Financial Disclosures & Ethics

PROMESA Section 109(a) mandates that all Oversight Board members and staff are subject to the Federal Government’s COI requirements under the United States Code (Section 208 of Title 18). PROMESA Section 109(b) mandates disclosures of Oversight Board members’ and Oversight Board designated executives’ financial interests. The Oversight Board’s disclosure and ethics policies are also governed by its Bylaws, its Code of Conduct, and its Third-Party Anti-Lobbying/Anti-Influence Policy.

In addition, the Oversight Board has policies and processes to check potential conflicts of interest (COI) among Oversight Board members, staff, contractors, and consultants. An independent ethics advisor oversees these policies, and, in certain events, conducts COI-related inquiries and investigations.

The Independent Ethics Advisor

The independent ethics advisor is a role created under the Oversight Board’s Bylaws (Section 11.4). The independent ethics advisor counsels the Oversight Board on compliance with the relevant sections of PROMESA, and the management and review of the ongoing effectiveness of the Oversight Board’s ethics and compliance program generally.

The independent ethics advisor is also responsible for reviewing situations that raise potential COI issues and determining, in consultation with the Oversight Board general counsel, if any Oversight Board member, executive, staff member or third party contractor should be disqualified from involvement in applicable Oversight Board activities.

The independent ethics advisor’s activities include periodic counseling, analysis and recommendations to the Oversight Board and individual Oversight Board members, executives, and staff on ethics matters.

Conflicts of Interest

The Oversight Board’s Contract Review Team, which reviews certain contracts between the Government of the Commonwealth of Puerto Rico and its agencies and instrumentalities (GPR) and third parties, also exercises proactive COI management, in cooperation with the independent ethics advisor, by following COI check procedures. Similar COI check procedures are also performed with respect to indebtedness reviews under Section 207 of PROMESA.

The Code of Conduct mandates Oversight Board members, staff, contractors, and consultants to not only avoid misconduct, but also to take proactive steps to avoid acts or omissions that might create an appearance of misconduct or impropriety and to seek early guidance from the independent ethics advisor when potential COI or ethics concerns arise.

Conflict of Interest Training

The independent ethics advisor provides annual ethics and COl education and training to the Oversight Board members and the staff. Oversight Board members and staff are also encouraged to be proactive in managing actual and potential COl issues.

Human Resources COI Screening

The Oversight Board’s Human Resources function requires that prospective staff provide a COI questionnaire. In addition, the Oversight Board’s Code of Conduct requires staff to disclose any COI issues that may arise on an ongoing basis.

Government of Puerto Rico Contract COI Screening

The Oversight Board’s Contract Review Team, which reviews certain contracts between theGPRand third parties, also exercises proactive COI management, in cooperation with the independent ethics advisor, by following COI check procedures. COI check procedures are also performed with respect to indebtedness reviews under Section 207 of PROMESA.

Third Party Contractor COI Management

The Oversight Board has established a third-party COI management system within its Third Party Contractor Agreement form that requires disclosure by contractors of any COI.

Financial Disclosure of Oversight Board Members, the Ex Officio Member, the Executive Director, and Oversight Board Designated Executives

Financial interest disclosures and reports by Oversight Board members, the ex-officio member, the executive director, and Oversight Board designated executives are defined by the U.S. Code (Section 208 of Title 18), the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA Section 109) and the Oversight Board’s own Bylaws (Section 11.4 (c)).

The Oversight Board requires four distinct financial disclosure forms:

Initial Disclosures: Each Oversight Board member, the ex officio member, the executive director, and Oversight Board designated executives must provide an initial disclosure report of their financial interests upon joining the Oversight Board.

Quarterly Disclosures: Each Oversight Board member, the ex officio member, the executive director, and Oversight Board designated executives must file a Quarterly Transactions Report updating their financial disclosure if they purchased, sold, or exchanged stocks, bonds, commodity futures or other securities if the amount of the transaction exceeds $1,000, subject to certain exceptions. If no transactions occurred in the quarter, the disclosure is filed and signed but remains blank.

Annual Disclosures: Each Oversight Board member, the ex officio member, the executive director, and Oversight Board designated executives must provide an Annual Financial Report disclosing the required financial interests for the past calendar year.

Upon leaving the Oversight Board: Each Oversight Board member and the ex officio member of the Oversight Board must provide final disclosure of their financial interests when they leave the Oversight Board. Each of the executive director and Oversight Board designated executives must provide final disclosure of their financial interests once their employment with the Oversight Board ends.

Ethics Related Documents

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