The anticorruption laws enacted in Puerto Rico following Hurricane Maria have inadvertently created a lucrative anti-corruption market centered on outsourcing public procurement to private corporations. Despite millions invested in platforms, websites, training, and consulting services to ensure compliance, fraud and corruption have persisted, driven by profiteering, a new study suggests.
Study author Jose Atiles, a sociology professor at the University of Illinois Urbana-Champaign, argues that these flawed anti-corruption policies were a façade to legitimize state-corporate crime. Instead of eradicating corruption, the policies perpetuated a system of wealth extraction benefiting corporations and local elites.
"Under the guise of fighting corruption, the Puerto Rican government has spent over $787 million on public procurement for anti-corruption and fraud prevention since 2018," Atiles said. These policies have created opportunities for government contracting and new corporations to serve these laws, operating as a regime that condones state-corporate crime.
Atiles explores Puerto Rico's history of corruption in a recent paper published in the Journal of White Collar and Corporate Crime. Factors contributing to the anti-corruption market include Puerto Rico's government-corporate relationship, its colonial history, and inequities in federal resource allocation. Economic struggles and a surge in corruption cases since 2006 worsened after Hurricane Maria in 2017. U.S. pressure to fix the economy and address corruption to qualify for disaster relief funding exacerbated the situation.
While Puerto Rico was labeled corrupt, many corruption cases occurred in the federal system, Atiles noted. The Puerto Rico Oversight Management and Stability Act (PROMESA), aimed at helping Puerto Rico manage debt, has limited state resources and increased opportunities for private firms to take over government services.
Austerity measures further opened the door for corruption, constraining government workforce recruitment and leading to outsourcing essential functions. The Anti-Corruption Code for the New Puerto Rico, or ACT 2, enacted in 2018, commodified anti-corruption efforts, creating profit opportunities for marketing companies, corporations, and law firms through digital technologies and surveillance.
Public procurement and government contracting grew, making up over $4.4 billion or 20% of Puerto Rico's budget in 2021. Despite numerous policies, including executive orders and emergency measures, compliance issues limited economic resources for those in need. Corporations and local elites profited, while government communications cultivated a public perception of efficiency and integrity.
ACT 2 authorized a Public Registry of Persons Convicted of Corruption, outsourced to SNAC LLC with 14 contracts worth over $851,700. However, the registry was kept from public access until a 2021 lawsuit made the information available. The management of the registry and access to data depended on a private corporation.
During the COVID-19 pandemic, the Puerto Rico Department of Labor and Human Resources outsourced the development of a website for unemployment assistance applications. Technological issues and lack of staffing at the call center led to an investigation, revealing that the website's inefficiencies facilitated corruption, exposing applicants' personal information.
The study concludes that anti-fraud policies and corporate profiteering have rendered the local state unable to deliver basic services, trapping individuals in a flawed system.
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