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Battle Of The Corruption Allegations

by Lance Oliver

May 26, 2000
Copyright © 2000 THE PUERTO RICO HERALD. All Rights Reserved.

Last year, long before the candidates for this year’s general elections were even chosen, the Popular Democratic Party settled on one of the central themes it planned to pound on during the campaign. They might as well have had a sign pasted up on the wall at Puerta de Tierra headquarters reading: "It’s corruption, stupid."

The unified chorus of attack on the New Progressive Party was more than coincidence. The populares were clearly focusing tightly on a message they expected to have an impact on this year’s vote. They’ve kept the pressure turned on in mostly consistent fashion ever since.

That’s what makes the current controversy over a land deal in Old San Juan so potentially troubling for the PDP. Despite months of "investigation" by NPP legislators, the issue had still not stuck that well until recently. The balance tipped when Comptroller Manuel Díaz Saldaña weighed in with a report that not only criticized the deal but actually put a price tag on what he called a bad decision.

It’s fairly easy to dismiss the objections of legislators such as Melinda Romero, among the NPP’s most partisan and vocal attack experts. But it’s harder to dismiss the criticisms of Díaz Saldaña. Although he comes from the pro-statehood ranks, he has proven to be independent-minded in his role as comptroller, losing some old friends along the way.

The deal at the center of the controversy involves PDP contributor Rubén Vélez and a parking garage that is being built next to the Wyndham Hotel along the waterfront in Old San Juan. Vélez leased the land for 70 years from the city and made a pre-payment of $1.6 million to the city for the first 30 years of the lease.

The objection of Díaz Saldaña and the NPP legislators is the discount rate given to Vélez by the city, presided over, of course, by Mayor Sila Calderón, the PDP’s candidate for governor. Because he was prepaying the rent, he was given a discount of 12 percent compared to what he would have paid in installments over the course of the lease.

Díaz Saldaña said the discount should have been around 7 percent, which is the level of return the city could expect on an investment of the pre-paid money. He also took issue with the way the rent was calculated at the end of each year, instead of at the beginning. All told, he estimated the city lost more than $1 million.

Vélez has argued his case forcefully, saying that the discount rate he received is within the normal range. Calderón has also defended the deal, noting that the city retained the land and got a lump sum up front, which eliminated many of the risks of the project, from the municipality’s standpoint.

The electoral relevance is that the NPP may have found a case it can make stick against Calderón, whose party has been harping on NPP corruption. Pro-statehood mayors from Toa Alta (former mayor in jail) and Cataño (regular brushes with the law) are helpful targets, as was ousted legislator Aníbal Marrero Pérez. The AIDS Institute corruption trial also provided some fodder for accusations, but what the PDP really wants is to be able to damage Carlos Pesquera, the candidate for governor.

To do that they’ve raised questions about contracts signed with the Ports Authority when Pesquera was on that agency’s board and they’ve kept the spotlight on the ongoing grand jury investigation of the Housing Department.

The entire strategy falls apart, however, if the PDP can’t make it look like there’s a fundamental difference between them and the NPP. It does no good to accuse Pesquera of giving juicy Ports contracts to political supporters of his party if Calderón can be credibly accused of doing the same with a major donor to her party.

This entire struggle plays out on two levels. The more tangible level involves whether the lease for a plot of land remains in effect, whether a parking garage gets built, what the city does or does not get paid. Vélez, on this level, has the most to lose, if the contract’s opponents are somehow successful in getting it annulled.

The bigger stakes really involve public perception. Will one party be seen as corrupt and the other relatively clean, or will voters dismiss both equally as engaging in more of the same old business? That’s the question that ultimately matters more, because it will play a significant role in determining who is sworn in as Puerto Rico’s seventh elected governor in January.

Lance Oliver writes The Puerto Rico Report weekly for The Puerto Rico Herald. He can be reached by email at:

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