- The Washington Times - Tuesday, August 8, 2000

SAN JUAN, Puerto Rico (AP) A spate of scandals rocking Puerto Rico has prompted a U.S. government crackdown and calls for accountability from the U.S. territory, which gets $13 billion a year in federal aid.

The high-profile corruption has hit nearly all levels of Puerto Rican government, stretching from misappropriated AIDS treatment funds to a mayor demanding kickbacks for a cleanup contract.

Previous administrations estimated 10 percent of the government's annual budget now at $20 billion, about half from U.S. funds were misspent or lost to corruption, loose accounting and other causes, according to Puerto Rico's own corruption crusader, Comptroller Manuel Diaz Saldana. Current figures were unavailable.

"I believe that sunshine is the best disinfectant of all and that's why we are demanding answers to the problems we are seeing in Puerto Rico," said Sen. Christopher S. Bond, Missouri Republican.

He is chairman of a Senate committee overseeing the U.S. housing agency, whose inspector general wants to clean up its Puerto Rican counterpart.

In the latest development, Puerto Rico's housing authority, the second-largest in the United States after New York City, was accused of "flagrant fraud, waste and abuse," by Susan Gaffney, inspector general of the Department of Housing and Urban Development.

She urged last month that the authority, with nearly $1 billion in active HUD grants, be placed under judicial receivership.

Puerto Rico's housing authority insists it's improved its administration and Carlos Romero Barcelo, Puerto Rico's lone delegate to Congress, accused Miss Gaffney of "prejudice against the U.S. citizens of Puerto Rico" a charge Miss Gaffney rejected.

Still, the FBI, the U.S. Attorney's Office and Puerto Rican state agencies have found a laundry list of recent problems:

• A dozen prominent citizens were indicted on suspicion of diverting $2.2 million in federal funds meant for patients at the San Juan AIDS Institute to political campaigns including the governor's and for personal use.

• A former mayor of Toa Alta was convicted of demanding $2.5 million in kickbacks for a federally funded cleanup contract after Hurricane Georges in 1998.

• Two ex-directors of a social services agency are on trial on charges of stealing $5.8 million in federal funds for underprivileged children, the homeless and elderly.

• Investigations are targeting the Puerto Rico police department, the ports and municipal government funding authorities, and spending on environmental pollution, highways and the Puerto Rico National Guard.

• Eleven policemen on Vieques Island were fired for corruption and convicted in 1999, with their leader sentenced to 24 years in jail.

Gov. Pedro Rossello has created local anti-corruption agencies and has cracked down on income-tax evasion. Still, investigators confront an entrenched system of back scratching among politicians and their business supporters, a politicized civil service and local tax evasion.

Add Puerto Rico's status as the Caribbean's top movement center for cocaine destined for North America and its recent federal designation as a money laundering hot spot, and the crackdown comes none too soon, says Marlene Hunter, special agent in charge of the FBI's San Juan office.

While white collar crime isn't unusual in U.S. island territories, the stakes are high in Puerto Rico. Half its 4 million people live in poverty, and Standard and Poor's recently warned that the corruption cases could damage the island's credit rating and thwart sorely needed investments.

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