Manuel Pietrantoni (Secretary) of Pietrantoni
Méndez & Álvarez; Attorney Marcos Rodríguez Ema (Executive Director),Chase Securities
Puerto Rico general manager 1989-1992, president of the BGF 1993-1996 and R. Roselló’s
and Jennifer’s González electoral strategist 2016; Attorney Xenia Vélez Silva, from
McConnel Valdés and Secretary of Treasury (Hacienda) 1997-2000; José R. Vizcarrondo
Carrión, from Metropolitan Development (Desarrollo Metropolitano) and Richard Carrión’s
nephew.
8
COFINA (La Corporación de Interés Apremiante) is a corporation affiliated to the BGF
created through Law 91 of 2006 with the
 Financing Corporation) in order to borrow and refinance
the public debt. The recommendations of this preliminary
report where kept secret at the request of elected Governor,
Luis Fortuño until January 2009.

4. On December 23, while the preliminary

recommendations from CAREF still remained secret, an
important negotiation in the BGF concluded in the midst
of the governmental transition: a $1,230 million dollar9
emission in new debt, to be used at Carlos García’s
discretion by the time he assumed presidency at the BGF in
10 days. From one side of the negotiation table, the outgoing
President of the BGF, Jorge Irizarry Herranz.10 From the other
side of the negotiating table, the incoming President of the
BGF still in his capacity as President of Santander Bank,
Carlos García, accompanied by Banco Popular, who’s
president also presided the CAREF and recommended the
bone chilling bond emissions. Santander, Popular and UBS,
then presided by the notorious Miguel Ferrer, where one of
the main underwriters of these bond emissions.11 We will see
this trio (Santander, Popular and UBS) along as main
underwriters in the next 6 consecutive emissions made by
9
It would be the BGF’s biggest bond emission up until then as debt issuer. It was surpassed
again on December 23, 2009 and JulyCarlos García’s presidency
10
Before becoming Executive Financing Vice-president of the BGF (position that was later
filled by Fernando Batlle under Carlos García’s command) in 2005 he worked as strategy and
financial consultant for Santander Bank through his company Sandoval Associates. He is the current
Executive Director of Bonistas del Patio, Inc. (Playground Bondholders Inc.)
11
Underwriters are financial institutions that give money in advance in order to purchase
bonds (make the loan) and they make sithat loans or avoid making loans. The group of
banks that act as underwriters are usually organized by the managing underwriters, the
institutions that receive the biggest profits for designing and assuring the mechanisms to
buy and sell all the emitted debt. The managing underwriters seek out other banks in order
to make the transactions and choose lawyers in order to consult the legality of such
transactions.
 the BGF under the presidency of Carlos García.

5. On January 2, 2009 Carlos García made his transition

from private banking (Santander) to public banking (BGF)
official. In other words, the bank that loaned went on to be
the bank that accepted loans. On January 20 he introduced
his workteam: almost all of which where banking executives
with ties to Santander. Fernando Batlle Hernaiz12- Executive
Vice President, Director of Finance, Investments and
Treasury; William Lockwood Benet13- Executive Vice
President and General Fiscal Agent; Jesús F. Méndez
Benet14.- Executive Vice president and Administrative,
Operations, Comptroller/ AccountingsDirector; Víctor G.
Feliciano Arroyo15- Vice president and Secretary of Treasury;
Ana María Gregorio16- Vice president and Director of
Communications; David Álvarez Castañeda17- special
assistant to the President of the BGF and, in November 16,
2009, his designated executive director of the Public-Private
Partnerships Authority (Autoridad para las Alianzas
Público-Privadas) a corporation ascribed to the BGF; George

12
Juan Carlos Batlle Hernaiz’ older brother, who served as President and Chief Executive
Officer of Santander Asset Management, Carlos García in the company) when the first
emission of bonds was released. While Fernando Batlle worked as Executive Vice-president
for First Bank, he contributed funds to Luis Fortuño’s resident commissioner electoral
campaign in 2004.
13
Apart from the positions he held in Santander Securities, he was a private consultant for
Banco Santander.
14
Apart from the positions he held at Santander Securities, he was Chief Executive Officer
and General Director.
15
Before his designation he was Director of Capital Markets at Santander under the
direction of José Ramón González and Carlos Gía.
16
We suspect she is sister of the ex-director of Santander Bancorp, Vicente Gregorio.
Additionally she is professor of the commuSagrado Corazón.
17
Before his designation he was superior analyst and economic consultant at Santander
Securities and Santander Bancorp.
 Joyner Kelly18- Executive Director of the Housing Finance
Authority, subsidiary of the BGF which emits debt to finance
public housing; among others.

6. On January 7, 2009 Fortuño designated Zulma Rosario

Vega Executive Director of the Office of Government
Ethics.19 This was confirmed by the Senate in April of that
year. In a study published by the Office of Government Ethics
in September 2011, 2009 was the year in which the least
amount of new cases of violations regarding the
Government Ethics Law (1) where initiated since the creation
of this office en 1985; followed by 2008(3).20 Zulma Rosario
approved 92% of the ethical rule exceptions that where
solicited in 2016. These ethical exceptions are exceptional
privileges that the Executive Director of the Office of
Government Ethics grants, discreetly, when a public server or
expublicserver might have violated the Government Ethics
Law.

7. On January 8, 2009 Fortuño was planting terror in the

media21 while García was spreading the good news around
the private banking sector: the first law of the term, approved
in two days,22 he had gotten double the amount of money
collected from the IVU (Sales tax revenue) directed towards
the COFINA (Spanish: Corporación del Fondo de Interés

18
Ex-president of Santander Mortgage Corporation.
19
It was temporally occupied by Gladys Malpica de Schaffer (July 1, 2007- January 6, 2009)
20
https:eticapr.blob.core.windows.net/files/STIC-2012-01.pdf
21
On January 8, 2009 CAREF’s recommendations where made public. Fortuño signed his
first executive order declaring a state of fiCarrión intervened in repeated occasions during
the press conference to answer questions directed towards the governor.
22
Project 598 of the house of representatives of the sixteenth Legislative Assembly was
presented on January 12, 2009, was sent It was signed by Fortuño on January, 14.
 Apremiante) group whose bonds are backed by the sales
tax revenue, in order to borrow on previous debt/emit
23
new debt. Fortuño announced there was insufficient
money to issue the first payroll payment of his term and
in order to comply with such it would be necessary to
take loans, without mentioning that such move had
already taken place through the BGF three weeks prior
in a hidden negotiation and it was clad in exceptionally
high conflict of interest, and that the money loaned for
the payment of such payroll was released two days
before the expiration of the first bi-weekly payment.

8. COFINA’s first attempt at debt issuance fails after

duplicating the income derived from the IVU (Sales tax
revenue) which was diverted for those purposes. On
January 27, 2009, they return and take on another loan
through the BGF for the sum total of $250 million. The
managing underwriters? Santander, Popular and UBS.

9. On March 3, while announcing the radication of the

bill that would become the notorious Law 7, a message
was delivered to the country. Two memorable quotes:
“In these 60 days we’ve discovered that the fiscal
deficit is 4 times bigger.”24”This means that the people
who issue loans to the government of Puerto Rico in
order for it to build roads, schools, hospitals and
provide the services that the citizens need, won’t lend

23
Law 1-2009 increased the IVU revenue directed towards repaying the debt emitted by
COFINA from 1% to 2% and made amends to the
24
This information was known since December 19, 2008, before the first day of his term,
through CAREF’s preliminary report for Fortuño.
 us anymore.’’

10. On March 9, 2009 law 7 is signed, which authorized

the increase of the existing debt and the mass layoff of
tens of thousands of public employees. Law 7
eliminated the provision that established that no
refinancing of bonds issued could possess an interest
higher than the refinanced bonds.25 Furthermore, law 7
authorized an additional increase of .75% in the
collection of the sales tax revenue (IVU) that was
diverted towards COFINA. It also created the Economic
and Fiscal Reconstruction Plan (JREF in Spanish), entity
in charge of the layoff of tens of thousands of public
employees and the cuts to the public investment in
government agencies. The president of this
board?26Carlos García.

11. On March 20, 2009 Carlos García was still owner of

25,000 shares from Santander Bancorp, through a
corporation of his: Palo Negro Development, Inc. These
shares concentrated on his person the highest power over
Santander Bancorp’s investment decisions. The second
person with the most power, at the same time, was José
Ramón González with 14,531. Additionally, García and
González each owned 3,300 and 9,494 shares from

25
Article 47 of Law 7-2009 added a new article to Law No. 2 of October 10, 1985, as
amended, known as the Financing Bond IssuancLey de Emisión de Bonos de
Refinanciamiento), which exempted the Secretary of Treasury from having to meet these
requirements.
26
Another member of JREF was José Pérez Riera in capacity of Secretary of the
Department of Economic Development and Commerce (D de Desarrollo Económico y
Comercio- DDEC), before being designated he worked as associate director of municipal
financing in UBS.
 Santander Bank S.A., beneficiary entity of 90.59% of
Santander Bancorp shares at the time.27 None of this was
pointed out by the Office of Government Ethics.

The Plan Implementation

1. June 10-19, 2009: the loot was served. The largest

emission of bonds in the history of Puerto Rico was
issued through COFINA: $5,574 million. At the time of
the bond emissions the Board of Directors of COFINA
was made up of Carlos García, Alejandro Ballester (CAREF
member) and Marcos Rodríguez Ema (exmember of CAREF,
expresident of the BGF and private investment banking
veteran), among others. The executive director of COFINA

27
https://www.sec.gov/Archives/edgar/data/1099958/000114544309000684/d24614.htm
 was Fernando Batlle. Among the distributors of the local
banking sector was Santander Securities, with Juan Carlos
Batlle in charge of top management. However the bond
emission was so large that it had to be fractionized.
Although Santander Securities was among the underwriters
of 96% of this debt, it was one of the managing underwriters
of $1,218 million of this emission along with Popular and
UBS. The bank syndicates that participated in this emission
distributed more than 77 million in commissions amongst
themselves,28 as well as the earnings that would be
generated by the resale of the bonds and the payment of
interests.29 The source of loan payment for this emission is
the revenue from the IVU sales tax.

2. June 26, 2009: emission of $331 million in debt from the

Authority of Public Buildings (Autoridad de Edificios
Públicos-AEP). Santander Securities, again, appears as one
of the underwriters of this debt. 100% of the emission was
used to pay the commission of the underwriters, refinance
the debt and to withdraw interests from the capital market.
Not one building was built or restored with this money. The
source of loan payment: the revenues that where (no longer)
being payed from the Government of Puerto Rico to the AEP
for the leasing of their office space (including the Minillas
Government Center- Centro Gubernamental Minillas).

28
This sum only considers the Underwriting Discount and the Original Issue Discount.
29
Through COFINA alone, this Santander Scheme produced more than $22,556 million in
interest, or an effective interest fee of 20, Santander’s participation in the bond emissions
of COFINA dates back to COFINA’s first emission back in 2007. Since then, the Santander
Scheme produced $39,250 million in interests, or the equivalent of an effective interest fee
of 252%, everything payed for in each IVU sales tax transaction.
 3. October 16, 2009: The Authority of Public Buildings made
an $152 million emission in debt. Santander Securities
showed up as one of the underwriters of this emission.
100% of this emission was used to pay the underwriters
commissions, refinancing of the bond debt, refinancing of
the debt with the BGF and to turn the main debt into almost
$23 million in interests. It had the same source of loan
payment as the previous emission.

4. In this successive manner we’ll tell the story of the

performance of Carlos García as chief financial officer of the
Government. Under the direction of Carlos García as
financial assessor and fiscal agent (December 2008-March
2011), the total of bond emissions that the BGF authorized
rised to $19,740,691,367.10, which summed up to the total
of $235,786,812.40 in clean profits for the underwriters.30
The Santander, Popular UBS alliance subscribed all the bond
emissions issued by the BGF during García’s presidency.
Furthermore, O’Neill & Borges’ law firm31 was hired as legal
consultant of at least 10 bond emissions during García’s
term in the BGF.

30
We include shares from the BGF as well as General Obligation shares and public
corporation shares.
31
Pedro Pierluisi was an associate of this lawfirm, first in 1997-2006, and reintegrated
recently in January 2017, O’Neill and BFinancial Control Board, entity created under
PROMESA, advocated by Pedro Pierluisi while he was resident commissioner.
 The Retreat Strategy
1. On January 20, 2011 Fortuño held a meeting at the
Ciudad Grupo Santander, the headquarters of
Santander Bank S.A. in Madrid, accompanied by the
chief executive officer and president of Santander
Bancorp and Santander Bank of Puerto Rico, Francisco
Javier Hidalgo,32 in order to ask this parent company to
participate in the privatization process of the
production of renewable energy and other projects of
infrastructure in Puerto Rico through the “Public-Private
Partnerships Authority”.33

2. On February, 2011 Carlos García announced his

resignation of the presidency of the BGF, effective March 1.
He would renounce the presidency of the Board of Directors
of the BGF on March, 30 of the same year, 6 days after
presenting the bill in Legislature for a new Government
Ethics Law that would be extremely beneficial to him. Along
with him Fernando Batlle resigned as well, he went on to
become García’s assessor in the Board of Directors towards
the end the of March. During his presidency in the Board of
Directors of the BGF, Carlos García recluted and confirmed
Juan Carlos Batlle as his successor.34 Juan Carlos Batlle,
younger brother of Fernando Batlle, moved from the
management of Santander Asset Management and
32
Carlos García’s presidency successor at Santander.
33

http://www.primerahora.com/noticias/gobierno-politica/nota/gobernadorsereunecongrupo
santanderenmadrid- 464653/
34
Juan Carlos Batlle was supervised by Carlos García since they worked at Popular Securities.
When Carlos García was recruited bJosé Ramón González to work at Santander Securities since 1997,
Carlos took Juan Carlos Batlle along with him
 Santander Securities to the management of the BGF from
March, 2011 towards the end of the four-year-period. Carlos
García warned that his commitments with the Government
where accomplished.35

3. The exit of Carlos García from the presidency of the BGF

coincided with the time in which Santander accelerated the
sale of their investment funds with an extremely high
exposition to Puerto Rico government bonds.36 Additionally
the financial statements made by the FDIC to the Santander
Bank in Puerto Rico revealed that, from 2011 onwards,
Santander did not purchase any more bonds from the
government of Puerto Rico, for it’s own investment
portfolio,37 even though it continued buying from the BGF and
selling their clients a lot of government debt emitted
between 2011 and 2012, when the emissions where made
through the Batlle brothers revolving door . In other words
García and Batlle from their positions in the BGF borrowed
money from Santander (and it’s clients) but, once they
returned to Santander, instead of staying with those bonds
they decided to sell them before the rest of the market.

4. On April of 2011, in the middle of the musical chairs game

between the BGF and the Santander Bank, a young analyst
joined the Santander group after earning his Master’s Degree
from the University of Virginia in 2008, he was promoted to
the post of Vicepresident of Investment Banking in
35
http://www.elnuevodia.com/noticias/locales/nota/essumamenteduroytemarca-895748//
36

https://www.santander.pr/SecuritiesFamFunds/pdf/Prospectus/Prospectus2013_Q4/Tarsan%20II
I%20Fund%20Final %20Prospectus%20(with%2012-18-13%20Sticker).pdf
37
https://www5.fdic.gov/crapes/2015/20828_150527.PDF
 Santander Securities. His name is Gerardo J. Portela Franco.
By February 2012, he had participated in the $5 million
38
emission in government debt.

5. On April 12, 2011 pieces of the scheme start being

revealed when FINRA, the federal agency in charge of
investor protection from abusive practices coming from
broker-dealers, fined Santander Securities. Between the fines
and the reimbursement for losses payed to it’s clients,
Santander Securities payed $9 million. It turns out that
Santander Securities was selling government bonds,
especially those of COFINA and the BGF,39 to clients without
the appropriate guidance over the possible conflict of
interest that Santander Asset Management had with
Santander Securities and it’s employees. Additionally, it
encouraged it’s clients to borrow money from Santander
Banks in order to buy those bonds off of Santander
Securities. When the bonds depreciated in value, the clients
lost the collateral to pay their loans with Santander Bank and
the bank therefore resold the loans to a collecting agency.40

6. Juan Carlos Batlle receives an ethical exemption on May

31, 2011 in order for Santander Securities to be able to be
underwriter of the debt emitted through COFINA.41 The
38
http://www.camarapr.org/Presentaciones-Calaf/Energia/Energia-Inclan.pdf
39

https://www.santander.pr/SecuritiesFamFunds/pdf/FactSheets/Fact%20Sheets%203Q201
6/TM3%203Q2016.pdf
40

https://www.finra.org/newsroom/2011/finra-fines-santander-securities-2-million-deficienci
es-its-structured- product
41

http://tmp.oegpr.net/wp-content/uploads/2015/08/AAJ-DEPTO.ESTADO3.3dY3.3-
e.pdf
 conflict of interest lied on Batlle who still maintained direct
economical ties with Santander Securities at the time he
acted as president of the Board of Directors of COFINA, a
post reserved for the president of the BGF, while he
negotiated the last bond emissions of this entity. On
December 1, 2011 COFINA reached it’s borrowing limit and
hasn’t been able to borrow again.

7. On June 27, 2011 the Santander conglomerate announced

that Carlos García would return to their workteam, as “right
hand of the chief of staff” and chief of corporate affairs of
the bank group in the United States.42 From this post he
would supervise the integration of the operations of
Santander Bank in Puerto Rico with the subsidiaries of
Santander Group in the northwest of the United States. That
same day Santander sold one of it’s funds exposed to a high
rate of Puerto Rican government bonds.43

8. On July 6, 2011 Santander announced that Santander

Bank of Puerto Rico would “integrate” with Sovereign Bank,
their banking conglomerate operation in the United States, in
order to “aggressively expand” their presence in the
commercial banking market of the United States.44

42
Banco Santander S.A.’s main banking subsidiary was relocated to the United States, with
headquarters in Boston, it was known as Sovereign Bank and later came to be known as
Santander Bank N.A.
http://sincomillas.com/carlos-garcia-nombrado-chief-of-staff-de-sovereign-bank/
43

https://www.santander.pr/SecuritiesFamFunds/pdf/Prospectus/Prospectus2013_Q4/Tars
an%20III%20Fund%20Final %20Prospectus%20(with%2012-18-13%20Sticker).pdf
44

http://www.elnuevodia.com/negocios/finanzas/nota/santanderafinasuoperacionenlaisla-1
008753/
 9. On July 15, 2011, the president and chief officer of
Santander Bancorp, Francisco Javier Hidalgo,45 announced
the hiring of Fernando Batlle as director of Santander
Bancorp, effective August 1, 2011. After complying with
some “regulatory procedures”, Fernando Batlle, went on to
occupy the presidency of Santander Securities in Puerto
Rico.46

10. The next step taken in the retreat required the approval of
a new Government Ethics Law that would modify the
definition of what constitutes a conflict of interest for
government officials and ex-government officials. That was
fulfilled on January 3, 2012. The new definition of “conflict of
interest” eliminates the conflict between public interest and
personal or economical interest of “people associated to” a
government official as an ethics violation.47

11. On November 2012, Santander Securities anticipated,

much before the rest of the market, the imminent
degradation of the credit rating of the government bonds
that it sold to it’s clients. Those of which it tried to quietly
discharge from it’s very own bond inventory but did not do
the same with it’s clients bond inventory, for 67% of much of
it’s funds must’ve been compromised with the debt of the
government of Puerto Rico. On May 13, 2012, Moody’s
degraded the credit rating of a majority of the government
bonds: they where a step before entering junk bond status.
The next day, the clients of Santander Securities wanted to

45
The same person who accompanied Fortuño to Spain, on January of that year.
46
http://sincomillas.com/santander-securities-contrata-a-fernando-batlle
47
Law 1-2012
 sell their government bonds but the bank refused to buy
them, while it accelerated the sale of it’s own government
bond inventory. This practice continued, at least, until
October 2013. On October 13, 2015 FINRA fined Santander
Securities once more, this time for $6.4 million. The
regulating agency also forced Santander Securities to rebuy
much of the bonds that it sold in this practice.48

12. The ones involved in this scheme recognize that they

burned the market of their industry in Puerto Rico. The
viability of their business in Santander requires the
recuperation of the market of government bonds in Puerto
Rico: the return of Puerto Rico to public indebtedness. On
February 2, 2016 Carlos García went before Congress and
proposed an antidemocratic structure that could take
financial and legislative control over the Government of
Puerto Rico, compensating for the “insufficient power” of the
JREF (Junta de Reconstrucción y Revitalización Fiscal) that
he presided up until 2011.49
13. On March 15, 2016 Carlos García Rodríguez came up as
a donor of Rosellos’s primary campaign and on April 2, 2016
Ricardo Roselló proposed the elimination of the BGF and it’s
substitution for a debt management authority, similar to the
structure suggested by Carlos García before Congress.50

48

https://www.finra.org/newsroom/2015/finra-sanctions-santander-64-million-pr-bond-super
visory-failures
49

https://www2.pr.gov/ogp/Bvirtual/reogGubernamental/PDF/PROMESA/CHRG-114hhrg984
58.pdf
50

http://www.noticel.com/noticia/188581/ricardo-rossello-es-el-momento-de-transformar-al-
 14. On April 12, 2016 the first draft of PROMESA was
born and, after it’s approval on June 29, 2016, the
Financial Oversight and Management Board of Puerto
Rico51 was born and it is now in charge of setting all the
Puerto Rican economy on fire in order to reactivate the
public indebtedness in Puerto Rico. Carlos García and
Jose Ramón González occupy 2 of the 7 chairs in that Board
from August 31, 2016. The legal objectives of PROMESA and
their Financial Oversight and Management Board are (1)
eliminate the structural deficit of the Puerto Rican
government through cuts to the government structure
(not the debt); and (2) return Puerto Rico to the bond
market in order to reactivate the public indebtedness.
15. On November 8, 2016 Ricardo Roselló, Jennifer
González and the PNP legislative delegation won the
general elections. On August 21, 2016 Carlos García
Rodríguez appeared once again as campaign donor of
Ricardo Roselló during the general election.52
16. On December 15, 2016 Roselló Nevares announced that
Gerardo J. Portela Franco would take the reins of the Puerto
Rico Fiscal Agency and Financial Advisory Authority (AAFAF
in Spanish), entity that would inherit the functions of the BGF

bgf.htm
51
On February 2, 2016, two months before the first draft of the legislation of PROMESA was
submitted to Congress, Carlos García Subcomité de Asuntos Indígenas, Insulares y de los
Nativos de Alaska del Comité de Recursos Naturales de la Cámara de Representantes
federal. In his presentation he suggested that Congress impose on Puerto Rico a Fiscal
Control Board similar to JREF which he presided yet with more power over treasury, labor
laws and permits than he possessed at JREF. He also advocated in favor of the
resurrection of federal tax incentives like Section 936 (Sección 936).

52
Puerto Rico’s Official Comptroller’s website. See Law-2-2017.
 since 1942 until April 6, 201653 and the functions conferred to
the JREF between 2009 and 2011,54 This agency is also in
charge of negotiating with the organized bondholder groups
and the Financial Oversight and Management Board.
17. Gerardo Portela’s workteam in the AAFAF
reproduced an already known behavior. The executives
also held direct ties with Santander: Jesús D. Mattei
Pérez55-Director of Public Financing,56 Alejandro
Camporreale Mundo57- Chief Operating Officer.
18. On February 23, 2017 the BGF signed a financing
assessment contract with Ankura Consulting Group.
The contract was 127 days long and totaled $1,606,440
but the monthly payment as of March equaled a salary
of $21,433.28 per workday. Only 3 employees from
Ankura Consulting Group would be in charge of
providing the consulting services to the BGF and one of
them was Juan Carlos Batlle, general co-director of
Ankura Consulting Group of Puerto Rico alongside the
ex-president of the electoral platform and political
contributor for Luis Fortuño, Jorge L. San Miguel.58
19. On April 28, 2017 Gerardo J. Portela Franco
announced, while presenting a deposition before the

53
Law 21-2016.
54
When the government entity’s responsibility would be absorbed by the Fiscal Control
Board. See Law 2-2017.
55
Analyst and investment portfolio manager for Santander Asset Management 2011-2017;
investment portfolio analyst for UBS 2007-2 mutual funds administrator for Banco Popular
2004-2007.
56
Fernando Batlle’s position at the BGF between 2009-2011.
57
He was mortgage banking director at Santander Bank Puerto Rico 2014-2017.
58
He was Energy Answers’ attorney who pushed for the construction of the incinerator at
Arecibo.
 Financial Oversight and Management Board in a
televised reunion, that the fiscal plan proposed by the
BGF would culminate with the closure of the public
bank. During this discussion, Jose Ramón González took
his turn to explain that he was part of the work
subcommittee created under the Fiscal Control Board to
collaborate with the AAFAF in the elaboration of this fiscal
plan. The elimination of the BGF received a unanimous
endorsement from the Financial Control Board, including
Carlos García and Jose Ramón González.
20. On May 15, 2017, governor Roselló Nevares announced
that Gerardo Portela, from the AAFAF, negotiated with Jorge
Irizarry Herranz, from Bonistas del Patio Inc., the “voluntary”
restructuration59 of the BGF’s obligations: the government
made the commitment to repay between 55-75% of the
nominal value of the BGF’s60 bonds, entity bankrupted by the
Santander Scheme.

59
At the mercy of the legal provision stipulated by Chapter VI of PROMESA.
60
This agreement is detrimental to the UPR (University of Puerto Rico), the municipalities
and the rest of depositors (public an