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Online Appendix – Supplementary Material ONLINE APPENDIX – SUPPLEMENTARY MATERIAL Development and Decay: Political Organization, Economic Conditions, and Municipal Corruption in Puerto Rico, 1952-2015 Gustavo J. Bobonis1, Luis Raúl Cámara Fuertes2, Harold J. Toro3, and Julie Wilson4 January 2021 1 Professor, Department of Economics, University of Toronto, BREAD, and J-PAL. Address: 150 St. George St., Toronto, Ontario, M5S 3G7, Canada. Tel: 416-946-5299. Fax: 416-978-6713. E-mail: [email protected]. 2 Professor, Department of Political Science, University of Puerto Rico-Río Piedras. Address: P.O. Box 23445, University of Puerto Rico, Río Piedras Campus, San Juan, PR 00931, USA. Tel: 787-764-0000, ext. 4332. E-mail: [email protected] 3 Teaching Professor, Keough School of Global Affairs, University of Notre Dame. E-mail: [email protected]. 4 MA, Department of Economics, University of Toronto. E-mail: [email protected]. 1 Appendix A: Context The Report of the Military Governor of Puerto Rico on Civil Affairs (1902) highlights issues and lacking fiscal and organizational capacity at the municipal level: “The municipal authorities could not collect taxes that were due, and the income counted on by approved budgets could not be realized. Police, school-teachers, and employees generally were unpaid, and civil hospitals that had to not been wrecked by the storm were closed or unable to receive the deserving applicants who thronged to them. An approved budget, regularly formed, became only some sheets of paper, and really meant nothing more than the town needed such and such amounts to administer its affairs. Those taxpayers who could pay often had no confidence in the honesty of the officials and so would find pretexts for refusing payment, and such proprietors usually had enough influence with the courts to prevent the collection being enforced by judicial procedure.” (p. 43) Colonial officials linked these forms of misgovernance to various practices of corruption and capture of local affairs – due to the informal rules of conduct of local officials in ways that persisted from the Spanish regime: “In some, indeed in many, towns the administration was most vicious, and frauds and peculations were common, admitted by all; yet the law provided severe penalties for officials aiding or permitting, or who did not prevent, fraud and malversations. The treasury or depositary of Caguas turned over his duties to his successor early in 1899. His books showed a large balance of cash on hand; yet, though the chest was empty, no proceedings were taken to enforce restitution. The bond of fidelity taken was worthless, and there was no way to recover the funds stolen. The members of the council who were in office when this occurred were personally responsible, yet they were not held to an accountability.” (p. 41) Similarly: “It was found that in practice the alcalde and a few of his friends dominated everything, the others absenting themselves from the sessions, or took no interest. This was probably as it was intended to be. There was not much improvement in procedure and administration after the newly elected councils were installed. It seemed to be impossible to break away from the old practice. The alcalde still continued to be the dominating power, as he was always of the party holding a majority representation. The tendency was for the 2 minority to be absent or decline to vote—this notwithstanding the fact that the rules of procedure enacted heavy penalties for illegal or unnecessary absence.” (pp. 42-43) The U.S. colonial powers implemented tutelage rule under both the Foraker Act of 1900 and Jones Act of 1917 and centralized decision-making regarding municipal affairs, with the stated objective of “educating the natives in self-government” by always retaining important functions in “continental” hands (Clark 1972). According to Clark (1972): “[m]unicipal autonomy under the Jones Act of 1917 was severely restricted: a clause in the law established the requirement for authorization by the U.S. President for funds to be used in any way other than the purpose for which they were originally appropriated (U.S. Statutes at Large, XXXIX, 952). This restriction was interpreted by colonial officials to apply not only to the insular government but also to the municipalities as well.” (p. 228) U.S. colonial officials claimed that poor local governance was mainly the result of practices found following the regime change. The Report of the Military Governor of Puerto Rico on Civil Affairs (1902) remarks: “[i]t is not surprising that honest and efficient municipal government should not exist; in fact, it would have been a miracle if, with all the constraints and inspections to which the local authorities were continuously subjected, good administration had ever been found. The miracle did not supervene, and the type of municipal government found by Americans was but another name for misrule.” (p. 39) The report also attributes patterns of misgovernance to intrinsic attributes of the Puerto Rican’s ethnicity: “It is a melancholy reflection that there is no instance when the Spanish race, through an honest exercise of the elective franchise, has been able to establish and maintain such a government.” (p. 45). Clark (1972) argues that this lack of autonomy led local and insular-level officeholders to prioritize patronage over programmatic politics, a strategy crucial for electoral success throughout the period: “[i]f the important functions of government (finances, public education, law and order, and long-range status) were thus removed from Puerto Rican control […], what remained for the native politicians? The very real limits upon their governmental participation made it tempting and easy for them to see politics as simply contests for the spoils of patronage. Without opportunity to make their political activity true statecraft, is it any 3 wonder Puerto Ricans were carrying on the "mere politics" denounced in 1940 by Luis Muñoz Marín?” (p. 233) These historical debates thus highlight the need to understand the political and electoral environment throughout our period of analysis as we argue it plays a fundamental role in explaining corruption patterns. 4 Appendix B: Description of Data Categories Used in Section 4.1 Figure 2: Panel A presents the average number of violations as well as those attributed to the top municipal officials (i.e., mayor or vice-mayor) throughout the period. Panel B shows the average level of reported findings and compares them to the share of those violations that was referred to the DoJ. In both panels, the measure of corruption represents violations per number of reports issued for a municipality in each term. For purposes of framing historical episodes, we include marker lines for each Comptroller’s term in office and for each governor’s terms in office in Panels A and B, respectively. Figure 2: Average Number of Corrupt Violations by Electoral Term Panel A: All violations and violations by Panel B: All violations and violations referred mayor/vice mayor to PR Department of Justice (with marker lines for Comptroller terms) (with marker lines for Gubernatorial terms) Note for Panels A and B: These figures represent the average number of violations per report in each electoral term. *Three reports from 1952 are included in the data for the 1953-1956 electoral term. **The latest publication year of reports in our dataset is 2015, and our data therefore does not include all reports in the 2013-2016 electoral term. Notes for Panel A: The dashed vertical lines reflect Comptroller terms as follows: (1) Dr. Rafael de J. Cordero Orta: July 1952 – May 1961; (2) Justo Nieves Torres, CPA: July 1961 – May 1971; (3) Lcdo. Basilio Santiago Romero: September 1971 – August 1977; (4) Félix L. Salgado Torres: August 1977 – January 1978; (5) Ramón Rivera Marrero, CPA: February 1978 – September 1986; (6) Luis M. Malpica Rodríguez, CFE: October 1986 – September 1987 (Interim appointment by the Governor); (7) Lcda. Ileana M.Colón Carlo, CPA, CFE: October 1987 – September 1997; (8) Sr. Manuel Díaz Saldaña: October 1997 – June 2010; (9) Hon. Yesmín M. Valdivieso: July 2010 – present. Notes for Panel B: The dashed vertical lines reflect Gubernatorial incumbents as follows: (1) Luis Muñoz Marín: 1949 – 1964; (2) Rafael Sánchez Vilella: 1965 – 1968; (3) Luis Ferré: 1969 – 1972; (4) Rafael Hernández Colón: 1973 – 1976; (5) Carlos Romero Barceló: 1977 – 1984; (6) Rafael Hernández Colón: 1985 – 1992; (7) Pedro Roselló: 1993 – 2000; (8) Sila M. Calderón: 2001 – 2004; (8) Aníbal Acevedo Vilá: 2005 – 2008; (9) Luis Fortuño Burset: 2009 – 2012; (10) Alejandro García Padilla: 2013 – 2016. 5 Figure 3: The figure documents time trends by type of violation identified in the municipal audits by municipal government activity classification. The notes to the figure in the appendix provide details of the types of findings in each category. Figure 3: Average Number of Corrupt Violations per Report, by Electoral Term and Class of Government Activity Contracts & Disbursements: issues with change orders; illegal contracting – with and without required auctions; issues with licensing or titling/ownership; illegal payments (e.g. payments to non-employees); faulty contracts; absence of or late contracts or purchase orders. Human Resources: illegal hiring, including nepotism and patronage; human resources mismanagement (e.g. sexual harassment suits); discriminatory layoffs/demotions (political discrimination); ghost/phantom employees. Controls & Regulations: Faulty controls (e.g. poor inventory management); no/poor regulation; no/late submission to OCPR; lack of supervision of donations to private groups or individuals. Other: enforcement of payments to government includes (non-payment of taxes or project insurance; illegal appropriation of municipal taxes); accounting and finance (accounting and financial mismanagement; missing budget credits, unnecessary and extravagant expenses); boards and assemblies (auction board mismanagement; municipal assembly mismanagement); theft/extortion (equipment and money theft); use of funds to improve the mayor’s image.
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