Caribbean Business - January 28, 2016 by Latin Media House, LLC

W E E K O F J A N U A R Y 2 8 - F E B R U A R Y 2 , 2 0 1 6 | V O L . 2 E D I T I O N 3 | W E E K LY $ 2 . 0 0 | © 2 0 1 6 L AT I N M E D I A H O U S E , L L C | C A R I B B E A N B U S I N E S S . P R

Pension Plans a Ticking Time Bomb

Prepa Restructuring Brigades Back to the Table

Supreme Immigration Decision Impacts 100,000 Dominicans in P.R.

EB-5 Regional Center Stuck in Neutral

CONTRIBUTIONS RUNNING DANGEROUSLY LOW PAGE 6

IRONING OUT ISSUES IN REVITALIZATION ACT PAGE 8

LULAC SUPPORTING OBAMA’S IMMIGRATION POLICY PAGE 19

REPORT INDICATES NINE PROJECTS UNFUNDED PAGE 21

COVER STORY

TOP STORY

Businesses Brace for New Regulatory Hike

Federal Changes to Overtime Rules for White-Collar Workers Slated to Begin This Summer

The Dangers of an Evertec Monopoly

As part of the U.S. Department of Labor’s (DoL) changes in overtime rules, expected to go into eﬀect after July, thousands of Puerto Rico employers will be required to pay overtime for white-collar professionals who are currently exempt. “The department is reviewing all comments received during the public comment period to the Notice of Proposed Rulemaking [NPRM] on overtime as it develops a final rule. The public comment period for the

apply to workers in the commonwealth,” Surbey said in an email to Caribbean Business. With Puerto Rico mired in a nearly-decade-long economic depression and many local businesses under financial strain, the news certainly won’t be welcomed by the island’s employers, in both the private and public sectors. Currently, the threshold for overtime exemption for executive, administrative and professional employees is a gross

Analyzing Puerto Rico’s ATM Network

In the late afternoon of Jan. 9, during the tail-end of the holiday shopping season and the beginning of back-to-school sales for the new semester, most of Puerto Rico’s debit system stopped working. From around 5 p.m. to 7 p.m., people were unable to use their debit cards to take cash out of automatedteller machines (ATMs), while thousands of stores and restaurants couldn’t process debit transactions on their point-ofsale (POS) terminals.

As a result, commercial activity on the island, at least for a couple hours, came to a near-complete halt; this was an unwelcome development considering Puerto Rico’s already weakened economic and fiscal state. It was also an unprecedented failure for the island’s main debit network—called ATH, short for “A Toda Hora” (At Every Time)—and a rare setback for the network’s owner and operator, Evertec. A San Juan-based company

that began as a subsidiary of Popular Inc. in 1988, Evertec has risen to become a leading player among transaction-processing service providers in the Caribbean and Latin America, serving 19 countries in the region. In September 2010, Apollo Management LLC, a private equity investor, acquired a 51% interest in Evertec. The following year, the company expanded its services to the Mexican market. BY DENNIS COSTA PAGES 14-18

U.S. Department of Labor NPRM closed Sept. 4. The department received more than 270,000 timely comments overall,” said Jason Surbey, of the U.S. Labor Department’s Oﬃce of Public Aﬀairs in Washington, D.C. “A final rule is likely to be issued by July 2016, with an effective date sometime after that. And yes, the final rule will

income of $23,660 a year, or $455 a week, according to the Fair Labor Standards Act (FLSA). Low-level workers and other administrative personnel, such as clerks and secretaries, aren’t exempt, meaning businesses must pay overtime to these full-time staﬀ members. BY ROSARIO FAJARDO CONTINUES ON PAGE 4

THURSDAY, JANUARY 28, 2016

Editorial

Contents PICTURE OF THE WEEK PAGE 19

Another Supreme Court Case

By Philipe Schoene Roura EXECUTIVE EDITOR

Evertec Inquiry Poses Important Questions

Advertising ...........................................................................................................46 Advertising Calendar............................................................................................46 Autos ....................................................................................................................43 Banking.......................................................................................................... 10-11 Cars 101 ..............................................................................................................43 Cultural Affairs ....................................................................................................28 Economy ......................................................................................................... 12-13 Editorial .................................................................................................................2 Federal Affairs......................................................................................................41 Front Page ...................................................................................................... 14-18 Government .................................................................................................... 20-22 Law/Courts ...........................................................................................................19 Lead Stories ....................................................................................................... 6-8 Politics ........................................................................................................... 26-27 Poll .......................................................................................................................23 Top Story............................................................................................................ 1, 4

FINANCIAL DATA: Stock Comment ....................................................................................................12 Winners & Losers..................................................................................................12

SPECIAL FEATURES: Car Review ..................................................................................................... 44-45 North America International Auto Show ................................................................42 People to Watch.............................................................................................. 37-40 SME 65 Años .................................................................................................. 29-36 caribbeanbusiness.pr Volume 2, No. 3 • Thursday, January 28, 2016 PO Box 12130, San Juan PR 00914-0130 CARIBBEAN BUSINESS ® (USPS 313150) is published weekly, except the first two weeks of January, by Latin Media House, LLC, 1700 Ave. Fernández Juncos, San Juan, P.R. 00909-2938. Subscription rates: $45 a year + $4.73 state tax +.45 municipality tax = $50.18; $58 for two years + $6.09 state tax +.87 municipality tax = $64.96; $108 a year for foreign + applicable tax and shipping & handling. Customer Service/Subscription telephone: (787)728-8280, toll free 1-844-723-2351. Fax: (787)728-0195. Circulation Department telephone: (787)728-7670. General telephone: (787)728-3000. Fax: (787)268-1626. Periodicals postage paid at San Juan PR 00936-9998. Postmaster: Send address changes to CARIBBEAN BUSINESS, PO Box 12130, San Juan PR 00914-0130, (ISSN 0194-8326). Entire contents: Copyright ©2016 by Latin Media House, LLC

‘Twas three days after Reyes and all through the ATH network, not a creature was stirring, not even a mouse. In fact, it was the late afternoon of Jan. 9—from around 5 p.m. to 7 p.m.—when Puerto Rico’s debit system came to a screeching halt. As a result, consumers were unable to use their debit cards to withdraw cash from automated-teller machines (ATMs) and businesses couldn’t process debit transactions at point-of-sale (POS) terminals. For those two hours, the network’s moniker ATH, short for “A Toda Hora” (At All Hours), rang hollow. During the outage, some 200,000 transactions were aﬀected. José Alameda, one of the economists interviewed by Caribbean Business, made a rough calculation of the possible monetary value of the losses stemming from the service interruption. His reasoning was based on 77,770 POS on the island, according to the Treasury Department, and with each POS averaging $3,162.35 in sales per day (amounting to $316.23 in average sales per hour), the estimated value of the losses for those 200,000 uncompleted transactions over two hours came up to $126.4 million. More than some “end of times” event, the ATH episode raises important questions that need to be answered. Why did it happen? Where are the redundancies to back the system up? Were people’s identities compromised? What is to prevent this from happening again? During a recent press conference, the network’s owner and operator, Evertec, shuﬄed out its top brass to answer pointed questions from the local media. The rabbit pulled from the Top Hat responses—“an anomalous failure” in one of the company’s main servers that in turn caused the massive outage in the ATH network—doesn’t satisfy this newspaper.

If Evertec isn’t a monopoly, where are the other providers when the system goes down? To his credit, Popular Democratic Party (PDP) Sen. Luis Daniel Rivera Filomeno is conducting a Senate probe into the Evertec brouhaha. Among the issues being investigated are the outage event, the rates that Evertec charges clients and whether the company represents a monopoly. Rivera Filomeno told Caribbean Business that “Evertec controls such a huge part of the market that it’s almost impossible for store owners to go to anyone else for their electronic transaction needs, even though there are six more similar companies registered here in Puerto Rico.” Puerto Rico’s consumers deserve answers to important questions. Rivera Filomeno is bound and determined “to have a clear picture, and if we deem that it is necessary to draft a bill that would take care of the problem, then that is what we will do.” Another important question to ask during the inquiry is why hasn’t the central government put Evertec’s long tentacles to good use in automating sales & use tax (IVU by its Spanish acronym) collections at the POS terminals? The technology exists to reroute IVU taxes directly to Treasury’s coffers. With Treasury Secretary Juan Zaragoza fighting mightily to snuff out tax evasion with recent raids on delinquent businesses, this technological upgrade is desperately needed. A Puerto Rico business community that is struggling with a huge tax burden can ill afford to have 200,000 transactions thrown in the trash bin. Nor should it have to shoulder a tax load that could be lightened by retooling technology at the points of sale.

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THURSDAY, JANUARY 28, 2016

Top Story Overtime

Continued from cover

However, the new rule would increase the threshold for exempt professionals to those earning a gross income of $50,440 a year, or $970 a week. This would mean professionals earning between $23,660 and $50,440 annually would receive overtime pay for working more than 40 hours a week. Certain professionals, including doctors, lawyers and teachers, aren’t subject to the salarylevel test, according to the U.S. Labor Department website. The FLSA doesn’t have exemptions for small businesses and nonprofit organizations. In general, though, the proposed rule would apply to those that have an annual gross volume of sales or business of $500,000 or more. ABOUT 171,000 LOCAL WORKERS MAY GET OVERTIME There is no oﬃcial estimate of the number of exempt employees in Puerto Rico, but

Banco Popular’s Progreso Económico (Economic Progress) report for October 2015 estimates that about 171,000 exempt employees out of some 909,000 employees islandwide will be included in the new overtime rules. “The diﬀerence in salary levels between Puerto Rico and the U.S. means that the proposal would impact a much higher percentage of workers and employers in Puerto Rico than in the U.S. In 2014, the average weekly salary of all employees in Puerto Rico represented 53% of that in the U.S.,” the report stated. “Moreover, in that same year, around 92% of all employees in Puerto Rico had weekly salaries of less than the one being proposed ($970) to qualify as exempt employees.” The options facing local businesses aren’t exactly positive, the report indicated. “[In Puerto Rico,] about 70% (120,000 employees) have an income of less than $50,440 a year. Therefore, if the

Businesses in Puerto Rico could be hit hard

“ [T]he options facing local employers would be to increase the salaries of these employees, pay these employees for overtime work or employ fewer workers.” —Banco Popular’s Progreso Económico October 2015 report

proposal is approved, the options facing local employers would be to increase the salaries of these employees, pay these employees for overtime work or employ fewer workers.”

Among the individuals and organizations that have sent comments to the DoL is the Puerto Rico Manufacturers Association (PRMA), which argued in a Sept. 3, 2015 missive that the new

overtime rules would cause a “debacle” on the island. “Although the PRMA generally supports any eﬀorts to modernize FLSA regulations, a vast majority of our members have expressed their concern about the impact that these proposed changes would have on their operations. Our comments are focused on a reconsideration of the proposed changes that can redefine who is eligible for overtime pay as well as impose an automatic adjustment of the minimum salary level on an annual basis and a request to grant Puerto Rico a specific exemption from the application of this proposed rule,” the organization said. “Raising the salary threshold across the board, without consideration to employers’ circumstances, would create a debacle on the island. Most of our members would have to take drastic measures to absorb the costs of implementing the proposed regulations. In the end, these remedial actions

would, more likely than not, have a negative impact on the employees’ compensation, flexibility, morale, opportunities for development and career advancement,” the PRMA warned. The initiative is a directive from President Barack Obama, who has noted that the current overtime salary threshold of $23,660 a year is below the poverty level for a family of four. “Workers above this level may be denied overtime even if they spend only a small share of their time on professional, executive or administrative activities. For example, a convenience-store manager, fast-food assistant manager or oﬃce worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay,” the White House stated. “For some of these employees, not receiving overtime pay means they aren’t even receiving the minimum wage when all of their hours of overtime are taken into account.” 䡲

THURSDAY, JANUARY 28, 2016

Lead

Materially higher additional contributions expected to ensure systems’ solvency

Unfunded Pension Funds Ticking Time Bombs Lower Gov’t Funding Hinders Stability of P.R.’s Three Main Retirement Systems BY LUIS J. VALENTÍN l.valentin@cb.pr

In 2013, the Alejandro García Padilla administration, which had just entered oﬃce, enacted legislation to reform Puerto Rico’s ailing retirement systems, as their assets were quickly vanishing and pensioners were facing the risk of not receiving their benefits. The pension reform sought to ensure solvency. Three years later, red flags are continuing to linger, as the three main pension systems—commonwealth employees, teachers and the judiciary—are still severely underfunded and projected to completely deplete their assets in the next few

years, according to valuations conducted by Milliman, the government’s independent actuaries. To date, the administration has met its shortterm pension obligations, including debt service on its roughly $3 billion in pension bonds, which are backed by employer contributions. Moreover, the government will pay about $580 million in payments to pensioners throughout the rest of the current fiscal year, which ends June 30, although the commonwealth is using funds that were already advanced by the retirement systems. Still, the government has been unable to meet funding requirements as provided under the 2013 reform, given a severe cash

crunch that oﬃcials say still threatens essential services to residents and has already taken its toll on taxpayers, suppliers and certain bondholders. “Each dollar you don’t contribute today, we would have to do so tomorrow,” Oﬃce of Management & Budget (OMB) Director Luis Cruz recently told reporters, after explaining the administration’s decision to further reduce contributions to the systems during fiscal 2016. A share of the commonwealth’s general-fund budget goes to cover costs associated with Puerto Rico’s pension systems, which are mainly funded by employer contributions (central government, public corporations and

municipalities) and employees, as well as investment income from the systems’ assets. Together, these have roughly $43 billion in net pension liabilities, or more than 60% of the island’s gross national product in fiscal 2014—on top of the island’s $70 billion debt. KICKING THE FIX DOWN THE ROAD? The sweeping pension reform reduced benefits, increased employee contributions and replaced defined benefits for a defined-contribution system. It also established an “additional uniform contribution” (AUC) to be made by the government, in a bid to stabilize the system’s assets. While it was already anticipated that expenses, which include debt service, would continue to exceed money entering into the systems, meeting the additional contribution in full is key to guaranteeing the government’s ability

to make benefit payments as they come due without first depleting the systems’ gross assets, according to the government’s most recent financial report. But as cash flow and other fiscal woes have moved into higher gear since the pension reform was enacted, the government has failed to make the required full contributions to the system. Generalfund revenue shortfalls have prompted the commonwealth government to place its contributions to the retirement systems in third-priority category, as provided under the Puerto Rico Constitution, whenever available resources haven’t been sufficient to cover budgetary appropriations. “This contribution [the AUC], due to the fiscal situation, hasn’t been done yet,” Cruz acknowledged a few weeks ago, when announcing a downward revision to the commonwealth’s current fiscal

year budget, which went from $9.8 billion to $9.3 billion. During this fiscal year, only $61 million—out of a required $257 million— had been allocated for the additional contributions. The allocation now decreases to $42 million following the García Padilla administration’s recent announcement of new spending cuts that include a $19 million reduction to the AUC this fiscal year. In fact, the government’s AUC requirements have hardly been met at all since 2013, and the practice of selling assets to cover payment of current benefits continues. CATCHING UP When asked how the latest adjustments would aﬀect the island’s pensioners, the OMB chief said: “Immediately, it has no eﬀect, because government contributions are still being made.” 䡲 —For the rest of this story, please access cb.pr.

THURSDAY, JANUARY 28, 2016

Tells U.S. Supreme Court to declare Puerto Rico an incorporated territory and apply Chapter 9

Lead

Pro-Statehood Lawyer: Excluding Puerto Rico From Bankruptcy Protection Violates Equal Protection Clause BY EVA LLORÉNS VÉLEZ

Pro-statehood lawyer Gregorio Igartúa urged the U.S. Supreme Court to rule that Puerto Rico is an “incorporated territory” of the U.S. to stop the discriminatory treatment against the island and rule the applicability of Chapter 9 of the U.S. Bankruptcy Code to Puerto Rico. Igartúa said that keeping Puerto Rico out of the bankruptcy code protections is unconstitutional because it violates the Equal Protection Clause of the U.S. Constitution. “Where is the discriminatory treatment toward Puerto Rico as if it is a non-incorporated territory? It consists in denying an alternative provided to all states for bankruptcy proceedings. Puerto Rico has been left defenseless against its creditors, like no other U.S. jurisdiction.

The Appeals Court proposal that Puerto Rico can recur to Congress for assistance is an exercise in futility,” he said. He made his remarks in a friend of the court brief, or amicus curiae, in the case before the U.S. Supreme Court that will review the constitutionality of the so-called local bankruptcy law, known as the Public Corporation Debt Enforcement & Recovery Act. The top court of the land will answer the question on whether Chapter 9 of the U.S. Bankruptcy Code, which doesn’t apply to Puerto Rico, nonetheless preempts the local statute creating a mechanism for public utilities to restructure their debts. Igartúa urged the top court to revoke the Insular Cases, a series of opinions by the U.S. Supreme Court from the early 20th century about the status of U.S.

territories acquired after the Spanish–American War, that declared Puerto Rico an “unincorporated territory.” Under U.S. law, an unincorporated territory is controlled by the U.S. “where fundamental rights apply as a matter of law, but other constitutional rights aren’t available.” “In consequence, the opinion of the Appeals

Court should be revoked,” he said in the brief in the Puerto Rico vs. Franklin California Tax Free Trust, slated to be heard in April. Igartúa noted that “the economic crisis of Puerto Rico is too vital an important issue for this Honorable Court to allow this Amicus to go unnoticed and/or unanswered.” Although the Bankruptcy Code excludes Puerto Rico from the safeguards of Chapter 9, the First Circuit Court of Appeals in Boston found that the Recovery Act, enacted to fill this void, was nonetheless preempted by the Bankruptcy Code. The First Circuit decision left Puerto Rico without either federal

“Moreover, the Appeals Court, by denying the applicability of Chapter 9 of the Bankruptcy Code to Puerto Rico, has denied the equal protection of the laws to the loyal American citizens of Puerto Rico.” —Gregorio Igartúa

or territorial debt relief to face its fiscal problems. Igartúa urged the top court to examine First Circuit Court of Appeals Judge Juan Torruella’s concurrence in the decision. Torruella argued that the 1984 amendments excluding Puerto Rico from even treatment under the Bankruptcy Code don’t meet rational scrutiny under the Equal Protection Clause. He urged the top court to evaluate the determination based on the constitutional relationship of Puerto Rico with the U.S., based “on what we are, 4th, 5th, and 6th generation American citizens by birth” and not on what we can hypothetically be. “This Brief is submitted in opposition to the nonincorporation statement by the Appeals Court in its opinion to propose respectfully to this Honorable Court that it clarify the legal status of Puerto Rico as that of one gradually incorporated by Congress since 1898, and in support of the fact that in the year 2016, Puerto Rico is a de facto incorporated territory in transit to statehood,” he said.

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Igartúa blasted the Insular Cases, contending that Puerto Rico has been slowly incorporated into the U.S., which granted Puerto Ricans citizenship and other rights to elect their governor and adopt a constitution, and that its relationship is closer to a state. He also said that it is incorrect, as the Insular Cases do, to say that residents don’t pay federal taxes (Puerto Ricans pay $3 billion per year in taxes from diﬀerent sources). He noted that U.S. agencies treat Puerto Rico as a state and local residents are allowed to vote in some federal elections. Although other prostatehooders argued that the current commonwealth status is a territory, Igartúa dismissed contentions that Puerto Rico is a mere territory. He used remarks made in 1952 by members of Congress to back up his claim. “Of particular interest: House Majority Leader John McCormick in approving the P.R. Constitution stated: it is a new experiment, turning away from territoriality is between the territorial status and statehood,” Igartúa said. 䡲

THURSDAY, JANUARY 28, 2016 Prepa hopeful Ad Hoc bondholders will rejoin forbearance agreement seeking Feb. 12 deadline for passage of Revitalization Act

Lead Prepa’s Restructuring Brigades Back to the Drawing Board CRO Donahue Seeks to Bring Ad Hoc Back Into the Fold BY PHILIPE SCHOENE ROURA & EVA LLORÉNS VÉLEZ p.schoene@cb.pr e.llorens@cb.pr

The Puerto Rico Electric Power Authority’s (Prepa) blown deadline on a Restructuring Support Agreement (RSA), which terminated at midnight Jan. 22 when the Puerto Rico Legislature failed to pass the Revitalization Act, has forced the bankrupt utility to go back to the drawing board to refocus its blueprint—stepby-step. The first priority called for obtaining goodwill from fuel-line lenders to provide an extension. In an interview Sunday with Caribbean Business, Prepa chief restructuring oﬃcer (CRO), Lisa Donahue, said the utility’s local fuel-line lending banks, Scotia group and the Government Development Bank (GDB), have provided the utility with an extension of their forbearance

agreement until Feb. 12, adding that Prepa continues working to bring in all its creditor groups. Obtaining an extension from Scotia group and the GDB is important because of the seniority of that $550 million debt, which was due in July 2014. “It was important that they were fine absent the extension of the Restructuring Support Agreement and not intending to move against Prepa. I am glad to say they are supportive given the complexity of the legislation,” Donahue said Sunday. Prepa is also trying to bring Solus Alternative Asset Management into the deal, which took on a $146 million line of credit that Citi reportedly had sold. “Solus has taken a bit longer because its internal process is a bit diﬀerent. I feel good about discussions with them; it is just matter of time,” Donahue told Caribbean Business.

Now that the lenders have given Prepa until Feb. 12 to get the Revitalization Act passed, the utility’s restructuring brigades have turned their attention to sticking points in the legislation, foremost among which is the rate restructuring.

a rate hike as a condition to making the $115 million relending to bolster the utility’s liquidity. Debtwire Municipals filed a report Friday indicating that a two-cent per kilowatthour surcharge was being sought. Prepa wanted the deadline for the passage of the Revitalization Act pushed out to Feb. 12 because consensus was still lacking on several points. Donahue told Caribbean Business that the parties are aligned on the im-

“The commonality with all stakeholders—and that includes the creditors, the legislators, the people of Puerto Rico, the advisers, Prepa—is that we want a transformed Prepa.” — Lisa Donahue, chief restructuring oﬃcer for the Puerto Rico Electric Power Authority Caribbean Business reported Friday that the Ad Hoc group of creditors added a new requirement to have the Puerto Rico Energy Commission pass

portance of continuing to seek enactment of the Revitalization Act over the next three weeks. The news means Puerto Rico may not have to worry

about outages caused by a lack of fuel for the island’s powerplants. Prepa says it remains focused on supplying its residential and business customers with reliable power, while continuing its discussions with key stakeholders. Untangling the knots in the legislative realm will take intense dialogue to achieve consensus. Sen. Ramón Luis Nieves (Popular Democratic Party [PDP]-San Juan), chairman of the Senate Energy Aﬀairs & Water Resources Committee, wasn’t clear about the delay in passing the bill other than to say that lawmakers were still working on the final language of the Prepa Revitalization Act to ensure it reflects what everyone wants and is also good for clients. He said he didn’t know when the bill will be finally passed. The approval of the bill is necessary to complete the restructuring accord with bondholders, which granted Prepa more than 16 forbearance-agreement extensions during negotiations that lasted more than a year and a half. Lawmakers don’t want the Energy Commission,

the entity in charge of approving a rate structure, to lose any of its powers to make final decisions regarding rate hikes even though some bondholders are now insisting on an immediate rate hike to guarantee a $115 million loan, Caribbean Business learned. Under the measure, which seeks to implement the RSA between the utility and its creditors, the proposed Revitalization Corp. isn’t allowed to petition for bankruptcy but Nieves believes that situation should change in the event that this option were available in the future. The U.S. Supreme Court agreed to hear in April the commonwealth’s appeal that seeks to validate a local bankruptcy law for public corporations that was declared unconstitutional. Through the restructuring agreement, the utility’s obligations would be cut by more than $600 million, with a large share of investors taking losses of about 15% by exchanging their bonds for the new securities. There is also five-year liquidity relief of debt-service obligations of nearly $800 million. 䡲

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THURSDAY, JANUARY 28, 2016 On positive note, Oriental, Scotia and GDB agree to extend forbearance agreement for fuel

Banking/Finance Collapse of Prepa Restructuring Agreement a Negative for Puerto Rico Banks KBW: Creditors Could Request a Receiver if Prepa Defaults BY JOSÉ L. CARMONA j.carmona@cb.pr

With the Restructuring Support Agreement (RSA) between the Puerto Rico Electric Power Authority (Prepa) and several groups of creditors (including Puerto Rico banks, the monoline bond insurers and the Ad Hoc Group) falling through last Friday, the news wasn’t a good one for financial institutions with Prepa exposure such as Popular, First BanCorp (FirstBank) and OFG Bancorp (Oriental). The deadline included in the RSA for passage of the Revitalization Act was Jan. 22, but the Puerto Rico Legislature missed the deadline, as some lawmakers have called for amendments to the bill. The creditor group had agreed to lend Prepa $115 million if the Legislature passed the measure to restructure the ailing public corporation. At the close of trading Jan. 22, shares of Popular, First BanCorp and OFG Bancorp had lost 17.4%, 29.2% and 24.8%, respectively, since the start of the year. On Jan. 25, First BanCorp established a new 52-week low of $2.13 during intraday trading, upon falling another 6%. ONE DEAL COLLAPSES, ANOTHER EXTENDED On Jan. 24, Prepa

announced that several other creditors, including fuel-line lenders Oriental, Scotiabank and the Government Development Bank (GDB), had agreed to extend their forbearance agreements until Feb. 12. Under the RSA, Oriental’s loan to Prepa would be extended for six years at a reduced interest rate, with no loss of principal to Oriental. Keefe, Bruyette & Woods (KBW) Financial Analyst Bose George noted, while the breakdown in the negotiations is a clear negative, the preliminary agreement highlighted there is a way to restructure Prepa that involves a reasonable creditor haircut and rate increase assumptions. “We think [the preliminary agreement] sets a good precedent for potential future restructuring discussions,” George said in KBW’s latest equity research. Pointing out that bank stocks involved in the fuel line could be weak on the news of the RSA’s collapse, George said there is headline risk to the banks, although their exposures are either minor or have large reserves booked. As of the third quarter of 2015, George said Popular, First BanCorp and OFG Bancorp have classified their Prepa exposures as nonaccrual loans and have recorded reserves of $30

million, $11 million and $24 million, respectively. Bank of Nova Scotia (Scotiabank) has a $200 million exposure as the lead bank in the Prepa syndicate, the KBW financial analyst noted. FUTURE CREDITOR ACTIONS While it is unclear what steps creditors may take, George said actions they could pursue include requesting a receiver be

appointed if Prepa defaults. If default occurs (or has occurred), any bondholder can petition the courts to appoint a receiver, he said. “If the bondholder holds greater than 25% of outstanding principal, the court must appoint a receiver, who will then take over the management of Prepa from its existing managers,” George warned. However, several other scenarios could play out. These include resuming restructuring negotiations or a possible restructuring under Chapter 9 of the U.S. Bankruptcy Code, if that is provided by Congress. “The now-expired preliminary agreement provides a solid oﬀ-the-shelf framework,” George said. 䡲

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THURSDAY, JANUARY 28, 2016

Banking/Finance

Encourages creation of ﬁnancial education videos from a fun and dynamic perspective

Financial Awareness Video Contest Winners Recognized Initiative Has Become Popular Among Puerto Rico’s College Students BY JOSÉ L. CARMONA j.carmona@cb.pr

The Puerto Rico Bankers Association (PRBA) and the Federal Reserve Bank of New York (FRBNY) have announced this year’s winners of the Financial Awareness Video Contest, now in its seventh edition. The event took place last week at the Sila M. Calderón Foundation’s Center for Puerto Rico, in the San Juan sector of Río Piedras. A total of 99 students from 14 higher education institutions islandwide took part in this year’s contest. With commercial credit to start a business as the main topic, the

participating students developed 29 videos of 30 seconds each. “We thank the college students who participated in the seventh edition of the Financial Awareness Video Contest, which allowed students to demonstrate their talent while contributing to the association’s educational mission,” said Zoimé Álvarez Rubio, PRBA executive vice president. The winning video was “No abandones tus ideas” (Don’t abandon your ideas), created by Brandon Cruz González, Wensi Pierre Natera and Gabriel S. Rivera Vázquez of the University of Puerto Rico’s Río Piedras campus. Second place went to

“Imagina tus Doggy Burgers” (Imagine your Doggy Burgers), developed by José Ducos García, Jann Jerez Rivera and Milton Vélez, of Universidad del Sagrado Corazón. The third place winner was “Tu banco el crédito te dará” (Your bank will give you credit), created by Juan Tomás López, Juan Antonio Rivera and Yeselika Mari Rivera of the Inter American University’s Aguadilla campus. The People’s Choice Award went to “Manifiesta el Empresario que Hay en Ti” (Manifest the entrepreneur within you) created by students Dayanne Meléndez Rosario, Nashmia M. Samrah Miranda and Raúl A.

First place winners of this year’s Financial Awareness Video Contest are flanked by Javier Silva, FRBNY community aﬀairs oﬃcial, and Zoimé Álvarez Rubio, PRBA executive vice president.

Samrah Miranda, of the University of Puerto Rico’s Bayamón campus. First-place winners received $700 each plus round-trip tickets for a three-day, two-night stay in New York City. Second place winners received $700 each, while third-place winners got

$500 each. Winners of the People’s Choice Award will enjoy a dinner with the contest’s sponsors. “The Federal Reserve Bank of New York is a proud co-sponsor of the Financial Awareness Video contest. The winning videos show the work of talented local college

students who inspire young people to become entrepreneurs and establish their own businesses,” said Javier Silva, FRBNY community aﬀairs oﬃcial. This year’s participating and winning videos can be seen at the YouTube webpage. 䡲

THURSDAY, JANUARY 28, 2016

WINNERS & LOSERS WEEKLY PERFORMANCE OF PUERTO RICO STOCKS

Sin Comillas is a Spanish-language digital media website that specializes in business news in such areas as economics, banking, planning and tourism. Sin Comillas was founded in 2010 by economist and journalist Luisa García Pelatti.

WINNERS FOR THE WEEK 52-wk

52-wk

PRICE

SYMBOL

LOW

HIGH

1/15

1/22

CHANGE

Triple-S Management Corp.

GTS

17.34

27.07

21.59

22.36

0.77

Evertec Inc.

EVTC

13.80

23.12

14.56

14.65

0.09

STOCK

People Don’t Respect the Treasury BY LUISA GARCÍA PELATTI SIN COMILLAS

LOSERS FOR THE WEEK 52-wk

52-wk

PRICE

SYMBOL

LOW

HIGH

1/15

1/22

CHANGE

Popular Inc.

BPOP

22.40

35.83

24.14

23.41

-0.73

OFG Bancorp

OFG

5.07

17.83

6.01

5.50

-0.51

First BanCorp

FBP

2.13

6.76

2.56

2.30

-0.26

STOCK

Weekly Comment on Puerto Rico Stocks Buoyed by higher oil prices, Wall Street finished a very volatile week last Friday with a 2% upswing that marked its first positive fiveday period of 2016. Investors’ optimism was pumped even higher on news U.S. home resales rebounded strongly in December from a 19-month low and prices surged—hinting the stateside housing market recovery remained intact despite signs of a slowdown in economic growth in recent months. The National Association of Realtors said last Friday that existing home sales jumped a record 14.7% to an annual rate of 5.46 million units, after falling with the introduction of new mortgage-disclosure rules, which caused delays in the closing of contracts in November. Crude prices, recently under pressure from a global glut, recovered 9% as harsh winter weather from a big cold snap boosted demand for heating oil. All 10 major Standard & Poor’s (S&P) sectors closed higher and in positive territory, led by a 3.5% jump in the S&P energy sector. For the week, the Dow Jones Industrial Average jumped 105.29, or 0.65%, to 16,093.37. The S&P 500 rose 26.6, or 1.39%, to 1,906.89, while the Nasdaq climbed 102.76, or 2.24%, to 4,591.18. Despite last Friday’s stock market rally, the Government Development Bank’s Puerto Rico Stock Index (PRSI) fell for the third week in a row, with three of its five components in the red, dragged down by the island’s fiscal woes. For the week, the PRSI lost 37.73, or 2.53%, to close at 1,452.89. Topping last week’s list of gainers was Triple-S Management Corp., which rose 77 cents, or 3.57%, to close at $22.36. It was followed by Evertec Inc., which inched up 9 cents, or 0.62%, to close at $14.65. Last week’s top nongainer was First BanCorp, which erased 26 cents, or 10.16%, to close at $2.30. It was followed by OFG Bancorp, which edged down 51 cents, or 8.49%, to close at $5.50. Shares of Popular Inc. fell 73 cents, or 3.02%, to close at $23.41. BY JOSÉ L. CARMONA SENIOR REPORTER, BANKING/FINANCE CARIBBEAN BUSINESS

Treasury Secretary Juan Zaragoza, who was the keynote speaker during a tax forum sponsored by the Puerto Rico Society of Certified Public Accountants, announced the privatization of payment plans, the elimination of tax prepayments and payment plans for sales & use tax (IVU by its Spanish acronym) debts and limitations on closing agreements. He also reiterated he will continue seizing the commercial properties of those who don’t pay IVU and announced Treasury will start publishing the names of the biggest tax debtors, whether businesses or individuals, within the next 60 days. “People don’t respect the Treasury,” Zaragoza said, who wants the agency to be like the U.S. Internal Revenue Service (IRS) in that “people think twice before not paying the IRS.” Several measures have been put in place to increase tax collections, an area with no information available regarding its level of efficiency. As part of this effort, the Treasury has hired three economists to design a “Collection Index.” One of the measures to increase collections is the anti-tax evasion operations whereby the commercial properties of business owners not paying IVU are seized. So far, 35 businesses have been raided, of which 28 have filed for bankruptcy and are continuing to operate. The outcome of these raids, which are “meticulously planned to have a media effect,” is that the number of taxpayers calling Treasury to pay their debts so their businesses aren’t seized, has tripled. “We are trying to make people understand there is a law and it is applied uniformly and consistently,” Zaragoza said. “Closing agreements”—special deals negotiated with taxpayers about discounts on their legal tax liabilities in exchange for taxpayers paying a portion of their tax liabilities—were also amended. As a result, closing agreements have been reduced by 90%. The law was also amended to eliminate tax payment advances, known as prepayments. “This distorts data and doesn’t allow for projections,” Zaragoza explained.

The secretary also announced the privatization of payment plans, a service he ironically referred to as “the jewel in the crown.” For example, a taxpayer with a $1 million debt was able to get a payment plan of $250 a month with a $900,000 balloon payment. Eventually, this taxpayer could get another payment plan for the $900,000 amount. This taxpayer could default on his payment plan for several months and nothing happened because Treasury had no record of the payment plans. The agency doesn’t know how many payment plans there are, and which ones are late or in default, so it is highly probable some debt may already have expired, meaning cancelled. Payment plans will no longer be possible if taxpayers owe IVU payments or the employer’s withholdings. Treasury has some $4 billion in tax receivables, but, according to Zaragoza, not all of it can be collected because “the records aren’t clean.” The secretary thinks that if $1.5 billion could be collected in a 10-year period “it would be a step forward.” Debtors will also get their tax exemption decrees cancelled. “For decades, Puerto Rico has made a fool of itself when, after detecting a tax evader, we granted him a tax exemption decree the very same week,” Zaragoza said. Some of the business owners whose properties were seized a few weeks ago have tax exemption decrees. So far, three cases have been referred for the cancellation of these decrees. “I suppose you already know this ship is going down and we are all responsible for that. I’m asking for solidarity. Complacency and laxity has lasted for too long. Having a uniform tax system that applies equally to everyone is a form of doing justice. I ask for your support…to understand what we are trying to do,” Zaragoza said. “If we don’t fix Treasury, Puerto Rico won’t be able to go on with its economic recovery,” he added, while admitting the agency itself is responsible for the “inertia, politicking, cronyism and the lack administrative ability” that led to the situation it now faces.

—Editor Rosario Fajardo contributed to this story.

Thursday, JANUARY 28, 2016

Treasury Department Raises $9.2 Million Less in December, but Exceeds Expectations BY LUISA GARCÍA PELATTI SIN COMILLAS

Net income to Puerto Rico’s general fund in December 2015 totaled $844.8 million, or $9.2 million less than the same month last year, representing a decrease of 1.1%. However, revenues were $2.5 million higher than expectations. In 2015, about $9.101 billion was raised for the Treasury Department coffers, an increase of $267.3 million, or 3% more, than in 2014. In the first half of fiscal 2015-2016, nearly $3.9 billion was raised, some $140.3 million more than the same period for the previous year, but $21.5 million less than the amount estimated in the original budget. Treasury receives about 60% of the original revenue estimate in the second semester of the fiscal year. Treasury revised the original revenue estimate to $9.292 billion, a reduction of $508 million.

The effect of this reduction will be noticed in the revenue of the second semester of the fiscal year, particularly in the last trimester, according to Treasury. The revision is due to the fact the revenues have fallen short of what had been expected in three of the six months that have passed in the fiscal year. The increase in the sales & use tax (IVU by its Spanish acronym), which in July went from 7% to 11.5%, helped raise $1.1 billion, or $420.8 million more, for the July to December 2015 period. IVU revenues in December increased to $215.4 million, some $93.9 million more than in December of last year. “However, the monetary value of the amount subject to tax for both periods was similar. This means that even with a higher rate, the economic value of consumption remained at the same level.

The behavior in consumption may be explained by various factors; first in economic terms with the reduction in cost related to fuels derived from oil, which increase the purchasing power of consumers. On the other hand, results may be attributed to the fiscalizing efforts related to the recent interventions with businesses that didn’t remit the IVU and the expansion of the tax base,” said Treasury Secretary Juan Zaragoza, while highlighting that these new efforts and strategies will continue. Income taxes from individuals once again fell, for the fifth month in a row, in December by $5.4 million, or a 3% drop. In the first six months of the fiscal year, income taxes from individuals have fallen 13.2%, or $138.2 million less. In December, corporations paid $231.2 million in taxes, which is 31.3%

less than last year. This drop is attributed to the fact that last year’s numbers included the last estimated payment of the patente nacional, or gross receipts tax, which has now been eliminated. Between July and December, corporations paid $110.5 million less in taxes to Treasury. Meanwhile, in the case of the amount retained to nonresidents, which include the payment on royalties for the use of patents in the manufacturing process, $141.2 million were received, or $62.8 million more than the previous year. This

increase is mainly due to a special payment by corporations, related to an auditing adjustment by the U.S. Internal Revenue Service. In the first six months of the fiscal year, Treasury had received $12.8 million more of these taxes. Some $78 million was received from taxes on foreign corporations (Act 154), which represents a decrease of 21.9%, or $21.9 million less. Revenues from this tax have decreased throughout four of the past six months. The general fund has received $848.7 million from this tax in six

months, which is $9.1 million below the amount received for the same period last year. Meanwhile, excise taxes on motor vehicles increased by 15.4%, or some $400,000 more. This is the second increase since the beginning of 2014. In the first six months of this fiscal year, revenues from the excise tax on motor vehicles have experienced a cumulative drop of $27.4 million, or a decrease of 19.6%. Treasury said this decrease is due to various companies that have claimed about $32 million in tax credits for the period. n

THURSDAY, JANUARY 28, 2016 FRONT PAGE

Debit Network Outage Brings Monopoly Questions Into Play

Evertec has fallen under serious scrutiny after its Jan. 9 network outage, with public oﬃcials questioning the company’s alleged monopolistic practices. BY DENNIS COSTA d.costa@cb.pr

n the late afternoon of Jan. 9, during the tail-end of the holiday shopping season and

the beginning of backto-school sales for the new semester, most of Puerto Rico’s debit system stopped working. From around 5 p.m. to 7 p.m., people were unable to use their debit cards to take

cash out of automatedteller machines (ATMs), while thousands of stores and restaurants couldn’t process debit transactions on their point-of-sale (POS) terminals. As a result, commercial

activity on the island, at least for a couple hours, came to a near-complete halt; this was an unwelcome development considering Puerto Rico’s already weakened economic and fiscal state. It was also

an unprecedented failure for the island’s main debit network—called ATH, short for “A Toda Hora” (At Every Time)—and a rare setback for the network’s owner and operator, Evertec.

A San Juan-based company that began as a subsidiary of Popular Inc. in 1988, Evertec has risen to become a leading player among transactionContinues on next page

FRONT PAGE THURSDAY, JANUARY 28, 2016

Continues from previous page

“Evertec controls such a huge part of the market that it’s almost impossible for store owners to go anywhere else for their electronic transaction needs.” —PDP Sen. Luis D. Rivera Filomeno

Continues from previous page

processing service providers in the Caribbean and Latin America, serving 19 countries in the region. In September 2010, Apollo Management LLC,

a private equity investor, acquired a 51% interest in Evertec. The following year, the company expanded its services to the Mexican market, and in 2013, Evertec became the first technology company

in Puerto Rico to be listed on the New York Stock Exchange (NYSE), under the ticker symbol EVTC. By that time, it had already expanded its footprint in various markets in Central America, as well as Aruba, Curaçao and Colombia, to name a few. “The company manages a system of electronic payment networks that process more than 2.1 billion transactions annually, and oﬀers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing,” reads a blurb on the company’s website. However, in the space of just two hours, the firm’s once-sterling reputation has been tarnished. Following the network blackout on Jan. 9, Evertec has come under fire, with public oﬃcials and private sector leaders not only questioning the firm’s security measures and network capacity, but also its business practices, partly due to the ubiquitous nature of its ATH debit network in Puerto Rico. Monopoly allegations have even been bandied about the company amid an ongoing P.R. Senate investigation. In a development that

proved perhaps more startling than the network outage itself, Evertec kept relatively mum about the incident for several days afterwards, which fueled further speculation. “It’s very strange that they would choose to remain silent this way,” said a person close to Evertec who spoke on condition of anonymity. “On previous occasions, minor malfunctions were usually explained away and nothing more came of it. This time it’s diﬀerent, both in the scale of what happened and the way they have handled it.” Once it re-established the ATH system and for days after, the company only made the following statement through social media: “In Evertec, we work hard to maintain a quality service and we apologize for any inconvenience that this situation may have caused.” No information was given about the cause of the outage. About a week later, the company published a similarly short message on its Facebook page: “In Evertec, the security of our information is our priority. That is why we comply with PCI [Payment Card Industry] standards

to protect our clients’ data, providing the security they deserve.” Calls by various news outlets, including Caribbean Business, for the company to provide additional details went unanswered until recently.

COMMERCE INTERRUPTED About two weeks after the fact, Evertec representatives sat down with Caribbean Business and other media outlets, during which Carlos Ramírez, Evertec’s executive vice president of business solutions, estimated that about 200,000 electronic transactions were aﬀected during the two-hour service interruption. Regarding the potential eﬀects the interruption may have caused in the Puerto Rico economy, local economists interviewed by Caribbean Business concurred that the incident’s economic impact was marginal at best. “It’s hard to estimate the economic impact because many of the missed sales transactions using debit cards during those two hours could have been completed with cash or checks,” said Heidie Calero, president of H. Calero Consulting Group.

José Joaquín Villamil, chairman of Estudio Técnicos Inc., agreed with Calero, adding that some of those missed transactions during the two-hour mishap were merely delayed and could have been completed once the Evertec systems were back online. Villamil stressed instead the lessons learned from Evertec’s service interruption. “Technology makes us more vulnerable. The more interconnected we are, the more turbulent the interruption and the more vulnerable we become,” he said. Before computers and POS systems became the norm, merchants used regular cash-register machines. If something happened to the cash register, the mishap was isolated only to that merchant since there were no interconnections between other merchants or suppliers, Villamil said. With the high amount of interconnectivity these days due to the use of technology, if a supplier suﬀers a service interruption, many merchants and their clients are aﬀected, he noted. José Alameda, an economics professor at the Continues on page 16

THURSDAY, JANUARY 28, 2016 FRONT PAGE

Employees at Evertec’s Network Operating Center [shown above] first noticed there was something wrong at 4:27 p.m. on Jan. 9. Some two hours later, they fixed the system, but the damage was already done. Continues from page 15

University of Puerto Rico’s Mayagüez campus, gave a diﬀerent perspective on the incident by providing a rough calculation of the possible monetary value of the losses stemming from the service interruption. He did this by combining Evertec’s data of 200,000 uncompleted transactions during the two-hour service interruption with transaction estimates of the sales & use tax from the Treasury Department. With 77,770 POS on the island, according to Treasury, and with each POS averaging $3,162.35 in sales per day (amounting to $316.23 in average sales per hour) the estimated value of the losses for those 200,000

“It wasn’t an attack,” said Carlos Ramírez, Evertec’s executive vice president of business solutions. “No data was compromised.” uncompleted transactions over two hours came up to $126.4 million, according to Alameda’s calculations.

AN ANOMALY Alan Cohen, Evertec’s executive vice president of marketing & communications, apologized for the outage on behalf of the company. “A twohour service interruption doesn’t comply at all with the level of service we are

used to providing to our clients,” he said. As to the underlying cause, “first of all, it wasn’t an attack or a hack,” Evertec’s Ramírez told Caribbean Business. “No data was compromised and there was no theft involved.” What took place, the exec said, was “an anomalous failure” in one of the company’s main servers that in turn caused a

massive outage in the ATH network on two fronts. “The first front was on the POS side,” Ramírez explained. Specifically, there is a point in which a transaction from a store or restaurant switches over to the system of the bank that holds the debit card’s account. “It was at that switch point that the failure took place,” he said. Continues on next page

FRONT PAGE THURSDAY, JANUARY 28, 2016

Continues from previous page

At the same time, an outage occurred in the network’s ATM terminals, an area that falls more directly under Ramírez’s purview. Evertec employees stationed at the company’s Network Operating Center first noticed the breakdown at 4:27 p.m., when alarms began to go off in the system. “There were too many cards being declined; that rapidly told us something was wrong,” the exec said. When pressed about the exact nature of the malfunction, Ramírez said it was due to “software failure.” In a system as complex as Evertec’s, conflicts between different components and/or glitches are almost inevitable. The key, Ramírez noted, lies in the level of redundancy that the system has; in other words, the system’s capacity to recover quickly. In most instances, the system’s back-up systems are enough to recover in no time, with no visible effects. However, on Jan. 9, the glitch affected a lot of components at the same time, and it was of such a magnitude that the system was unable to self-correct. At first, Ramírez and his crew checked to see if it was the result of a hack, most probably a common type of attack called a DDoS (Distributed Denial of Service). After eliminating that possibility, as well as other attacks such as a Trojan or a virus, the team deliberated whether to essentially move the whole system to secondary facilities that the company has at an undisclosed location in the U.S. mainland. “We evaluated the situation and decided that we wouldn’t suffer further

delays in carrying out the system’s recovery and wouldn’t have to rely on the mainland facilities,” Ramírez said, adding that switching over to the secondary platform would have taken roughly the same time as the company ultimately took in reestablishing the network. Afterward, it was basically a matter of rebooting the server, not unlike what one does at home with a malfunctioning personal computer. By 6:28 p.m., according to the company, the network was mostly up, particularly the POS side. “There was a general perception that the outage took longer to fix because many stores and restaurants assumed the system was down and were telling people that debit cards weren’t working well into the night, even though we were reporting on the latest developments through our various platforms,” Ramírez noted. Some observers speculated that high-volume activity stemming from back-to-school sales played a factor in overloading the ATH network, especially since the government had implemented a brief sales tax-free period at the time. However, Ramírez dismissed the notion. “We were experiencing a typical Saturday volume sales-wise when the malfunction took place,” he said. When asked about what steps are being taken to prevent a similar incident from taking place, Ramírez said that after carrying out an in-depth investigation, the company has begun implementing recommendations given by the firm’s internal work team and hired outside experts. “The key is to reduce recovery time

Rubén Piñero [second from right], president of the United Retailers Association, said it was necessary to launch an investigation into Evertec, adding its alleged monopoly constituted “a dangerous scenario.” significantly,” the exec noted. “Just to make sure, we are operating at double the capacity that we currently need.” “In 10 years, we have had a network reliabil-

PROBE ON THE WAY Despite their best eﬀorts to clear any doubts, the company’s relative silence on the matter during the first few weeks following the incident has prompted

About 200,000 transactions were aﬀected during the two hours the ATH network was down. Unoﬃcial estimates place the total economic losses at about $126.4 million.

ity of 99.9%,” Evertec’s Cohen added. “However, no system is completely flawless; it just so happens that on Jan. 9, that 0.01% came into play.”

further scrutiny. For instance, Popular Democratic Party (PDP) Sen. Luis Daniel Rivera Filomeno, who chairs the Senate Consumer Aﬀairs Committee,

filed Senate Resolution 1321 mere days after the service interruption. The resolution calls for an investigation into the outage itself, the rates that Evertec charges clients and whether the company represents a monopoly. The Senate approved the resolution late last week, with the first hearings scheduled for this past Tuesday, after this story went to press. Rivera Filomeno told Caribbean Business that many businessowners have complained for years that Evertec charges too much for their service. “They have pointed out that the fees are way above those charged in the U.S. mainland,” he noted. “It has reached the point in which many establishments choose to go cash-only in their transactions. This not only limits consumers, but also opens the door for tax evasion and even money

laundering. It’s a domino eﬀect.” Rubén Piñero, president of the United Retailers Association, said it was necessary to launch an investigation into Evertec’s alleged monopolistic practices. “For us retailers, having one company with almost complete control of the island’s commercial and banking transactions is a dangerous scenario.” To this, Rivera Filomeno added: “Evertec controls such a huge part of the market that it’s almost impossible for store owners to go to anyone else for their electronic transaction needs, even though there are six more similar companies registered here in Puerto Rico.” Two of those companies, Paytech and Multi-business, were scheduled to testify at the Senate hearings this week. Continues on page 18

THURSDAY, JANUARY 28, 2016 FRONT PAGE

Continues from page 17

“Eventually, we will have the participation of all seven companies in the segment, as well as officials from the Consumer Affairs Department and the Monopolistic Affairs Office at the Justice Department,” Rivera Filomeno noted. “The intent is to have a clear picture, and if we deem that it is necessary to draft a bill that would take care of the problem, then that is what we will do.” Meanwhile, House Resolution 1108, which was filed by PDP Rep. Javier Aponte Dalmau, was also approved this past week. Of note is that this resolution was filed in October 2014, and originally sought to look into Evertec’s alleged monopolistic practices. Aponte Dalmau chairs the House’s Small Business, Commerce, Industry & Telecommunications Committee. While Evertec’s execs said they wouldn’t respond to monopoly allegations until they testify in the hearings, they insisted they have been operating in an open, competitive environment. “First of all, we aren’t alone in the segment; there are also the likes of Visa and MasterCard in the field,” Evertec’s Cohen explained. “They not only deal with credit cards, but also with debit, the only difference being that ATH is pinbased and their cards are signature-based.” By the same token, Ramírez disputed the idea that all ATMs on the island are the property of ATH and hence, Evertec’s. “As it turns out, we don’t operate most of the ATMs on the island,” he said. “There are about 12 companies who supply these terminals, which are mostly available at small stores, and we

“In 10 years, we have had a network reliability of 99.9%... it just so happens that on Jan. 9, that 0.01% came into play.” —Alan Cohen, Evertec’s executive vice president of marketing & communications don’t operate those.” And while ATH is by far the most well-known debit network on the island, several measures prevent Evertec or any other company from being the sole gatekeepers of the island’s electronic transactions, the execs went on to say. “By federal law, each debit card must have access to at least two networks,” Ramírez said. “A typical

one may have the ATH logo and a Visa or MasterCard logo. Each logo represents a network. “Federal law also regulates the rates that we may be able to charge, so that particular argument also falls flat,” he added. Finally, as to the question about why Evertec took so long to provide details to the public about the service interruption, the key may

lie in the firm’s status as a public company, with the additional pressures that this implies. “The company needed to be absolutely sure of what happened and why it happened before we went public with it,” Cohen said. “We needed to be very careful.” 䡲

—Senior Reporter José Carmona contributed to this story.

Evertec’s Cohen said the incident ‘doesn’t comply at all with the level of service we are used to providing our clients.’

THURSDAY, JANUARY 28, 2016

Comité Dominicano de Derechos Humanos, Lulac supporting Obama’s immigration policy

Law/Courts

Supreme Court Ruling on Immigration Guideline Could Impact Over 100,000 Immigrants BY EVA LLORÉNS VÉLEZ

The U.S. Supreme Court will evaluate the legality of President Obama’s immigration initiatives issued in November 2014, a ruling that could have an impact on some 100,000 undocumented Dominicans in Puerto Rico. Because of Congress’ inaction in passing immigration reform, Obama announced a new policy in 2014 that would allow certain undocumented immigrants to apply for a program that would permit them to stay in the country for three years and work legally. The program was called “Deferred Action for Parents of Americans & Lawful Permanent Residents,” or DAPA. As part of the program, the undocumented immigrants have to meet two criteria. First, they have to have children who are U.S. citizens or lawful permanent residents. Second, they must have been in the U.S. at least since January 2010. The new regulation would have allowed some 5 million undocumented immigrants to stay in the country but it never went into eﬀect because Texas and 25 other states challenged it in federal court, contending that Obama had abused his power by sidestepping Congress and had ignored federal procedures for changing rules. A federal judge issued an order blocking the new

policy and a federal appeals court upheld that ruling. The Obama administration appealed to the Supreme Court, which the justices acknowledged. The case is expected to go for oral arguments in late April, with a decision expected in late June. The timing coincides with the 2016 presidential campaign, in which immigration has already played a major role. It would be the third time the court has ruled on Obama policies, rejecting challenges to two other initiatives including his healthcare law. José Rodríguez, president of the Comité Dominicano de Derechos Humanos (Dominican Human Rights Committee), says the decision will aﬀect some 100,000 Dominicans who are working as cleaning people (especially women), crop pickers or in the areas of construction and farming. If the policies are validated by the courts, it will stop unscrupulous people from getting money from these illegal immigrants with promises they would try to legalize their status, he said. He also noted that in the area of construction, some people hire 10 to 12 illegal immigrants to perform the job. When it is time to pay them, however, some employers threaten to call the police to avoid making payment. Rodríguez says these illegal immigrants are

dispersed throughout the area but most are in the San Juan-metro area. The decision isn’t expected to influence local elections. While Gov. Alejandro García Padilla introduced a bill last year that would allow foreign residents to vote in elections, the legislation, House Bill 2758 and its counterpart Senate Bill 1532, haven’t even gone to public hearings. The U.S. Supreme Court case is not only about immigration but also about the scope of president’s powers. The new policy issued by Obama wasn’t made through executive order. Rather, the secretary of Homeland Security (DHS) issued guidance to law enforcement oﬃcials, deferring the deportation of young people brought to the U.S. as children and the parents of U.S. citizens. In accepting U.S. vs. Texas, the justices asked the parties to answer four questions in total. The first is “do states have standing to sue?” If the justices decide in the negative, the Obama administration wins.

The lower courts ruled that the states have standing because they would be harmed by the additional costs posed by the new immigration policies over their respective state budgets. The administration, on the other hand, argues that the guidelines issued by DHS only advise immigration oﬃcials about how to use their existing discretion. The new policies don’t hurt the states because they don’t have to subsidize services for illegal immigrants. The administration also says immigration is an area of the law that falls exclusively in federal jurisdiction. The second question posed to the parties in the case is “whether the DHS guidance is capricious, arbitrary and illegal?” The states argued that the new polices aren’t legal because they allow migrants to stay legally without having to go through the immigration process. The administration argues that these are exercises of prosecutorial discretion that many presidents have followed in the past. The third question that the justices asked the parties to answer is “whether the guidelines were subject to the Administrative Procedures Act [APA]?” The states argued that the APA requires a notice and

“We are going to support this [Obama’s new immigration guidelines as a matter of civil rights].” —Abdiel Martínez, state director of the League of United Latin American Voters

José Rodríguez, president of the Comité Dominicano de Derechos Humanos

comment process, something the DHS didn’t do. The Obama administration claims the policy is merely guidance but the states say it is a regulation that should have gone through the administrative procedures. The fourth question, which was put by the justices themselves, deals with whether Obama was violating the law. It asks the parties to determine “whether the guidance violates the Take Care Clause of the Constitution, Article II, section 3.” The Take Care clause says the president shall take care that laws are faithfully executed. If the DHS guidance doesn’t follow the Immigration & Naturalization Act, then the administration may lose its case. In its plea to the Court to review the case, the Obama administration says that unless the lower courts’ ruling is reversed, some four million immigrants will be harmed. The League of United Latin American Voters

(Lulac) supports the new Obama guidelines contending it is a matter of civil rights. The organization says that after years of promises from Republican leaders claiming to support bipartisan comprehensive immigration reform, their only response has been to block eﬀorts that would help immigrants. While Republicans say they have a moral obligation to vote against a position they believe to be unconstitutional, they also ignored the fact that administrative action was necessary because of the Republicans’ failure to act on pending bipartisan comprehensive immigration reform, the organization says. Abdiel Martínez, state director for Lulac, says the local group intends to participate in marches and protests to validate Obama’s actions. He noted that Lulac was founded precisely because of the discrimination that Hispanics experience in the U.S. “We are going to support this,” he said.

THURSDAY, JANUARY 28, 2016

Government

Puerto Rico has gone a long way but still lags in research & development

Collaboration, Infrastructure Needed to Advance R&D BY EVA LLORÉNS VÉLEZ e.llorens@cb.pr

The development of new drugs against malaria, an AIDS vaccine, new technologies for the early detection and treatment of cancer, an environmental laboratory and the proposed Science City are just some of the many initiatives being pushed by the Puerto Rico Science, Technology & Research Trust (Science Trust) as it seeks to turn the island into a global research and development hub. As the commonwealth grapples with a $70 billion debt, Gov. Alejandro García Padilla stressed the importance for Puerto Rico to become a center of knowledge and innovation. For instance, he said the commonwealth is a major manufacturer of medications and medical devices, but “we should also invent ones so revenues from patents can stay here,” he said. U.S. Patent & Trademark Oﬃce statistics show that Puerto Rico accumulated 79 individually owned patents from 2010 to 2014, the University of P.R. accumulated 18 patents; Hewlett-Packard Development Co. registered 17 patents and Ortho-Tain Inc. has some six patents. Compared to other U.S. jurisdictions, the island lags behind. For instance, the state of Florida had more than 4,000 individually owned patents from 2010 to 2014, but it also has numerous other

companies listing patents, which increases that number to nearly 8,000. According to the latest figures from the P.R. Statistics Institute, the estimated gross expenditures in R&D were $449.3 million, or 0.44% of Puerto Rico’s gross domestic product, and just a 3.3% increase from 2009. The Science Trust’s COO Iván Ríos Mena recently acknowledged to Caribbean Business that while the island has gone a long way moving forward in the area of R&D, it still needs to do more. Established in 2004 under Public Law 214 as an autonomous entity, the Science Trust stimulates innovation, technology commercialization and the creation of high-technology jobs in Puerto Rico’s targeted industry sectors such as Life Sciences, Alternative Energy, Environmental & Agricultural Sciences, Computer Science & Information Technologies, Medical Devices and Aerospace & Aeronautics. The Science Trust, which was marked by allegations of misuse of public funds during the 2008-12 governing administration, uses money it receives from the rum tax to be able to provide grants for important scientific research. Nonetheless, Ríos said that to encourage the R&D sector to grow, the Science Trust must also create infrastructure to enable and work with the academic and private

sectors. Still, the Science Trust says it has yielded about $12 million in return investments. As part of the needed infrastructure, the Science Trust is developing Science City, an area that will harbor a number of research and technology facilities on the grounds of the former Oso Blanco State Penitentiary. The governor and Science Trust oﬃcials inaugurated construction of Laboratory Road, which will connect the Cardiovascular Center, Centro Médico and the Comprehensive Cancer Center in San Juan’s Río Piedras district to Science City. This project, which is being developed by the Infrastructure Financing Authority, relies on a $10 million investment from the Science Trust.

Ríos said Laboratory Road is two lanes that will include the infrastructure and technological devices for research. The Science Trust’s CEO Lucy Crespo revealed there are already two clinical research companies, whose names she refused to reveal, that will be moving to the area. Science City will also be the site of a new environmental research laboratory for the Environmental Quality Board’s laboratory (EQB), which is being made possible with a $2.7 million investment. The new laboratory will serve as a resource for the Science Trust to promote scientific investigations but will also conduct analyses to establish environmental parameters and test and validate new products. “The EQB has the job of conducting research on environmental problems

“We need to change the generators in education at [the] University of Puerto Rico and private universities to improve public policies that allow investigators to develop research…. There is also a need for more human capital and collaboration.” —Gretchen Díaz, evaluator of grants for scientific research for the P.R. Science, Technology & Research Trust

Iván Rios, COO for the Science, Technology & Research Trust

to ensure citizens’ health as well as protect natural resources. Our research will help us comply with the environmental policies,” said EQB President Weldin F. Ortiz. The Science Trust is also the key promoter of biotechnology startups in Mayagüez, a collaborator with the Molecular Sciences Building, which has more than 400 researchers and, together with the Ana G. Méndez Foundation, inaugurated the Photonics Institute in Barceloneta. Despite the advances that have occurred over the past three years, Ríos and Gretchen Díaz, the latter who is in charge of evaluating grants for scientific research, contend there is still a need for a “mental and cultural revolution” in Puerto Rico that can help promote research. She said science, technology and research should be a priority that

isn’t subject to the political whims. “We need to change the generators in education at [the] University of Puerto Rico and private universities to improve public policies that allow investigators to develop research…. There is also a need for more human capital and collaboration,” Díaz noted. As a scientist, Díaz said that in addition to collaboration from diﬀerent sectors and funding for research, investigators and researchers not only have the local mechanism of the Science Trust but also external funding. The Science Trust recently awarded grants of up to $150,000 to 12 different projects. It also is helping six other projects that have commercial potential, mostly in the area of medical devices. In July, the Science Trust expects to have the needed metrics to determine the exact impact of the grants. It is also developing an oﬃce that will specialize in grants for research at universities. Some of the grants the Science Trust has awarded in the past year will help fund projects to create hybrid technologies to further communications and aviation, promote advances in biotechnology to purify water and test technology to fight cancer in its late stages. The Science Trust is collaborating in the second phase that will help develop a vaccine to fight AIDS, which will also allow Puerto Rico to manufacture it. 䡲

THURSDAY, JANUARY 28, 2016

EB-5 Regional Center Yet to Finance a Single Project in Puerto Rico BY EVA LLORÉNS VÉLEZ

It isn’t that they are unwilling, but Puerto Rico’s EB-5 Regional Center, a corporation created in 2014 to enable foreign entrepreneurs to finance commercial enterprises in exchange for a visa, has yet to find a project to finance on the island. The information is contained in the 2015 annual report, ending last November, of the corporation’s activities for the past year, which was submitted to the P.R. Legislature. The U.S. Citizenship & Immigration Services (USCIS) administers the EB-5 Program that allows entrepreneurs to apply for a green card to be a lawful, permanent resident if they invest $500,000 to $1 million in a commercial enterprise in the U.S. that creates or preserves 10 permanent full-time jobs. Congress created the EB-5 Program in 1990 to stimulate the U.S. economy. Two years later, Congress created the Immigrant Investor Program, also known as the Regional Center Program to set aside EB-5 visas for participants who invest in the projects approved by USCIS. The local EB5 Regional Center, which requests a $10,000 fee to evaluate enterprises, listed nine projects that were

evaluated during late 2014 to November 2015, but none were financed because they were either not ready or were already in advanced stages. Thus, the center didn’t submit any of the nine projects

Juan Carlos Suárez, executive director of the Commonwealth EB-5 Regional Center

for USCIS approval. “In conclusion, the [corporation] currently doesn’t have any projects approved by the USCIS and hasn’t raised capital for the projects that are being listed,” the report states. One of the projects that the local EB-5 Regional Center had planned to finance was the Science City, a $28 million project pushed by Puerto Rico’s Science, Technology &

Research Trust. However, the trust declined the $16 million the EB-5 program was going to provide after receiving a federal grant for the same amount. The EB-5 Regional Center, however, says it is working with the trust to identify other projects. The second project was a hotel in Barceloneta that sought $64 million in EB-5 funds. While the project received a positive evaluation, the developer hasn’t been able to obtain a permit to operate a casino in the hotel from the Puerto Rico Tourism Co. because there are too many casinos in the area, the report says. The EB-5 Regional Center also examined a Puerto Rico Aqueduct & Sewer Authority (Prasa) project to establish a high velocity, fiber-optic cable through San Juan areas identified as “technology districts,” but Prasa declined the funding because it would have entailed delaying the project to allow for the EB-5 evaluation. Prasa has begun the initial stage of the project and could use EB-5 funding in the future. The report says a group of private developers also sought EB-5 funding to help build a film studio in Dorado. “The project was Continues on page 22

It’s not unusual to want to counteract the effects of the holidays by starting or intensifying an exercise program around this time of year. However, enthusiasm quickly wanes when we do not see the desired results as soon as we expected. “Frustration is often the result of misguided intentions,” says Exercise Physiologist Luis R. Lopez. “When exercise is undertaken solely as a means of losing weight instead of a means of achieving optimum health, people tend to make themselves follow a rigorous routine or take up the latest exercise fad. When they find it too difficult to keep up or get hurt in the process they get frustrated and abandon the program.” Exercise Physiologists are trained healthcare professionals who assess, plan and implement fitness programs or physical activities from a clinical perspective with the goal of improving body composition, muscular strength and endurance, flexibility and cardiorespiratory function. Lopez is one of two certified Exercise Physiologists who are part of the Cenegenics Puerto Rico team of age management professionals. A leading authority in healthy aging with almost two decades of experience, Cenegenics Puerto Rico offers Concierge Elite Health Programs that acknowledge that achieving and maintaining optimum health has to be an ongoing process and take into consideration the changes in our bodies and our habits. The foundation of the Cenegenics approach to Elite Health is a comprehensive evaluation to establish the patient’s metabolic, physiologic, neurocognitive and fitness baseline. “A part of this initial assessment we will conduct exercises to determine your level of functionality, flexibility, strength and endurance compared to standards for your age and gender,” Lopez explains. “We will also analyze your personal objectives and the time at your disposal. “ The results of this assessment will guide the design of a customized exercise routine to meet your health care needs and performance goals whichwill be integrated into your Elite Health Program. Exercise may

be prescribed to improve metabolic variables such as HDL, LDL cholesterol, triglycerides and blood glucose, aid in weight control, to restore functionality or cardiorespiratory function and rehabilitation after an operation, as well as for general physical fitness. The prescription will establish attainable short- and long- term goals, as well as the appropriate intensity and supervision protocol to allow for progressive adjustments so that each physical function is optimized and maximum benefit is obtained from a medical, individual and scientifically proven aspect. “In some cases, this means a progressive increase in light physical activity, such as counting the steps taken each day, as a way to introduce exercise,” says Lopez. “Patients with greater aptitude will receive recommendations to strengthen their deficiencies in specific areas under supervision of an exercise physiologist or a trainer”. The advantage of working with an Exercise Physiologist lies in this professional’s expertise in monitoring how the body adapts to exercise in short term, as well as long term, to ensure that conditioning progresses without injury. A personalized exercise program, combined with a nutrition program centered on natural, whole foods with low glycemic index and hormonal optimization (when clinically indicated) are the trifecta for Elite Health with significant improvements that go way beyond the increased energy levels, decreased body fat and muscular tone associated with exercise. They also contribute to increased sexual vitality,mental acuity, restful sleep and a younger appearance, while helping prevent the degenerative conditions associated with aging. “Exercising like crazy for the sake of losing weight is really selling yourself short,” says Lopez. “Why work harder, when you can work smarter and reap the benefits of physical fitness to reach and maintain optimum health? ” Cenegenics Puerto Rico 787-722-6030 www.cenegenicspr.com

Government

Work Out Smarter, Not Harder

THURSDAY, JANUARY 28, 2016

Government EB-5 Continued from page 21

interesting and adequate for EB-5 financing, but the developers weren’t ready to proceed because they wanted additional guarantees from the government regarding future film incentives. The developer was also exploring financing through the Economic Development Bank and opted for that financing,” the report says. The EB-5 Regional Center says it met with commonwealth agencies to see if they could partially finance

EB-5 Regional Center looking for commercial projects it can ﬁnance

an infrastructure project centered around PR-22, but it was still in the initial stages and wasn’t ready for financing. The local oﬃce also expressed interest in funding $6 million for the Puerto Rico Industrial Development Co.’s “Plug and Play Building,” to allow new and existing enterprises to expand their businesses; the initiative was expected to yield 159 jobs. Nonetheless, the project was delayed because more studies were needed, which could increase the amount needed to carry out the initiative.

“In conclusion, the [corporation] currently doesn’t have any projects approved by the USCIS [U.S. Citizenship & Immigration Services] and hasn’t raised capital for the projects that are being listed.” —Annual report from Puerto Rico’s

EB-5 Regional Center

The EB-5 Regional Center did a preliminary evaluation of a project for the construction of four skilled nursing homes to complement the island’s medical tourism offer. However, the developers opted to “coordinate other efforts with the Medical Tourism Corp. and have yet to start the financing phase,” the report says. Two other projects that the local office is evaluating include a soccer stadium in Bayamón and a boutique hotel in Old San Juan. The report says the EB-5 Regional Center was in negotiations to receive

the required $10,000 deposit each to start the evaluations. The local EB-5 Regional Center, which operates with a $480,000 allocation from the Economic Development & Commerce Department (DDEC by its Spanish acronym), says during 2016, it will be launching a website and providing workshops in various municipalities to obtain lists of projects that could potentially get financing. The local office also hopes to submit projects for approval to the USCIS during the latter part of 2016. 䡲

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THURSDAY, JANUARY 28, 2016

Poll

CUD says holiday retail sales dropped 30%

Holiday Blues for P.R. Retailers Visits to Malls in December Down by 5% Compared With Last Year BY ROSARIO FAJARDO r.fajardo@cb.pr

The holiday season wasn’t a happy one for retailers in Puerto Rico, as the island’s economic woes are continuing to have a ripple eﬀect on many industries. This past December, about 11% of the population 12 years and older visited a shopping mall during an average day, according to this week’s Gaither International survey. That’s roughly 300,000 Puerto Rican residents visiting malls daily. That percentage represents a decrease when compared to 2014’s 16% visit incidence during December for the same group. That year, almost 150,000 more people visited a shopping mall daily, totaling some 450,000

people on an average day, Gaither reported. The decrease in visit incidence during the recent holiday season has also carried over to January. As of Jan. 22, only 6% of respondents mentioned visiting a mall during the previous 24 hours. That’s a five percentage point decrease when compared to the previous month and a six percentage point decrease when compared to January 2015’s 12% visit incidence. This month’s 6% visit incidence would also represent the lowest for any month since at least January 2013 when Gaither began monitoring that category. The results are from Gaither International’s Media Brand Profiles tracking survey, which interviews more than

80 people daily among a representative sample of Puerto Rico’s population 12 years and older. The United Retailers Association (CUD by its Spanish acronym) recently reported a 30% drop in holiday sales in Puerto Rico amid the island’s worsening economic crisis. CUD President Rubén Piñero said about 70% of local businesses reported the decrease during a recent survey. He blamed the drop on the 11.5% sales & use tax (IVU by its Spanish acronym) that recently took eﬀect. The commonwealth government increased the tax from 7% last year to help generate up to $1.2 billion in revenue as the island struggles through a nearly decade-long economic slump. Critics say the tax has forced some

businesses to close and has curtailed shopping. It is the highest sales tax compared with any U.S. state. By contrast, holiday spending in the mainland U.S. rose 7.9% from a year ago, which tracks retail sales across credit cards, cash and checks from Black Friday to Christmas

Eve. The uptick was driven by people sitting in the comfort of their homes or at work, with online shopping up 20%. “Shopping at physical stores still accounts for the majority of spending during the holidays,” the Associated Press reported. “But the continuing

shift to online shopping is forcing retailers to improve their websites or offer perks like faster or free delivery.” 䡲 Polling is conducted by Gaither International and the

results

are

reported

exclusively by CARIBBEAN BUSINESS.

Thursday, january 28, 2016

Politics

NPP La Fortaleza hopefuls with their eyes on the prize

Ricky Rosselló-Pierluisi Gubernatorial Primary Race Avoiding Confrontations BY ISMAEL TORRES

While the internal poll numbers of each of the gubernatorial hopefuls from the New Progressive Party (NPP), according to their respective spokespersons, place both in the lead, both camps have agreed to a gentlemanly race by avoiding confrontations and personal attacks that could affect the NPP’s possibility of victory in the general elections this coming November. Elías Sánchez is the executive director of Dr. Ricardo “Ricky” Rosselló’s campaign, while the former legislator and former Appeals Court judge Néstor Aponte Hernández is at the head of attorney Pedro Pierluisi’s campaign, currently Puerto Rico’s

resident commissioner in Washington, D.C., and NPP president. Sánchez emphasized the freshness of Rosselló’s candidacy as well as the innovative ideas he presents and the enthusiasm he generates among the people. “He is a young candidate with new ideas and new styles of making politics,” said Sánchez, highlighting Rosselló’s qualities in his quest to be the NPP candidate for governor. The candidate is the son of former Gov. Pedro Rosselló, who served from 1992-2000. Sánchez is so sure of Rosselló’s victory in the race with Pierluisi that he called the primary on June 5 an “academic primary,” because of Rosselló’s

ample lead in their internal polls. He added that Rosselló “always” scores a two-digit lead in their surveys over Pierluisi. The results of these internal polls haven’t been released. For his part, Aponte said the purpose of Pierluisi’s campaign is to “make sure that once we win the primary, we have a united party, so as to win the coming elections.” There won’t be any attacks coming from our team,” he added. “It will be a campaign without attacks on our fellow party members.” Aponte also said Pierluisi’s campaign would highlight the resident commissioner’s experience and his performance on Capitol Hill, working on

Puerto Rico’s Fiscal Crisis Forces Adjustments in Local Republican Party Primaries BY ISMAEL TORRES & ROSARIO FAJARDO r.fajardo@cb.pr

Puerto Rico’s fiscal crisis has already touched on the electoral process and its first victim will be the primaries of the local Republican Party for the U.S. presidency, scheduled for March 6. Local Republican Party functionaries said about

$809,000 have been requested for their primaries, but the Executive branch has only earmarked $300,000 for this purpose to the State Elections Commission (CEE by its Spanish acronym). Thus, instead of a straight vote, the local Republican Party has decided to use an alternative method and hold an “open-precincts caucus”

for their primaries for the U.S. presidency. Besides voting for who will be the Republican candidate for the presidency, the local primaries will also elect 20 delegates on March 6, who are joined by three other superdelegates. These three are Republican National Committeewoman Zoraida F. Fonalledas; National Republican Committeeman

Ricardo ‘Ricky’ Rosselló, an NPP candidate for P.R. governor

Pedro Pierluisi, an NPP candidate for P.R. govenor

behalf of Puerto Rico, regardless of who is the governor of Puerto Rico. He added that the work that has been carried out after he took the helm of the campaign some months ago, are bearing fruit with internal polls showing a trend of constant growth in support of Pierluisi. “At the moment, a threshold has been crossed between both candidacies

and Pierluisi is ahead at the moment and keeps rising,” said Aponte, referring to polls prepared by firms hired by Pierluisi’s camp, which also haven’t been released on grounds that they are important campaign “resources.” What both campaign officials didn’t mention, because the primary is an internal NPP race, is that at the grassroots level, the

The CEE and the Office of Management & Budget allegedly didn’t comply with the Electoral Law, as the minimum funds needed to hold a primary weren’t assigned. and former Gov. Luis Fortuño; and New Progressive Party (NPP) Rep. Jenniffer González as Republican Party Chairwoman in Puerto Rico.

It is unclear how many Puerto Rico residents are registered with the Republican Party, but they are a distinct minority in Puerto Rico, as most local

message promoted between both camps is the commitment of their respective candidates with the statehood ideal and the plan they would implement, after winning the election, to push statehood at the federal government level. Some voices in the Rosselló camp have questioned the activism and commitment of Pierluisi in promoting statehood, while Pierluisi’s camp has been sounding alarms about Rosselló’s lack of government experience and the risk this would represent for Puerto Rico, especially given the island’s fiscal and economic crisis. Aponte reiterated that his campaign team would avoid attacks against their opponent that could jeopardize victory in the November general elections. For his part, Sánchez said they would do the same, but that his team would be ready to respond to any attack against Rosselló. n

residents are aligned with the Democratic Party in terms of national politics. As an indication, González recalled that some 126,915 GOP voters participated in the 2012 Republican primaries for the presidency. There were more than 2.4 million registered voters in Puerto Rico during the 2012 elections, according to the CEE. Local Republican officials said no poll numbers are available indicating the level of support for the various Republican presidential candidates in Puerto Rico. Nationwide, Continues on next page

Thursday, january 28, 2016

Politics

Tackling Puerto Rico’s fiscal and economic crisis at the top of his agenda

Bernier’s Gubernatorial Campaign Will be ‘Diverse and Inclusive’ BY ISMAEL TORRES

Just as in previous Popular Democratic Party (PDP) campaigns for governor in 1992 with Víctoria Muñoz and 1996 with Héctor Luis Acevedo, La Fortaleza hopeful David Bernier’s campaign also aims to be inclusive and diverse. And as in Biblical times, the campaign will be based on a kind of “10 Commandments” that will serve as thematic references for the campaign, which will be headed by attorney Liza Ortiz

Continues from previous page

billionaire businessman Donald Trump continues to lead the GOP field, according to the latest national poll released last week. Trump remains the front-runner with 36% support nationally, reported The Hill. U.S. Sen. Ted Cruz of Texas is in second place with 17% support nationally; U.S. Sen. Marco Rubio of Florida is in third place with 11%; followed by retired neurosurgeon Ben Carson at 8%; and former Florida Gov. Jeb Bush at 5%. The survey of 385 registered Republican voters was conducted by Monmouth University between Jan. 15 and Jan. 18 and has a 5-percentagepoint margin of error, according to The Hill.

Camacho, who has ample political and government experience. This includes having served as a top aide to the office of former Gov. Aníbal Acevedo Vilá when he was the spokesperson of the PDP minority in the House of Representatives. She also served as an adviser on legislative, municipal and public affairs at La Fortaleza during Sila María Calderón’s term as governor. Ortiz Camacho currently heads her own legal practice, Success Solutions, and is the National Committeewoman

The Republican National Convention will be held July 18-21 in Cleveland. The Republican Party’s local electoral commissioner, Edwin Mundo, foresees serious problems throughout Puerto Rico’s electoral process, charging that the executive branch has failed to fulfill its financial commitment to hold events such as primaries and the general elections next November. Mundo, who is also a member of the minority pro-statehood NPP, also questioned whether the planned electronic vote count will even occur at all. He noted that as early as last Friday, the CEE was informed of a $4 million cut in funds assigned for the electronic votecounting process, which has a total $38.5 million price tag.

of the Democratic Party in Puerto Rico and a member of the Hispanic Caucus. “I am going to put my life, heart and soul into the campaign. I firmly believe in David Bernier’s proposal, who I consider to be a capable, mature, serious and committed person, with great enthusiasm for democracy and helping to improve the quality of life of Puerto Ricans,” Ortiz Camacho said. Last December, Gov. Alejandro García Padilla announced he wouldn’t seek re-election. Bernier,

David Bernier, Popular Democratic Party candidate for Puerto Rico governor

who had served as secretary of State in García Padilla’s administration, announced his candidacy

for La Fortaleza just a few days later. She added that at the moment, Bernier’s government plan is being worked on. The ambitious list includes addressing the island’s financial and economic crisis; solving the issue of Puerto Rico’s political status; attacking corruption and political investing; transforming the education system; saving the health system; guaranteeing the security of the Puerto Rican family; reforming the government and transforming it into an agile and efficient structure; generating equality and fighting poverty; inserting Puerto Rico at international levels; and calling for the unity of Puerto Rico. Ortiz Camacho also

The leaders of the Puerto Rico Republican Party, Edwin Mundo, electoral commissioner; Jenniffer González, chairwoman; and Zoraida Fonalledas, committeewoman, announce changes to the local Republican primaries because of a reduction in funds from the State Elections Commission.

González explained that the decision to hold an open-precincts caucus for their primaries rather than a straight vote was

because the CEE and the Office of Management & Budget allegedly didn’t comply with the Electoral Law, as the minimum

funds needed to hold a primary—the requested $809,000—weren’t assigned. “It is sad to see how in

said that as a lawyer, she represents clients in different forums, including government entities, but not as a lobbyist. “I am a lawyer and I represent clients, but I am not a lobbyist,” she said in response to criticism regarding this issue. Besides Ortiz Camacho, Bernier’s campaign team is comprised of communications entrepreneur David Vergel, in charge of the government program; Chief of Security at the University of Puerto Rico Río Piedras Campus Samuel González as head of operations; former assistant Secretary of State Javier González in charge of electoral affairs; and Ana María Santiago in charge of press and communications. n

Puerto Rico, this administration spends more than $65 million on lobbyists before a Republican[controlled] Congress, but wants to take away the right of Puerto Rico to participate in the Republican presidential primaries that give us direct access to those leaders,” González charged. She said that based on the party’s proposed plan, 110 voting colleges islandwide will be open on March 6, compared with the 3,528 voting colleges opened for the 2012 primaries. González said anyone who is a U.S. citizen, affiliated with the Republican Party and who supports statehood for the island can vote in these primaries. The last day for voters to register is Feb. 6. n

THURSDAY, JANUARY 28, 2016

Cultural Affairs

Superhero’s mistake could affect Puerto Rico’s ﬁscal crisis. Or could it?

‘Espaider-Man’ or how a Superhero Loses his Bearings BY JUAN A. HERNÁNDEZ j.hernandez@cb.pr

If history is to be considered a long succession of hits and misses, then Puerto Rico’s recent history is experiencing a prolonged slump, as baseball fans would say. Still amid the longest recession since the 1930s, Puerto Rico’s financial woes have grown almost to the level of impending doom: insuﬃcient revenues, more and higher taxes, ineﬃcient government services, stagnant economy, increasingly lower cash flow, default on public debt and a recurrently postponed restructuring of the debt, among other issues. To the long list of material woes, a new, maybe notso-pressing issue has been added: the confounding of

Puerto Rico’s identity with that of a diﬀerent country, albeit there are similarities between the two. Anyone might think, “Yeah, right…does that really add to the island’s concerns?” Depending on whom you are and who the other country is, the answer could be a resounding yes, or a no, for exactly the same reasons. It also depends on who is confounded. In this case, Marvel Comics mistook Cuba for Puerto Rico in its Amazing SpiderMan No. 1.2 issue. The faux pas is evident in one of the panes of the comic book where “your friendly neighborhood” hero is crouching on the side of a building in the town of Remedios (or San Juan de los Remedios, to be exact) after jumping from an airplane. As the superhero

gazes into the setting sun over the town’s skyline, the reader sees a Cuban flag flying on the side of a building nearby. Or is it? Well, it just so happens that while the colors are right, the positioning isn’t. The Cuban flag has three azure stripes alternating with two white and a white star in a red triangle, but the banner in the illustration has the colors inverted: three red stripes alternating with white and a white star in a triangle field of azure. Either the superhero landed two blocks down the street in Puerto Rico, just past Haiti and the Dominican Republic, or jumping from a high-flying airplane, messed up his Spidey sense and is now seeing visions. Back in the late 1800s, don Antonio Vélez Alvarado,

“A new, maybe not-sopressing issue has been added: the confounding of Puerto Rico’s identity with that of a diﬀerent country…” then a young newspaperman and staunch advocate for Puerto Rico’s independence, was running a fever in his modest New York City apartment. Vélez Alvarado, also one of the founders of the Sección Puerto Rico of the Cuban Revolutionary Party (whose mission was to fight for the independence of Cuba and Puerto

Rico), had been feverishly staring at a small Cuban flag he had pinned to a wall in his apartment. For a moment then, he looked at the blank wall where the flag was being displayed and saw the ghost image of the flag, but with the colors inverted. Vélez Alvarado took this as a sign of what the flag of Puerto

Rico should be. The young journalist made an initial prototype of the flag with crepe paper that eventually led to its adoption as Puerto Rico’s oﬃcial flag by the Club Borinquen of New York, which had also pledged to fight for the independence of the two Antilles. How can a flag mix-up from a comic book company adversely aﬀect Puerto Rico any more than it already has been by so many real problems? The mix-up could have consequences of amazing proportions if Gov. Alejandro García Padilla and sidekick David Bernier were to realize Spider-Man is but the first member of the federal fiscal control board appointed by the U.S. Congress. On the New Progressive Party’s side, consequences are considered to only reach comic book proportions because it is still to be decided who’s going to be JGo’s sidekick in La Fortaleza.

SME’S 65TH ANNIVERSARY AND TOP MANAGEMENT AWARDS Special Feature January 28, 2016 Pages 29-36

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65 Years at the Forefront of Sales and Marketing Changes In 1951, a group of visionaries decided to create the Sales & Marketing Executives Association (SME) using “Nothing happens until someone sells something” as its slogan to boost both professions on our island. From its humble beginnings, the Association has become the most important representative of people who work in fields as diverse as marketing, advertising, communications, research, distribution and sales—both at the retail and wholesale levels. In 2016, our Association celebrates 65 years at the forefront of sales and marketing changes and we are proud to say that we continue to grow along with our partners and collaborators. This journey has been filled with experiences, successes and challenges within an industry that has undergone major changes. Since its founding, our organization has had the chance to witness marketing and sales changes, first using print and radio, then television and now the internet, as well as to participate in an increasingly globalized and interconnected world. Changes in technology and in the way of doing business will be accelerated by changes in consumer habits, social networks and online and smartphone direct purchases, just to name a few examples. All these developments will oﬀer countless opportunities for those who are well positioned and keep informed of the changes at the right time. The SME’s primary goal is to provide its members and colleagues with the tools they need to succeed and to better adapt to the opportunities that the future has in store for us. As Charles Darwin once said: “Organisms that survive aren’t necessarily the strongest, but rather those who adapt more quickly to changes in their environment.” This basic principle also applies in business—and in the past 65 years, there have been many examples that have proven this point. Throughout 2016, we will celebrate our anniversary by focusing the SME’s educational events on trends that set the

standard in the manner in which sales and marketing strategies are developed globally. In addition, we will strengthen our research studies, awards and business opportunities for our members. Looking ahead, we will establish new initiatives such as the SME Webinars and the SME Speakers Bureau, among other projects. Sixty-five years is only the beginning and we are confident that our Association will continue to grow and innovate. Personally, I am convinced that the professionals who make up our industry— and which our Top Management Award winners proudly represent—will help us have a promising future that will add to our great history as a leading industry in Puerto Rico. All that’s left for me to do is extend my congratulations to this year’s outstanding executives and invite them to share our Association’s achievements over the next 65 years. 䡲 Roberto Trigos President SME 2015-2016 Consulting Partner of Caribbean Round

THURSDAY, JANUARY 28, 2016

Message from the Director SME Top Management Awards Committee As a member of the SME Board, it is a pleasure for me to have led the Nominating Committee of the prestigious SME Top Management Awards. Since 1967, the Puerto Rico Sales & Marketing Executives Association has honored more than 600 business leaders for their achievements, high ethical values and professionalism. On this occasion, we are pleased to extol the career of 15 leaders who work hard in their respective industries and adhere to standards of excellence, proving that in Puerto Rico, there are people worthy of emulation. Both the Nominating Committee and the Selection Committee had a diﬃcult time choosing the winners in each category, as the nominees had outstanding careers marked by excellence. We appreciate the opportunity given to us to learn more about the socioeconomic and social responsibility contributions that these people are making on behalf of our island. We encourage you to continue working hard to further stimulate the growth of your diﬀerent industries or social causes, always basing every decision and action on the ethical grounds that today make you worthy of a Top Management Award.

Congratulations! Michelle Pérez, Vice President & Head of Marketing, Scotiabank Puerto Rico

Top Management Awards & SME’s 65th Anniversary Gala Jan. 29, 2016 El San Juan Resort & Casino Program 7:00 p.m. 7:45 p.m. 8:15 p.m. 9:15 p.m. 10:35 p.m.

Welcome Cocktail SME’s 65th Anniversary Celebration Dinner Awards Ceremony: 2015 Top Management Awards Celebration Cocktail

Information: 787-773-5088 | smepr.org | reservaciones@smepr.org

THURSDAY, JANUARY 28, 2016

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F E A T U R E

SME Top Management Award Winners 2016 AGRICULTURE Gualberto Rodríguez III President Caribbean Produce Exchange BANKING Annette M. Montoto Terrassa Executive President Corp. Para Las Microfinanzas P.R. QUALITY OF LIFE Raymond Arrieta Comedian, actor, singer & philanthropist

EDUCATION Heri Martínez de Dios Executive V.P., Dean of Technology & Marketing Atlantic University YOUNG ENTREPRENEUR Luis Sánchez Ferrá President Turnos Media LLC MEDIA Margarita Torres Millán VP & General Manager Sistema TV, Canal Universitario Ana G. Méndez

MARKETING Jorge Bracero Catoni Chief Marketing Oﬃcer Compañía Cervecera de Puerto Rico

INSURANCE Jaime Estrada Febo District Sales Manager Mutual of Omaha

ADVERTISING Edgardo M. Rivera COO/Managing Partner DDB Latina Puerto Rico

TECHNOLOGY Kenneth Sewell Acosta President Data Base Marketing Services

PUBLIC RELATIONS Karen Garnik Mercado President Global Vision Marketing & Communications

TOURISM Ricardo J. Carrión Ortíz CEO/Executive Producer El Tercer Hombre Inc. / Puerto Rico Comic Con Continues on page 32

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Thursday, JANUARY 28, 2016

Plaza Provision’s CEO Torres Enters SME Hall of Fame BY CB STAFF

For more than 100 years, Plaza Provision Co. has become a powerhouse of consumer-product distribution in Puerto Rico and its nearby islands, and Ángel Torres, its president, has stoked its fires for growth through a most difficult period of economic uncertainty and decline. Torres has been at the helm of Plaza

Top Award Continued from page 31

Sales Adrián Rivera V.P., Sales & Marketing CC1-Coca Cola P.R. Bottlers Hall of Fame Ángel Torres President Plaza Provision Co. Waleska Olivencia Award Sister Julia José Brecord Director Hogares Rafaela Ybarra

Provision for the past seven new business categories. years and he attributes his “As Puerto Rico consuccess at the company to tinues to erode and the “leading and motivating a demographic changes team of excellent sales, marcontinue to change the keting and operations proconsumer profile, the fessionals in understandonly way to grow, when ing our suppliers’ brand and you lead in most prodbusiness strategies and exuct categories serviced, ecuting them to the satisfacis through innovation tion of our customers.” This and expanding into new approach has led Torres into businesses.” He sees the Sales & Marketing Exthe consumer profile in ecutives Association’s (SME) Puerto Rico shrinking, Ángel Torres Hall of Fame, as a top performer in the becoming older and with less money to field of sales and marketing. spend. The chief executive’s accomplishments “We are, therefore, entering new marunder the challenging market conditions ket segments, such as hardware stores, since he assumed the company’s leaderand offering new product categories, such ship in March 2009, closely parallel the as locally produced frozen food products,” distributor’s own success. “Plaza Provihe explained. At the same time, Plaza sion has been rated the top distributor Provision is offering its clients a wide arin Puerto Rico over the past two years in ray of services that can make them more a row in an independent market study,” efficient to improve profitability, such as Torres noted. “We have achieved this by key account management and category exceeding both our suppliers’ and cusmanagement, among other tailored solutomers’ service expectations.” tions, he pointed out. “The distribution business in Puerto Growth opportunities Rico is benefiting from the changes in the Looking ahead, Torres sees growth opgo-to-market strategies by most multiportunities through the application of national companies,” Torres said. “Many innovative services and expansion into of those companies are either reducing

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their local staff or closing their former commercial offices on the island and are transferring the distribution responsibilities to local distributors. Those of us who have kept up-to-date in our processes, systems, technology, facilities and human capital, have benefited from increased sales volume of their brands and the availability of experienced and well-trained professionals.” Holistic business approach Torres takes a holistic approach to doing business that comes from his experience at accounting giant Arthur Andersen, where he sharpened his skills in financial analysis by doing internal audits and budgeting. He later moved to Bacardí Corp., where he presided over Bacardí operations in Puerto Rico for 12 years. In the process, he was exposed to different business and organizational experiences that contributed to his hands-on management style. Plaza Provision is part of a business conglomerate that includes a distribution company, Hunter Foods Co., in the U.S. Virgin Islands; a food service company, Plaza Food Systems, in Puerto Rico; a top wine and spirits distributor, Plaza Cellars; and a retail operation, Boutique Du Vin, on the island. n

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Database Marketing Services: A Pioneer in Postal Optimization Technology BY MARIO BELAVAL DÍAZ

Baskets brimming with returned mail do more than just take up space in companies. In fact, they represent a drain on businesses’ economic resources. Each returned letter could mean a late payment or no payment at all from a client, a missed opportunity to reach out to existing clients with new oﬀers or even attract new ones. Add to that the $11.50 cost for each returned letter as well as the cost to reprocess that letter. Kenneth Sewell, president & founder of Database Marketing Services, explained that businesses may lack the instruments or tools that allow them to measure their mailing performance and take

action to make it more eﬃcient. Even if a business has a system in place to handle returned mail, it tends to be time-consuming because manual processes don’t allow the business to react proactively and in “real time” to the situation. With that in mind, in 2013 DMS designed, developed and launched MPI (Mailing Performance Indicator), a proprietary application that allows clients to track a letter through its mailing process, which includes five stages: induction,

Kenneth Sewell, president & founder of Database Marketing Services

Angel O. Torres Irizarry President Plaza Provision Company

YOU BELONG TO THE TOP! Your outstanding vision and undisputed passion, deserve recognition. The Board of Directors, Officers, and your team at Casa de Líderes are very proud of you for being elected as the SME Hall of Fame Top Management Award 2015 .

Yes, It is true, Together we win!

processing, delivery, address change and electronic devolution, or return. MPI has three metrics that provide this data, which address quality, or the validation of the postal address, against the U.S. Postal Service database; USPS tracking capability; and the result of the delivery. “Each letter has a unique tracking number that informs the client where the letter is and at what stage; for example, if it arrived at the post

oﬃce or if it was sorted and sent out for delivery,” Sewell said. “In case the letter is returned, the situation is also electronically captured and the client has the information whether a specific letter was returned and why. Thus, a business doesn’t have to wait to have the letter physically returned before taking action, which may include integrating other channels of communication to contact the client, such as a telephone call or an email.” MPI aims to empower businesses by providing them with an active role in the mailing process, transforming the process itself into a proactive strategy for their clients with precise information in real time. 䡲

THURSDAY, JANUARY 28, 2016

S P E C I A L

F E A T U R E

SME Top Management Award Winners 2016

QUALITY OF LIFE

MARKETING

Raymond Arrieta

Jorge Bracero Catoni

Comedian, actor, singer and philanthropist

Chief Marketing Oﬃcer Cervecera de Puerto Rico

Raymond Arrieta has become the hero of walkers and the hope of cancer patients in Puerto Rico. When his colleague Dagmar was diagnosed with cancer, he pledged to fight cancer through his Da Vida Caminando (Give Life Walking) con Raymond event. To help raise funds for Oncological Hospital cancer patients, he chooses to travel the same route that legendary Ramón Rivera “Diplo” walked in 1953. That joint endeavor with the Puerto Rican Cancer League has led him—for seven consecutive years—to set out from the island’s southern region on a northbound journey, walking and promoting solidarity with cancer patients. In 2014, the money raised made it possible to acquire a CT machine that provides direct service to more than 400 patients, cover the cost of more than 5,133 chemotherapy treatments and sessions and remodel the Clinical Laboratory and Blood Bank. In June 2015, despite the island’s economic problems, the Da Vida walk exceeded expectations by raising $974,591,000. In addition to providing entertainment through television, Arrieta is known as an announcer and host in popular radio programs. In 2015, he launched the Raymond and Friends program and made a stage adaptation of the Men and the City segment, which set sales and attendance records. 䡲

Jorge Bracero has more than 20 years of marketing experience and has worked at companies such as Méndez & Compañía, Eli Lilly, FCB and EJE Sociedad Publicitaria. In 2014, he joined Cervecera de Puerto Rico with a mission to restructure the company’s business and marketing areas. In 2015, Bracero and his team focused on maximizing Cervecera’s brands portfolio and developed opportunities for each product—all within an environment of declining, highly competitive markets. In the case of Medalla Light, strategies such as launching the award-winning advertising campaign Lo Que Somos (What We Are), promoting the highly successful Medalla Light Electric Holiday event and launching the Medalla Absorbe el IVU (Medalla Absorbs the Sales Tax) campaign, contributed to Medalla Light’s market share growth from 30% to 32%. The brand also showed growth in areas such as brand recall, consumption and loyalty. For Malta India, the brand’s revitalization began by using innovative activations and events like Comic Con, Navitown and Vlogin. On social networks, Bracero and his team tripled its fans and also introduced new packaging in the form of 8-ounce cans. All these initiatives helped Malta India grow by 6%, reaching a 92% market share for the first time. 䡲

INSURANCE

WALESKA OLIVENCIA

TOURISM

Sister Julia José Brécord

Ricardo J. Carrión

Jaime Estrada Febo

CEO & Executive Producer El Tercer Hombre

District Sales Manager Mutual of Omaha, Puerto Rico

For the past 20 years, Sister Julia José Brécord has tirelessly led Hogares Rafaela Ybarra in San Juan, seeking to change the lives of more than 400 girls between the ages of 4-18. Thanks to her dedication, these girls have received the love of a true home from the Ángeles Custodios Sisters. Her many achievements include an innovative system of sponsors who once served as a model for a college thesis and through which the girls are given the opportunity to have family experiences with their godparents/sponsors. The process of renovating the houses where the girls and adolescents live began under her leadership. With an investment of about $2 million, they have managed to convert five wooden houses into modern homes with room for 36 girls, as well as administrative facilities to provide better services. It should be noted that Hogares Rafaela Ybarra has obtained excellent grades in monitoring tests by Fondos Unidos de Puerto Rico, the Education and Justice departments, and the Legislature. In 2015, they received recognition from the P.R. Senate for their excellent work. Sister Julia has created a magical atmosphere at Hogares Rafaela Ybarra that encourages individuals, corporations and associations to support the girls as well as the institution. 䡲

From Dorado and with a degree from Universidad del Sagrado Corazón, Ricardo Carrión began his advertising career as a creative professional, working in some of the island’s leading advertising agencies before opening his own agency, El Tercer Hombre. When making the transition from creator and executive producer of Puerto Rico Comic Con (PRCC), Carrión turned his passion for entertainment and popular culture into a company that for more than a decade has helped promote Puerto Rico in this aspect. Under his leadership, the event is now the region’s largest and most important entertainment property, growing by 33% over the past four consecutive years. Furthermore, according to Publisher’s Weekly, PRCC is among the top 20 entertainment conventions in North America. In its 2014 and 2015 editions, the event generated hundreds of hotel nights, plus economic activity in excess of $5 million. His vision, along with his strategic thinking and commitment to Puerto Rico, have been key to boosting Puerto Rico Comic Con’s international reach and the island’s image. Every year, more visitors and merchants from the U.S. mainland, Japan, the Dominican Republic, Central and South America, Canada and other countries attend the popular event. 䡲

Jaime Estrada Febo is a Life Underwriter Training Council Fellow who started in the insurance industry 18 years ago. He attributes much of his team’s success to a focus on education, training, monitoring and feedback aimed at goals, as well as being able to add value and help other people grow professionally within the industry. At the beginning of his career as an insurance agent, Estrada received sales recognition from the Builder’s Club and the Chairman’s Council. After taking the course GAMA: Essentials in 2007, he was ranked among the topthree sellers for life, disability and critical illnesses products. Currently, Jaime Estrada oversees an average of 35 insurance agents and is part of the team that trains and develops new and experienced agents at Mutual of Omaha. They specialize in life insurance, disability, critical illnesses and long-term care, as well as annuities, mutual funds and the concepts of estate planning, retirement and business continuity. In 2014 and 2015, his team was instrumental in the Puerto Rico oﬃce’s growth, which ranked among Mutual of Omaha’s topfive sales units at the national level. This achievement earned them the Diamond Level Award that measures the ability and results of the company’s sales managers. 䡲

Executive Director Hogares Rafaela Ybarra

THURSDAY, JANUARY 28, 2016

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F E A T U R E

SME Top Management Award Winners 2016

EDUCATION

MEDIA

BANKING & FINANCE SALES

Karen Garnik

Heri Martínez de Dios

Executive V.P., Dean of Technology & Marketing Atlantic University College

Margarita T. Millán

Annette M. Montoto Terrassa

Adrián Rivera

President Global Vision Marketing & Communications

Karen Garnik is a licensed public-relations professional with more than 28 years of experience in communications consulting, public relations and brand development. In 2009, she founded Global Vision Marketing & Communications, a strategic marketing and communications consulting firm serving manufacturing, distribution and service companies in Puerto Rico. Clients include Serrallés Distillery, Caribbean Produce Exchange, Cervecera de Puerto Rico and Social Media Group, the parent company of Gustazos.com. One of her professional passions is to promote local brands that highlight the excellence that distinguishes Puerto Rico worldwide. Her projects have successfully promoted the island in international markets and created memorable campaigns that have inspired local pride. Her achievements during 20142015 include projects such as the campaign to promote the 2014 Puerto Rico Tomato Harvest, which generated a 35% increase in sales and earned the SME’s Award for Best Implementation of a Public Relations Strategy and Marketing Excellence Award, as well as the plan to celebrate Serrallés’ 150th anniversary that included launching Don Q’s new image, the commemorative anniversary logo and a variety of public relations and advertising initiatives. 䡲

Educator, visionary, civic leader, executive producer, strategist, writer and entrepreneur are qualities that describe Heri Martínez de Dios. As executive vice president of Atlantic University College, he and his team turned the school into the leading university for digital arts in the Caribbean. In 2014, Martínez de Dios founded Gladius LLC, Puerto Rico’s first digital animation studio, where commercials, animated shorts, visualizations, videogames, post-production, virtual reality and animated feature films are produced. Recent achievements include his fourth Emmy Award from the Academy of Television Arts y Sciences for his technological and artistic achievements. He also won six Telly Awards for his short film “Phoebe y Luna.” Throughout his 29-year career, Martínez de Dios received the 2014 Executive of the Year from the P.R. Manufacturers Association and the 2014 Zenit Award from the P.R. Chamber of Commerce. He was honored as a Caribbean Business top 100 executive and the P.R. House of Representatives recognized Gladius LLC for its corporate and professional achievements. He has two master’s degrees, in marketing and digital graphic design, and is a doctoral candidate in educational technology. Martínez de Dios is an example of reaching goals through persistence and unbreakable will. 䡲

Margarita T. Millán has more than 30 years of experience in the TV industry in Puerto Rico. Her professional career began in the marketing department at Colgate-Palmolive before she became general manager of Mediafax, a company that changed the way of measuring TV viewership. Millán has held important positions in the industry, such as vice president of programming at Telemundo Puerto Rico, vice president of programming & advertising and manager of the WAPA-TV station, as well as an independent producer at the Puerto Rico Corporation for Public Broadcasting. She is currently vice president & general manager of Sistema TV, Canal Universitario Ana G. Méndez, the only channel in Puerto Rico that is affiliated with PBS. For the past six years, she has steered the educational station toward developing a new offer of local programming that highlights and promotes the arts, science and environmental preservation, cooking shows, news, investigative series and discussing public policy issues. She is constantly working in the latter as she is part of the Advisory Board of Sistema Universitario Ana G. Méndez’s Institute of Public Policy and the Regional Alliance for Economic Development. This effort by Sistema TV has earned recognition from the P.R. Chamber of Commerce. 䡲

Annette Montoto has been executive president of Microfinanzas Puerto Rico since January 2011. The company is a pioneer on the island, helping to improve the quality of life of micro-entrepreneurs and their families through innovative solutions and financing models to promote economic development and create a microfinance culture in Puerto Rico. In 2014 and under Montoto’s leadership, Fundación Comunitaria de Puerto Rico and CITI gave Microfinanzas Puerto Rico the “Best Microfinance Institution” award for its work on behalf of the island’s socioeconomic development. As past president of the Puerto Rico Economic Development Bank, Montoto has vast experience in developing innovative programs for small and midsize entrepreneurs. During her tenure, she was responsible for implementing business sector initiatives such as Puerto Rico Emprende (Puerto Rico Undertakes), a corporate socialresponsibility program aimed at creating micro-businesses. The program stood out for integrating major economic sectors like agriculture and tourism to micro-entrepreneurship initiatives as part of their value-added chain. Montoto has solid experience in the financial markets, both in the banking sector and local and international investments. 䡲

Adrián Rivera has more than 20 years’ experience in marketing, sales and advertising, holding leadership positions in multinational consumer-products companies such as Unilever, RJ Reynolds Tobacco and The Coca-Cola Company. He is currently vice president of Sales & Marketing of CC1 Companies, a conglomerate of Puerto Rican companies that include Coca-Cola Puerto Rico Bottlers, Puerto Rico Coﬀee Roasters, Carmela Foods, Nikini Water Plant, Club Caribe Distillers and Kikuet. Rivera began his career in advertising at Leo Burnett and Lopito, Ileana & Howie, handling accounts such as Procter & Gamble, Citibank, Unilever and Kimberly Clark. While working as Brand Manager at Unilever de Puerto Rico, he discovered his passion for brand management and found that a good marketing plan is only eﬀective if you get your sales team to understand it, adopt it as their own and successfully execute it. During the past 15 years, he has directed several departments within the Coca-Cola system in Puerto Rico. His sales achievements in 2014-2015 include the growth of the bottled water category with a 45% share of the local market and relaunching Sangría Cappricio, representing a 40% growth in six months. 䡲

PUBLIC RELATIONS

Vice President & General Manager Sistema TV, Canal Universitario Ana G. Méndez

Executive President Corporación para las Microfinanzas Puerto Rico

V.P. Sales & Marketing CC1 - Coca-Cola Puerto Rico Bottlers

S P E C I A L

F E A T U R E

THURSDAY, JANUARY 28, 2016

SME Top Management Award Winners 2016

ADVERTISING

AGRICULTURE

Edgardo M. Rivera

Gualberto Rodríguez

CEO & Managing Partner DDB Latina Puerto Rico

President Caribbean Produce Exchange Inc.

Edgardo Manuel Rivera graduated from Ball State University in Indiana with a degree in advertising. He began his career as an account executive at EJE Sociedad Publicitaria, where he had the opportunity to learn and develop his skills in handling advertising accounts while also acquiring working knowledge of the media, creative and production divisions. Rivera later moved to Miami to work at DDB, where, as regional director of Strategic Planning, he was responsible for planning, developing and carrying out advertising plans in more than 19 countries including South America, Central America and the Caribbean for global client ExxonMobil. In 2008, he returned to the EJE team and was instrumental in the transition from EJE Sociedad Publicitaria to what is now known as DDB Latina Puerto Rico. As part of his work at DDB, Rivera is responsible for leading teams in attracting new business. In the past two years, DDB has been the agency in Puerto Rico with the greatest number of acquired accounts, which include Coca-Cola, Puma Energy, Reliable Auto and Kimberly Clark, among others. Under his leadership, based on organic growth and the creation of new cutting-edge services, DDB has achieved a 32% increase in revenue in recent years. 䡲

Gualberto Rodríguez Feliciano represents the third generation of Puerto Rican entrepreneurs who founded Caribbean Produce Exchange (CPE) and since 1960 have left a mark on the food industry in P.R. and the Caribbean. Progressive, visionary and innovative, Rodríguez has over 17 years’ experience in business administration, operations, marketing, logistics and distribution. Under his leadership since 2005, CPE has achieved annual sales surpassing $85 million. CPE is the leading provider of fresh fruits, vegetables and eggs for the local and Caribbean markets. In 2012, he launched the Viva Fresh brand that includes precut fresh fruits and vegetables for retail and the food service industry. Committed to the transformation and revitalization of local agriculture, Rodríguez believes in sustainable solutions for agribusiness. Rodríguez has an M.B.A. from Yale University, Executive Education certificates from the London School of Economics and Harvard University, and a B.A. in Economics and Political Science from Fordham University. He collaborated with the boards of the Foundation for P.R. and Center for a New Economy, is a member of the local chapter of the Young Presidents’ Organization and was MIDA president. He is married to Mowzoun Neda, “Nutri Chef” at CPE.䡲

YOUNG ENTREPRENEUR

TECHNOLOGY

Luis Sánchez Ferrá

Kenneth Sewell

Ángel Torres Irizarry

President & Founder Database Marketing Services

President Plaza Provision Company

His extraordinary vision, commitment, courage and perseverance led Luis Sánchez to create an innovative shifts system that maximizes available technology and provides a business model that combines customer service with closed-circuit advertising. After graduating from the University of Wisconsin with a degree in business administration and working as an analystprogrammer, Sánchez always believed that with his experience and knowledge, he could undertake a successful online business. This became a continuous thought and wherever he saw a problem, he looked for his own technological solution. While waiting in a doctor’s office, he toyed with the idea of a system that would handle the monitoring of “waiting in turn,” but it had to be diﬀerent from what was already in existence, something innovative and cutting edge. His idea grew, and after defining the main features of the “turns” system, he began to develop it, with the first version ready in early 2013. The idea born in a waiting room has now become Turnos Media. The company has a mixed business model that includes advertising, system use and software sales. Today, the company has several employees and the system is being used in more than 60 government and private oﬃces in Puerto Rico. 䡲

Kenneth Sewell’s career started when he was managing and developing direct marketing programs for Chase Manhattan Bank’s customer base. After five years, his professional development continued at AT&T, where he was direct mail manager in charge of handling a volume of more than seven million pieces during the Equal Access process. He finished this portion of his career at Saatchi & Saatchi, working as account director at the agency’s direct marketing division. Experience gathered in all matters related to the mailings and direct mail industry motivated Sewell to launch his own business within the industry. In 1993, Database Marketing Services was born as a Puerto Rican company fully dedicated to the design, implementation and management of postal strategies. Under his vision and leadership, Database Marketing Services has transformed an industry with manual processes to one that has embraced digital technology as a strategy to measure mailings’ performance. One of the company’s key achievements was to design its proprietary Mailing Performance Indicator application, which is used to measure mailings’ behavior in “real time”. This focus on developing a strong technological platform is responsible for a 28% sales growth for Database Marketing Services. 䡲

After graduating magna cum laude with a degree in accounting from the University of Puerto Rico’s Mayagüez campus in 1975, Ángel Torres began his career at the international accounting firm of Arthur Andersen & Co. Four years later, he joined Bacardi Corp. as director of internal audits, and after holding various management positions in the finance, operations, sales and marketing departments, he was named company president in 1997. After 28 years at Bacardi, 12 of them as president, he retired in late 2008. In early 2009, Torres became president of Plaza Provision Company, a century-old firm that is the leader in the import and distribution of food items, household products and health products in Puerto Rico. For the past two years, Plaza Provision Company has earned recognition as Best Distributor on the Island by the Performance Monitor independent study. Under his leadership, the company has kept growing despite the economic and demographic challenges in Puerto Rico, by venturing into new segments and engaging in the distribution of frozen products manufactured in Puerto Rico. The company has also expanded its team’s abilities to oﬀer a wide range of sales services and created a new division to distribute hardware products.䡲

President Turnos Media LLC

HALL OF FAME

PEOPLE TO WATCH IN 2016 Special Feature January 28, 2016 Pages 37-40

THURSDAY, JANUARY 28, 2016

Dr. Timothy Howard

Ramón Hernández Guillermety

Headmaster Tasis Dorado

Last July, when Dr. Timothy Howard was welcomed by the local community as the new headmaster at TASIS Dorado, he was optimistic about the future of the prestigious school. “That was an exciting time for me, as I had so much to learn from the students, parents, teachers and other administrators. I did a lot of listening,” he said. Now, with a full semester under his belt, he has a clearer view of how he and his colleagues can take the school to the next level. “Our opportunities and challenges are now coming into focus and I have a better sense of the lay of the land. We’re looking at a number of ways we can build on our strengths and address areas of growth.” Despite Puerto Rico’s economic crisis, he believes the school can expand and thrive in a number of areas. “There’s so much happening here—academically, artistically and athletically—and so much potential for Tasis Dorado to grow in exciting ways that are good for students as well as financially responsible,” he said. This includes programs such as a new Makers Space/Fabrication

Sales Manager Molinos de Puerto Rico

Lab (FabLab), which will start in August and is aimed at helping students integrate and apply their knowledge and ideas, using everything from sophisticated 3D printers and architectural software to basic hammers and nails. “We’re looking forward to hosting an invitational event in Spanish, whereby students from other schools will join with ours in a number of oratory, acting, reading and interpretation events,” he added. “This will be a great opportunity to use our new state-of-the-art theater, which is already providing lots of opportunities for students and the surrounding community.” Howard is also looking forward to getting the school more deeply involved in various leadership and community service programs, such as partnering with the Ricky Martin Foundation and Habitat for Humanity. “My goal is to develop our students’ leadership and creativity, while providing experiences that will lead to greater confidence,” he said. Tasis is the acronym for the American School in Switzerland. 䡲

For Ramón Hernández Guillermety, daily inspiration is present in the trust of his team, peers and leaders. “I am inspired every day by the men and women who work in our plant, who work with pride and love to serve Puerto Rico with the best quality products,” said Hernández Guillermety, whose sales experience includes more than 24 years in retail and distribution. “Personally, my biggest inspiration is my family, for them I want to be better, give more and do more.” He said there are two markers that define accomplishments: commitment and leadership. “On commitment my proudest accomplishment is my family, while on leadership, it is the opportunity to lead an amazing and talented group of individuals who are experts in this industry and the relationships we have built with our clients, counterparts and top management,” he noted. “As a result, Molinos de Puerto Rico has maintained a solid and consistent increase in sales in a weak economy.” Hernández Guillermety’s history in sales began at Supermercados Amigo,

where he started working as a bagger and learning the ropes of the business. This scenario prompted him to discover his passion for customer satisfaction. “Knowing that each day we help satisfy people with the best quality products to feed their families drew me in and keeps me in this industry,” he said. “I enjoy all aspects of the work I do; however, there are two things that provide joy above all others: interactions with clients and customer satisfaction.” Cultivating positive relationships and communication has been essential for Hernández Guillermety’s career. “In a world where everyone communicates, but very few connect, cultivating positive relationships with people opens doors to better understand others’ needs and provide solutions,” said Hernández Guillermety, adding that to face Puerto Rico’s current challenges requires reliance, a positive outlook and commitment. “It will take all of us to be engaged and committed, to be intentional and focused, to rise to the occasion and roll up our sleeves for Puerto Rico.” 䡲

THURSDAY, JANUARY 28, 2016

Nydia E. Luciano Garced

Evelyn Monroig

President Juice Market

Nydia Luciano Garced has achieved what many only wish or dream about: working without really working. “It’s joyful waking up every day and going to work on something that you truly enjoy,” she said. “It’s a blessing to be able to work on something that is yours and in our case, involves the whole family.” Luciano Garced is part of the dynamic sister duo that launched Egg Market in Puerto Rico in 2010, importing and distributing top quality eggs under the same name. She and her sister Ivette decided to go into the dairy business due to the diﬃcult economic climate, as they were laid oﬀ from their jobs—in Nydia’s case as an accountant in a major healthinsurance company. “You could say that we decided to create a company that would never be able to fire us,” Luciano Garced quipped. “But it’s really empowering and fulfilling to know that you are working for you and your family’s future and well-being, not only in an economic sense, but also in the sense of belonging and having re-

President LVD Team

sponsibility for something that no one can take away from you. “ With Juice Market, founded in November 2015, the company wanted to explore other products that would provide healthy alternatives for consumers, with the local palate in mind. They are 100% natural juices, non-GMO [genetically modified], without preservatives and gluten free. “We want people to know that when it comes to juices, they don’t have to settle for sugar and water,” Luciano Garced said. “We wanted to bring an option that would answer the needs of young professionals and parents who are interested and willing to invest in quality products that add to healthier lifestyles for themselves and their families.” Luciano Garced, who said discipline and focus are essential to her strategies for success, advised those who are looking to launch their own businesses to also have these same qualities. “Never, ever lose faith in yourself,” she said. 䡲

“The greatest inspiration in my life is to help empower men and women to reach their maximum potential in all areas of their lives, giving them the tools and resources to achieve this,” she said. “In my personal life, being an example and a role model for my daughter is my biggest inspiration.” Monroig fulfills this inspiration in part through her work at LV Dream Team, which teaches and trains people in leadership, systems and strategies in network marketing. “I’m in love with the direct sales and network marketing industry because it is an industry that helps people to improve themselves and succeed, not only with talent and skills, but also with the right attitude,” she said. “It’s great to work with people and help them realize that with vision and focus, they can achieve their dreams.” Describing herself as persistent, Monroig added that her strategy for success is being structured, disciplined, always

keeping her word and always being on time. “I want people to have a grand vision that wakes them up and gets them out of bed in the morning with a passion for life and their goals,” said Monroig, who has been a certified life coach since 2011. “Through my work, I want to be able to touch and help as many Hispanic families as possible, whether in Puerto Rico, the U.S. mainland or Latin America, to reach their dreams.” Monroig carries this message in seminars such as “Trayectoria Hacia una Mente de Abundancia” (Path to a mind of abundance), a three-day Biblical-based seminar that aims to empower people with skills in the physical, mental, spiritual and financial areas. “I want people to dare themselves to believe again, to dream that there’s a better future for them, that the best is yet to come,” said Monroig, who also has had a “Maturing with Elegance” program on Nueva Vida 97.7 radio station since 2005. 䡲

Thursday, january 28, 2016

Daritza Mulero Méndez

Joaquín M. Nieves

President Columbia Central University

For Daritza Mulero Méndez, president of Columbia Central University, success lies on factors such as teamwork, objectivity and adaptability. “If we can accomplish to move as a team in the same direction, work will flow naturally and so will success,” said Mulero Méndez, a 14-year veteran of the industry. “I think work becomes enjoyable when in addition to working to accomplish the company’s goals, we are also contributing to a better society by providing education and providing the qualified human resources that we need.” To be successful in the industry requires a continuous response to its demands and challenges, she said. “I would say that adaptability is one of my distinctive qualities, my ability to embrace change and readjust to whatever is needed,” said Mulero Méndez, adding that her daily inspiration arises from each day itself. “Knowing that I can do what I like for one more day makes me work harder so I can provide for many more to come.”

President & CEO Multipak Postal Service & Affiliates

However, there is an even more significant source of inspiration for Mulero Méndez: her daughter. “Knowing that I have the job of providing for someone, as well as being a positive role model and very likely the person who will be a driver of my daughter’s future, inspires me to do my best and keep moving forward, independently of the challenges that may arise,” she said. Mulero Méndez said the education field faces the same challenges as other industries: Puerto Rico’s weak economy and the high levels of migration. “Although we don’t have control over these factors, we do control our services. Therefore, it’s important that we continue providing high-quality education and we work toward clearly projecting that Puerto Rico is an important destination and provider of education,” she noted. “It’s important that we make sure the value of our university is sustained and known locally and internationally, so it is clearly established that this is a place worth being at.” n

In the early 1990s, Puerto Rico experienced an economic recession that could have dashed the dreams and hopes of any young graduate or professional of landing a good job, let alone starting a business. “There weren’t that many job openings available at the time, especially for people like me with a degree in business administration and finance,” Joaquín Nieves said. “I didn’t see any other option; I had to start a business, and instead of waiting for opportunities, I decided to make those opportunities happen.” In December 1992, Nieves sat down with pen and paper and proceeded to write a business plan for a messenger and delivery service company, which he launched Jan. 27, 1993. He still has the three pages of the yellow notepad where he traced that first business plan that represented the starting point of what would be a 22-year career at the head of companies that would set trends in fields such as postal, logistics and transportation services. In 2009, Nieves founded Multipak Postal Services, which

now includes affiliate Multipak Stores throughout Puerto Rico, sendtopuertorico.com and CargEx Freight Systems. Besides Puerto Rico, the company has offices and operations in Florida and also serves the neighboring U.S. Virgin Islands. “We really enjoy our job, you could say it makes us feel like heroes sometimes,” Nieves said. “I love to see that through our work, we allow our clients to achieve their goals, from small businesses to large manufacturing operations.” Nieves, who describes himself as so sensitive that he even likes to help his competitors, said persistence, his favorite word, continues to be essential in the company’s success. “You have to be persistent in all endeavors, especially when it comes to doing all that it takes to meet your commitment to clients,” Nieves said. “Even if sometimes it may mean incurring losses, it is worth it if you have maintained that commitment to your clients with solutions and services that cater to their specific needs.” n

THURSDAY, JANUARY 28, 2016

Federal Affairs

Seventh time since 2015 that Congress holds hearings on Puerto Rico

U.S. House Hearing Over Federal Board in P.R. Postponed Until Feb. 2 BY LUIS J. VALENTÍN l.valentin@cb.pr

The U.S. House Indian, Insular & Alaska Native Aﬀairs Subcommittee, chaired by Rep. Don Young (R-Alaska), postponed until Feb. 2 a hearing on the potential establishment of a federal fiscal control board on Puerto Rico. Titled “The Need for the

Establishment of a Puerto Rico Financial Stability and Economic Growth Authority,” it was originally scheduled for Jan. 26. The latest congressional hearing marks the seventh time since last year that a congressional committee publicly discusses issues related to the island’s fiscal and economic crisis.

Although witnesses have yet to be announced, former Washington, D.C., Mayor Anthony Williams is expected to testify, Bloomberg reported. Before becoming mayor, Williams was D.C.’s chief financial oﬃcer during the late 1990s when the city was appointed a fiscal control board by Congress to tackle its fiscal crisis.

For his part, Resident Commissioner Pedro Pierluisi said he expects Congress to finally unveil a legislative package aimed at tackling Puerto Rico’s fiscal and economic woes following the Feb. 2 hearing. He would support “meaningful federal oversight,” as long as it is paired with providing the commonwealth with access to a debt-restructuring regime and “better—that is, more statelike—treatment of Puerto Rico.” The new House hearing follows one held on Jan. 12 by the Energy & Mineral

Resources Subcommittee, where energy challenges aﬀecting the commonwealth were discussed. Among the issues visited during that hearing were the troubled Puerto Rico Electric Power Authority (Prepa), the high energy costs residents and businesses face, and even access to Chapter 9 of the U.S. Bankruptcy Code, which would allow Puerto Rico to restructure about a third of its $70 billion debt. The commonwealth government is banking on congressional action, particularly over access to

a debt-restructuring regime such as Chapter 9, as it tries to avoid additional defaults amid a debt-service schedule that becomes steeper this summer. House Speaker Paul Ryan (R-Wis.) has said the lower chamber aims to come up with a solution to the Puerto Rico issue before the end of March. Meanwhile, Democratic senators are reportedly seeking to unanimously push Republicans in the upper chamber to grant the commonwealth access to a debt-restructuring mechanism. 䡲

THURSDAY, JANUARY 28, 2016

2016 NAIAS

Acura Precision Concept: The Future of Acura BY JOSÉ L. CARMONA j.carmona@cb.pr

The Acura Precision Concept model made its world debut Jan. 12 at the 2016 North American International Auto Show (NAIAS) in Detroit. The concept points toward a bolder, more distinctive futuristic look for Acura’s vehicle design. The Acura Precision Concept was developed by the Acura Design Studio in California to express the Acura brand’s DNA of “Precision Crafted Performance.” With an emphasis on highcontrast details and the intersection of modern, sheer surfaces and muscular, organic sculpting, the Acura Precision Concept aims at communicating Acura’s focus on performance and prestige through its ultralow and wide stance, long dash-to-axle ratio, deeply sculpted surfaces and the debut of a new Diamond Pentagon grille. “The Acura Precision Concept is more than simply a concept vehicle—it is a design study model that literally will shape the direction of all future Acura products around our Precision Crafted Performance DNA,” Dave Marek, Acura global creative director pointed out during the vehicle’s unveiling. “The Acura Precision Concept is the leading edge of a renewed commitment to delivering Precision Crafted Performance in every facet of the product experience and creating a powerful and very exciting direction for

the next generation of Acura models,” Marek added. FORWARD-LOOKING CONCEPT The Acura Precision Concept’s crouched and athletic stance is further emphasized by its deeply sculpted side surfaces pouring over swelling rear-wheel arches covering 22-inch wheels and tires. The forward-looking concept also features signature lighting designs—in front with its Jewel Constellation light-emitting diode (LED) headlights composed of organically arranged fractal elements and floating LED taillights in the back. A key design theme, dubbed “quantum continuum,” is seen in the seamless transition of materials and structure from the exterior to the interior of the vehicle, which is further highlighted by the absence of a B-pillar support post. The large door-rocker panel flows into the interior side sill, transitioning into a cantilever for the floating rear seats. The rear center high-mounted stoplight becomes an architecture element piercing the rear glass and then flowing down to help form the structure for the metal airfoil shape of the rear headrests. DRAMATIC INTERIOR The elegant and powerful exterior is matched by its dramatic interior design, where cantilevered surfaces meet with striking tones, expressive surfacing and modern detailing. Of particular

note are the double-layered instrument panel, the highcontrast front seat surfaces, the ultra-thin “floating” rear seats, evoking the look

of modern lounge furniture, and the hand-crafted audio speaker grilles made of exotic wood. The driver’s space is highlighted by a compact, raceinspired, sports steering wheel with paddle shifters and Integrated Dynamics System controls, a floating center meter, a driver’s head-up display, a cantilevered center stack and an ultra-wide, thin and curved center display screen. 䡲 Dave Marek, Acura global creative director, explains the idea behind the Acura Precision Concept during the model’s world debut in Detroit.

THURSDAY, JANUARY 28, 2016

CARS 101 Premium or Regular? That is the question BY JUAN A. HERNÁNDEZ j.hernandez@cb.pr

Let me start by saying that, like many of you out there, I know very little about cars—about the mechanics of cars, that is. I don’t say this to impress anyone with my frankness and/or my lack of knowledge on the subject. It’s a justification. A few weeks ago, I was having lunch with some very good friends and one of them said, “the car is the second biggest investment a regular person makes in his life.” (The first being our homes.) I stopped eating and looked at my friend. “Yes,” he continued, “and yet, most of the people know very little about it; how it works, how to take care of it…” I was appalled. During my life, I have bought five diﬀerent cars so far, at a cost of several thousand dollars each, and I know almost nothing about how they work (beyond gas and the ignition key) or how to take better care of them (beyond washing and waxing). So, my goal here—at least for the time being— is to let you know how you can take better care of your investment, without it costing you an arm and a leg. This is to be a learning experience, even for me. WELCOME TO CLASS. TODAY’S SUBJECT IS GAS. So you think you can get better gas mileage by

pumping premium gas into your car? More power? Better performance, maybe? This may come as a surprise to you, but higheroctane gas won’t make your car go faster, get better mileage or pollute less. What it will actually do is cost you more. So, my dear friend, the only thing you may be getting out of premium gas is a lighter wallet. You may also be surprised to know that most cars are designed to run on regular gas. What? You didn’t know that either? Did you ever read your owner’s manual? The basic rule here is

have tried to market it in Puerto Rico, most gas station owners and drivers haven’t favored it. Contrary to popular belief, higher-octane fuel doesn’t deliver more power to your engine because all gas grades essentially have the same amount of energy. The truth is you shouldn’t buy premium gas unless you have a knocking problem. If your engine is driving you nuts with the knocking and pinging, that is a signal for you to change to the premium pump. When a car knocks, it is because there is improper combustion of the fuel in

one or more of its cylinders. What happens is that as the fuel-air mixture is sprayed into the combustion chamber, it ignites on its own because of the pressure of the piston

instead of waiting for the spark plug to do its job. This act of insubordination on the fuel’s part amounts to an uncontrolled explosion occurring before the spark plug can generate a

You can take better care of your investment, without it costing you an arm and a leg that you use whatever kind of gas the manual says. If it is high octane, you use it. But, as I said before, most cars are made to run on regular. In the U.S., regular gas has an octane rating of 87 and premium is 91 or 92. There is also a midgrade rating of 89 but, while some oil companies

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nicely controlled ignition of the fuel mixture. To avoid this act of rebellion, higher-octane (91-92 rating) gas is formulated to burn slower. This means it would require the spark of the plug in your car to ignite. Because premium gas is formulated to burn at higher pressure, (compression) it is also the recommended fuel for high-performance cars, whose engines are specifically designed for high compression. Now, if you do own a trendy sports car instead of a sport-utility vehicle (SUV), please don’t be a cheapskate; use premium. Otherwise, you will get the same knocking as if you were driving the SUV. 䡲

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THURSDAY, JANUARY 28, 2016

2016 Toyota Tacoma TRD 4X4 Sport

Taming the Urban Jungle BY JOSÉ L. CARMONA j.carmona@cb.pr

For more than two decades, the Toyota Tacoma has been a very popular alternative for shoppers who feel regular fullsize pickup trucks are just too big or too expensive. For 2016, the redesigned midsize Tacoma hasn’t drifted too far from its proven formula. However, Toyota has made some notable improvements to further boost its appeal. Top

segment competitors include the Chevrolet Colorado and GMC Canyon. TWO CAB CHOICES, FIVE TRIMS The 2016 Toyota Tacoma is available with two cabs: the extended Access Cab (with small rear-hinged back doors) and the Double Cab (a larger crew cab). The Tacoma is now oﬀered in five trim levels: SR, SR5, TRD Sport, TRD Oﬀ-Road and Limited. Our test vehicle, the TRD 4X4

Sport, came standard with a cargo-bed rail system with fixed and adjustable tie-downs, bedliner, sliding rear window, full power accessories (windows, locks and mirrors), air conditioning, tilt-&-telescoping steering wheel with audio controls, GoPro windshield mount, rearview camera, Bluetooth phone and audio connectivity, voice controls, Siri Eyes Free (for Apple phones), 6.1-inch touchscreen interface and sixspeaker audio system with CD

player, USB port and auxiliary audio jack. The TRD Sport model also adds light-emitting diode (LED) daytime running lights, unique exterior trim (including a hood scoop), 17-inch alloy wheels, sport-tuned shock absorbers, a bed-mounted 120-volt power outlet, keyless entry and ignition (automatic transmission only), wireless-phone charger, leather-trimmed shift lever, special upholstery (shared with the TRD Oﬀ-Road), auto-

dimming rearview mirror and the SR5’s optional upgraded infotainment bundle. The TRD Sport’s options include a Premium and Technology package that adds automatic headlights, sunroof (Double Cab only), dual-zone climate control, heated front seats, rear parking sensors and blind-spot monitor with rear cross-traﬃc alert.

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THURSDAY, JANUARY 28, 2016

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TWO ENGINE CHOICES Depending on the trim level, the 2016 Toyota Tacoma comes with either a 2.7-liter four-cylinder engine (available on SR and SR5 models only) or a 3.5liter V6. Both rear-wheel-drive (4x2) and four-wheel-drive (4x4) configurations are available. All 4x2 Tacomas get a six-speed automatic transmission, while 4x4s are available with the automatic or one of two manual transmissions—five speeds for the four-cylinder engine, or six speeds for the V6. The 3.5-liter V6 engine in our test vehicle is rated at 278 horsepower and 265 pound-feet of torque. Environmental Protection Agency (EPA) fuel estimates for the six-cylinder automatic 4X4 Tacoma is 17 miles per gallon (mpg) in the city, 20 mpg on the highway, and 18 mpg combined. Four-cylinder Tacomas can tow a maximum of 3,500 pounds, while V6 models can handle up to 6,800 pounds, depending on drivetrain and cab configuration. UPGRADED INTERIOR After more than a decade in the market, the

tie-down cleats. The tailgate is both removable and lockable, and if you open it and let go, it won’t slam down—because the hinges lower it gently to the bumper level.

old Tacoma was certainly showing its age behind the wheel, so seeing some contemporary design flair with the new truck was very welcome. As expected, most materials appear to have been selected with durability in mind rather than luxury, but there are some inspired choices here and there, including trim-specific rubber dash inserts for the TRD model. We’re glad the userfriendly nature of the truck’s controls layout hasn’t changed. The very responsive touchscreen interface sits front and center, with large glove-friendly climate-control knobs and secondary switches below. The Tacoma’s front seats

are distinguished by their low mounting position and lack of height adjustability. In addition, there’s limited headroom for taller occupants in the front seat. Another unfortunate Tacoma trait is the short range of its telescoping steering wheel—it seems to come out about an inch, which doesn’t help much for taller drivers. The Tacoma Double Cab’s rear quarters are adultfriendly, featuring adequate legroom and an agreeably angled seatback. What’s more, the rear seats fold down, which is a very nice feature. In the back, the Tacoma comes standard with a plastic-lined bed as well as four adjustable and four fixed

MORE SERENE DRIVE The Tacoma’s 3.5-liter V6 engine is noticeably smoother and quieter than the 4.0liter version it replaces. It also feels sprightly enough in real-world driving, especially at higher revs. However, when trying to accelerate from a stop, the vehicle was a tad slow despite having 42 extra horsepower than the previous engine. The cab for the 2016 Tacoma is certainly better insulated than before, giving the truck a more serene ride on a variety of surfaces. We liked the way the TRD 4X4 Sport with 17-inch tires soaked up the bumps on pavement. The Tacoma’s steering offers a pleasant build-up of effort and good centering, despite its wide turning circle. Off-road, the Tacoma is ready for just about anything, with its 9.4 inches of ground clearance and 29- or 32-degree approach angle, which far surpasses any competition.

VEHICLE SPECS

VEHICLE TYPE: Midsize pickup truck DRIVE TYPE: Four-wheel drive ENGINE: 3.5-liter, direct injection V6 TRANSMISSION: Six-speed automatic HORSEPOWER: 278 hp @ 6,000 rpm TORQUE: 265 pound-feet @ 4,600 rpm BRAKES: Front ventilated discs, rear drums; antilock brake system; stability & traction controls, electronic brake-force distribution TIRES/WHEELS: P265/65R17; machine alloy wheels TURNING CIRCLE: 40.6 feet SEATING CAPACITY: Five CURB WEIGHT: 4,480 pounds FUEL ECONOMY (MPG): 18 City; 23 Highway PUERTO RICO PRICE AS TESTED (including excise tax): $36,995 PROS: Refined V6 engine with excellent oﬀ-road ability; responsive touchscreen interface; extensive list of options; superior resale value CONS: Low driver’s seat with no height adjustment; steering wheel has minimal telescoping range; acceleration with V6 engine is a tad slow BOTTOM LINE: A great choice for a midsize pickup truck, the redesigned 2016 Toyota Tacoma boasts a new V6 engine and interior, along with available oﬀ-road performance and more aggressive exterior styling to match it

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THURSDAY, JANUARY 28, 2016

Advertising

Ad agency celebrates second anniversary this month

Oneightyº Begins Year With New Campaigns, Accounts and Team Members BY MARIO BELAVAL DÍAZ mariob@cb.pr

Local advertising agency Oneightyº celebrated its second anniversary this month with the launch of a new TV campaign for client Honda. “The campaign is based on all the distinctions that make Honda stand out among all other car makers,” said Ricky Soler, chief creative officer & partner at Oneightyº. “With the statement, ‘More than a car, it’s a Honda’ (Más que un carro, es un Honda), two TV and movie theater spots were developed to bring this statement to life.” The commercial opens with a shot of a typical traffic jam on Baldorioty Avenue in San Juan, with cars from other automakers making their way at a stop-andgo pace. As the cars make their way, an announcer begins to point out the different distinctions that Honda has received for its qualities and performance. As the announcer mentions these facts, cars begin to disappear from the traffic jam, until the thoroughfare is empty. Then a Honda appears alone, with the road all to itself, and the ad closes with the tagline, “More than a car, it’s a Honda.” The spot, developed by the Oneightyº creative team led by Soler, was produced by BUMP under the direction of Willie Berrios and the Reaktor Post team led by Frankie Cueto. Oneightyº also launched this month a print campaign for the new Honda Accord, now equipped with Honda Sensing, a unique system that allows drivers “to see things you can’t see” on the road, as the ad’s tagline states. Honda Sensing is a group of safety features that range from adaptive

cruise control to lane departure warnings, according to autotrader.com. “In just a few weeks after its launch, the print ad has been selected in the world-renowned advertising website, Best Ads on TV and Commercial Photo Magazine in Japan,” Soler said. “This is the second time our Honda print work has been selected in this important advertising publication in Japan.” Oneightyº also welcomed the addition of Ensure nutritional shakes and drinks to its current roster of clients and is already working on the production of a new TV campaign to be launched

in early March. Later this month, Oneightyº will be launching a new campaign for Amstel Bright Beer in the Caribbean region. “It was both exciting and challenging to work on a whole new brand within the Amstel family of beers,” Soler said. The Oneightyº staﬀ is also bigger with a new creative team comprised of Nicole Alessandra Pérez, as art director. Pérez joined the agency last October after working in JWT San Juan; she is working with copywriter Sachira Rodríguez, who had already joined the agency in September 2015, from Kroma Advertising agency. “This is an award-winning team, who this year will be representing Oneightyº in the Cannes Young Lions Puerto Rico competition,” Soler noted. “Overall, we are proud to say that after two strong years in business, we are looking forward to an even more successful third year.” 䡲

Creative Fact Sheet: Client: Bella Group Agency: Oneightyº Concept: “Tapón” Creative Director/Copywriter: Ricky Soler Art Director: Nicole Alessandra Pérez Account Director: Ricky Rivera Production House: BUMP/Reaktor Post Producer: Arlette Ayala

Director: Willie Berríos Editor: Reaktor Post Brief Campaign Description: When you see all the distinctions that Honda has received, you realize that “More than a car, it’s a Honda.” Media Used: TV Target Audience: Men and Women 18-45 years old Campaign Budget: $300,000