Telephony / April 21, 1997
By Larry Luxner
Four days after the government announced it would put state-owned Puerto Rico Telephone Company up for sale, PRTC President Agustin García suddenly quit his $130,000-a-year job amidst allegations of involvement in one of the biggest tax scandals in island history.
"Slanderous and vicious accusations have been made against my person and my family that affect us directly," he said, adding that the accusations "could undermine trust" in the PRTC privatization process unveiled the week before by Puerto Rico Gov. Pedro Rosselló.
García himself wouldn't speak with reporters, and the PRTC's public relations director who distributed García's statement to the press, Ileana Borges, herself resigned Friday -- as did several other staffers. Nevertheless, Pedro Pou, who replaced Borges on Monday, said "I don't believe any so-called scandal or the resignation of Mr. García will have any effect whatsoever on the sale of the PRTC. The company will be sold."
A replacement for García hasn't been named, though the board of directors of the Telephone Authority -- which oversees PRTC -- named longtime company official Jorge Menéndez executive vice-president of operations and gave him all the powers García had.
García's departure after a 22-year career with PRTC followed reports that it had awarded millions of dollars in contracts to San Juan-based All Systems Electronics. That company's owner, local businessman Eladio López, was arrested and charged earlier this month with 39 counts of tax evation. García cancelled the contracts, but apparently gave the work to another company which was also being investigated for not paying taxes. Just before quitting, García denied press reports that he had given juicy PRTC orders to telephone contractors who contributed generously to Gov. Rosselló's New Progressive Party, which advocates statehood for Puerto Rico.
García, who took over the helm of PRTC in January 1993, was no stranger to controversy. A year and a half into his new job, he was found not guilty of criminal contempt following charges of involvement in the illegal surveillance and preparation of political files on PRTC employees. But in April 1995, García was sued for fraud and conspiracy during an alleged swindle of a local company while he was a private engineer in the late 1980s. Then, last September, the president of the opposition Popular Democratic Party, Héctor Luís Acevedo -- who favors continued Commonwealth status for Puerto Rico -- accused the PRTC of bugging his home phone.
Meanwhile, PRTC's two biggest unions are moving to scuttle the privatization, which analysts say could generate between $2.2 billion and $3.4 billion based on the number of lines in service.
"There is opposition right now, from both unions," spokesman Pou conceded. "It's somthing we're going to have to work with. Once the selling process gets explained more in detail to the employees, they will be more sympathetic to the sale."
Opposition Sen. Antonio Fas Alzamora has already filed legislation to ban the privatization of PRTC, though the measure will probably die, given the Legislature's dominance by lawmakers loyal to the governor and his pro-statehood party. Meanwhile, Victor García San Inocencio, a representative of the Puerto Rican Independence Party, says the resignation of Agustín García (no relation) is the best thing that could have happened.
"I hope that this is the first step in cleaning the house," he quipped, "not selling it."