STUMP » Articles » Puerto Rico Quick-take: You Found How Much Just Lying Around? » 19 December 2017, 12:03

This caught my eye on twitter today:

Puerto Rico Finds $5 Billion More Cash in Latest Disclosurehttps://t.co/MgG86mR3hs

— GuruLeaks (@Guruleaks1) December 18, 2017

My remark:

I've heard of finding loose change in the couch, but this is a bit absurd… https://t.co/072PybvrP0

— Mary Pat Campbell (@meepbobeep) December 19, 2017

So let’s take a look at the article itself:

JUST SOME SPARE BILLIONS, NO BIG DEAL

Puerto Rico Finds $5 Billion More Cash in Latest Disclosure

Puerto Rico said it had $5 billion more in cash than disclosed three weeks ago after scouring more than 800 government bank accounts, underscoring the murky financial reporting that’s complicated the bankrupt island’s effort to emerge from a crippling debt crisis.

The territory on Monday said it had $6.9 billion at the end of November, according to a securities filing that includes several accounts that were left out of the previous disclosure. That new tally, which is up from $1.73 billion reported on Dec. 1, comes just days after a judge ordered the government to turn over more financial data to bondholders who have long complained about a lack of reliable information.

It’s not merely that it’s $5 billion “oh, just here and there”, but that it is several times what they said they had before they found that “spare” money.

What the hell.

Let me see what others have to say about it.

TWITTER RESPONSE

Acknowledgement that Puerto Rico govt has $6.8 billion in cash means that their attorneys, proskauer</a>, have materially misprepresented to Judge Swain what the financial condition of the Commonwealth is. This is an extremely serious matter and the OBoard needs to explain <a href="https://twitter.com/hashtag/muniland?src=hash&amp;ref_src=twsrc%5Etfw">#muniland</a></p>&mdash; Cate Long (cate_long) December 18, 2017

This perfectly articulates the lack of any normal disclosure in Puerto Ricohttps://t.co/zZPzCrvOXu via business</a> <a href="https://twitter.com/hashtag/muniland?src=hash&amp;ref_src=twsrc%5Etfw">#muniland</a></p>&mdash; Kate Smith (byKateSmith) December 19, 2017

Puerto Rico just found $5 billion more in cash after a judge ordered the government to turn over more financial data to bondholders.https://t.co/gyapyYYiNZ pic.twitter.com/VFAcTLoACb

— Brian Chappatta (@BChappatta) December 18, 2017

PUERTO RICO FINDS $5 BILLION MORE CASH IN LATEST ACCOUNT TALLY

oops

— zerohedge (@zerohedge) December 18, 2017

Read our story out now about #PuertoRico's huge cash disclosure. ""If this was a corporation and they reported this number, heads would roll": https://t.co/uYopeG6qNB

— Rebecca Spalding (@rcurtisspalding) December 18, 2017

Although Puerto Rico govt officials (including the governor) asserted to Congress that would have no cash as of Dec 1 they have discovered 800 bank accounts holding $6.8 billion in cash (~$1.7B restricted by bankruptcy litigation) #muniland https://t.co/Zor6EGMzEN pic.twitter.com/Bkf26RJSzR

— Cate Long (@cate_long) December 18, 2017

QUICK TAKE: AUDIT PUERTO RICO NOW

Seriously, this is beyond “heads would roll” at a company. I’ve been part of financial reporting before, and I’ve been in the position where a change of less than $1 million on the last day of close would not be entered, because it wasn’t material.

So I understand that just because a number sounds big, doesn’t mean that it is meaningfully big.

That said, for Puerto Rico, $5 billion is not immaterial.

Looking at the table Cate Long tweeted, I can see that the funds are for a variety of things, and it doesn’t mean that the almost $7 billion total is available for bondholders, necessarily.

But really, this is an absurd amount of money to just “overlook”. Let’s forget about the disaster recovery aspect (I can just imagine the holes money is emptying out into), even if that weren’t going on the books need to be thoroughly audited.

It is difficult to do any kind of fiscal recovery or ordering when the books are a mess. It needs to be organized and audited.