Puerto Rico's oversight board is asking the U.S. Department of Justice and the Puerto Rico Secretary of Justice to investigate local government employers for failing to transfer payments to employees' defined contribution accounts.
In a letter Wednesday to respective Justice officials, Natalie Jaresko, executive director of the Financial Oversight and Management Board for Puerto Rico, said that not transferring money withheld from employees' paychecks into their retirement accounts "is unconscionable and potentially unlawful."
Puerto Rico Act 106-2017 provides for prison terms and penalties against head of government entities failing to remit the employee contributions, and the conduct may also violate Title 18 of the U.S. Code, board officials said.
On May 2, the oversight board said that 28 public corporations and 66 municipalities have failed to pay $340 million in retirement contributions due since 2017, when Puerto Rico converted to a pay-as-you-go pension system and switched to a defined contribution system for government workers, according to the fiscal agency's latest report.
Of those delinquent payments, 20 municipalities and seven public corporations failed to remit $10 million in employee payroll withholding for their defined contribution accounts, and the rest are past due on their pension payments.
Since then, the Retirement Board of the Government of Puerto Rico reported receiving $5.5 million of the outstanding contributions withheld, but three government entities and 11 municipalities still owe a combined $4.5 million.
Ms. Jaresko said that "inadequate" government efforts to fix the problem prompted the referral for criminal investigation. "We trust that you will treat this matter with the seriousness and urgency that it deserves," she wrote.