FBI reportedly investigating Whitefish Energy's Puerto Rico power contract

Oliver Milman in New York
Updated

Bureau said to be looking into how the Montana company, which has just two full-time employees, won contract despite never having handled similar project

Cars drive under a partially collapsed utility pole in Puerto Rico. Nearly three quarters of the island is without electricity.
Cars drive under a partially collapsed utility pole in Puerto Rico. Nearly three-quarters of the island is without electricity. Photograph: Alvin Baez/Reuters

The FBI is reportedly investigating the $300m contract awarded seemingly without tender by Puerto Rico’s power utility to Whitefish Energy, a Montana company which had just two full-time employees.

According to the Wall Street Journal, the FBI’s San Juan field office is looking into how Whitefish was awarded the contract to rebuild Puerto Rico’s shattered power infrastructure despite never having handled a similar project in the past. The Guardian has contacted the FBI for confirmation of the investigation.

On Sunday, Ricardo Ramos, executive director of the government-run Puerto Rican Electric Power Authority, said he accepted a request from Governor Ricardo Rosselló to cancel the contract, claiming it had become an “enormous distraction” to the island’s recovery efforts.

There is mounting pressure from both Democrats and Republicans in Congress for an explanation as to how Whitefish landed the contract, with the inspector general of the Department of Homeland Security set to review the matter. About $8m has already been paid to Whitefish, according to Rosselló.

Nearly three-quarters of Puerto Rico is without electricity, more than a month after Hurricane Maria smashed into the island. On 26 September, Whitefish was handed a contract by the power utility to repair the electricity grid. At the time, the company only had two full-time employees.

Whitefish is based in the home town of Ryan Zinke, the secretary of the interior. Zinke has said he was in contact with the company after the contract was awarded, and his son has completed an internship there, but he denied any knowledge of the deal nor having any influence over it. The White House has also denied any impropriety.

A Whitefish Energy pickup truck in Manati, Puerto Rico.
A Whitefish Energy pickup truck in Manatí, Puerto Rico. Photograph: Alvin Baez/Reuters

The Whitefish contract states that Federal Emergency Management Administration (Fema) had approved the terms of the deal – an assertion that the disaster agency said was “inaccurate”. Fema said it was not involved in the selection of Whitefish and that is has “significant concerns” about how it was decided.

According to the terms of the contract, Whitefish would be paid $319 an hour for a journeyman lineman, $286 an hour for a mechanic and $322 an hour for a foreman of a power line crew.

Whitefish has said the contract was obtained properly, with chief executive Andy Techmanski claiming that “there are people out there on a witch-hunt looking for something that does not exist”.

In a further statement posted on Facebook, Whitefish said it managed to obtain 350 workers for the task of restoring Puerto Rico’s power and that it was disappointed by the decision to scrap the contract.

“The decision will only delay what the people of Puerto Rico want and deserve – to have the power restored quickly in the same manner their fellow citizens on the mainland experience after a natural disaster,” the statement read.