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Puerto Rico Succession Crisis Escalates After Vote Delayed

Michelle Kaske, Michael Deibert, Jonathan Levin and Ezra Fieser
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Puerto Rico Succession Crisis Escalates After Vote Delayed

(Bloomberg) -- Puerto Rico’s succession crisis escalated after lawmakers delayed a hearing on embattled Governor Ricardo Rossello’s replacement until after he leaves office, fueling the political chaos gripping the bankrupt island.

The commonwealth’s Senate met Thursday during a special session to debate Rossello’s nomination of Pedro Pierluisi as secretary of state, a currently vacant position that’s next in the line of succession when the governor leaves office on Friday at 5 p.m.

But Senate President Thomas Rivera Schatz delayed a discussion of the nomination until Monday, three days after Rossello is set to resign. Some lawmakers from both political parties oppose Pierluisi, the island’s former representative in the U.S. Congress, because of his ties to a federal oversight board that’s managing the commonwealth’s finances.

“The date and hour of Ricardo Rossello’s exit was his decision, not mine,” Rivera Schatz said on the floor, blaming Rossello for the rushed process. “I want to tell you the following: Pedro Pierluisi does not have the votes of the majority.”

The delay torpedoes efforts to calm Puerto Rico’s unprecedented political crisis that has raged for weeks after massive protests forced Rossello from office in the wake of the release of leaked chats between the governor and aides that disparaged political rivals and ordinary residents. While Secretary of Justice Wanda Vazquez, who is next in line, said she would fulfill her constitutional responsibilities if needed, some legal scholars questioned whether Pierluisi or Vazquez could take power, fueling concerns about a constitutional crisis on the U.S. territory.

The island’s house is scheduled to meet Friday at 9 a.m.

“What happens tomorrow very much depends on the executive branch’s interpretation of the statute,” said Efren Rivera Ramos, a legal scholar at the University of Puerto Rico. “Tomorrow at five the governor‘s resignation becomes effective, and we will still have an unconfirmed designated secretary of state, and the question being if his post would be viewed as interim. If so, the secretary of state may be able to govern even if he is not confirmed by the legislature.”

Not Enough Votes

House Speaker Carlos “Johnny” Mendez, also of the New Progressive Party, has said there aren’t enough votes to confirm Pierluisi. Pierluisi on Thursday tweeted that he hoped to have an opportunity to answer questions and address concerns of those who would pass judgment on his appointment.

“I love my fatherland, and my only loyalty as governor will be to the people of Puerto Rico,” Pierluisi, 60, told reporters after his surprise entrance in the Senate chamber.

The island, which has been in bankruptcy for two years and is still rebuilding after Hurricane Maria, is facing a leadership crisis after Rossello announced July 24 that he would step down following the text scandal and massive street protests. There is no secretary of state since Luis Rivera Marin left due to his involvement in the chats. After that, the governorship would fall to Vazquez, who has said she doesn’t want the job.

Kenneth McClintock, a New Progressive Party politician who previously served as secretary of state and senate president, said it is unlikely Pierluisi can overcome opposition from leaders of the party, which has a majority in both houses of the legislature. Rivera Schatz, who has indicated he plans to run for governor in 2020 and was widely speculated to be jockeying for the nomination, “is a very powerful senate president and he will have the support of most of the party’s senators,” McClintock said. “You could easily have 20 of the 30 senators voting against confirmation.”

Board Connection

Rivera Schatz said on the Senate floor that he intends to serve his full term in the Senate and has never asked to be secretary of state. He slammed Pierluisi’s work as an attorney for O’Neill & Borges LLC, which is the federal board’s on-island law firm.

“The lawyer who has been Puerto Rico’s public enemy No. 1 cannot be the one in charge,” Rivera Schatz said about Pierluisi. The former resident commissioner isn’t the federal board’s lawyer, but his law firm has billed the oversight board for work that Pierluisi has done on the island’s bankruptcy case.

Pierluisi, who is on leave from the law firm as of Tuesday, rejected Rivera Schatz’s claims. He has vowed to answer only to the people of Puerto Rico.

“I advised the board on several local and federal issues,” Pierluisi said in a statement to Bloomberg News. “I have the respect of the members and its staff. That, however, does not present a conflict with my potential position as secretary of state or governor of Puerto Rico, where my role will not be legal but executive. It is also important to note that the oversight board deals with government information, all of which I will have access to as governor. There is no conflict.”

Under Pressure

Rossello had been pressured to name a candidate who can win approval of both protesters and the island’s congress. The appointment of a secretary of state in Puerto Rico requires confirmation by a majority in both the Senate and House.

“He has the qualities to be secretary of state,” Representative Jorge Navarro Suarez, head of the governance commission in the lower house that’s in charge of confirming nominees, said in an interview at the capitol Thursday. “He has contacts in Washington. He knows the board.”

Representative Luis Vega Ramos, a member of the opposition Popular Democratic Party, said he wanted to ask Pierluisi how he could guarantee independence from the federal board when Pierluisi himself had professional ties to the panel just days earlier.

Ramos said Pierluisi’s connections went deeper than the scattered billable hours documented in legal cases. He said Pierluisi was personally present around the time of the last federal Congressional hearings on Puerto Rico, and said he witnessed Pierluisi “opening doors” in Washington for Natalie Jaresko, the board’s executive director, a sign of those close ties.

“The person who took Natalie Jaresko by the hand lawmaker by lawmaker -- I saw this with my own eyes -- was none other than Pedro Pierluisi,” Vega Ramos said. “He was opening doors and making sure that there were meetings.”

Asked about the episode, Pierluisi said he was part of an “outside legal consultant team” that advised the board, but declined to address the specific anecdote. Pierluisi is also the brother-in-law of board Jose Carrion, chairman of the federal board, although Pierluisi and his wife are in the process of a divorce.

The federal board met with Washington lawmakers before hiring O’Neill & Borges, the panel said in a statement.

“We have engaged in meetings with Congressional representatives and their staff in both Washington and San Juan, even before O’Neill & Borges was hired as an outside counsel to the board,” the panel said in a statement. “O’Neill & Borges’ retention by the board occurred in 2016 as part of a request for proposals process, and before Mr. Pierluisi joined the firm in 2017.”

A spokeswoman for O’Neill & Borges declined to comment.

From 2009 to 2017, Pierluisi was Puerto Rico’s non-voting member of the U.S. House, known as resident commissioner, and prior to that, justice secretary under Governor Pedro Rossello, the current governor’s father. He’s a member of the ruling New Progressive Party and in the U.S. House caucused with Democrats. Pierluisi lost to the younger Rossello in the 2016 gubernatorial primary.

As resident commissioner, he was one of the main proponents for the approval of the Puerto Rico Oversight, Management, and Economic Stability Act of 2016, which gave Puerto Rico a path to bankruptcy court but also -- controversially -- installed the board, which has spurred complaints about vestigial colonialism.

Pierluisi’s fate may be sealed on Friday as House Representative Jose “Quiquito” Melendez said his chamber plans to vote before 5 p.m. on Friday.

“If the House rejects him, not just failing to act, game over for Pierluisi,” said William Vazquez-Irizarry, a law professor at the University of Puerto Rico.

(Updates with federal board comment in the 23rd paragraph.)

--With assistance from Amanda Albright.

To contact the reporters on this story: Michelle Kaske in New York at mkaske@bloomberg.net;Michael Deibert in San Juan at mdeibert@bloomberg.net;Jonathan Levin in Miami at jlevin20@bloomberg.net;Ezra Fieser in Bogota at efieser@bloomberg.net

To contact the editors responsible for this story: Elizabeth Campbell at ecampbell14@bloomberg.net, Michael B. Marois

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