Under the suspicion that a producer belonging to the government party has been disproportionately favored, the granting of tax credits for the film industry is subject to an investigation of the Federal Bureau of Investigation (FBI, for its acronym in English), confirmed three sources of The New Day.
Authorities inquire whether film producer Luis “Luillo” Ruiz Ruiz, a donor of power figures as the governor Wanda Vazquez, the senatorial president, Thomas Rivera Schatz, as well as the former governor Ricardo Rosselló Nevares, has granted some illegal favor to public employees under the pretext of obtaining a benefit in return, according to two of the sources aware of the matter. In fact, one of the sources assured that the matter was referred by the former senator. Zoé Laboy Alvarado, by becoming aware of the alleged irregularities.
Ruiz Ruiz argued that he has earned in good deal the credits obtained thanks to his career and his ability to obtain financing.
Asked about the FBI investigation, the producer said he takes it “with some surprise, although it seems to me that the federal authorities are here to do their job and I support that work.”
According to the research of El Nuevo Día, Ruiz Ruiz has managed and achieved, through his corporation Pepper Film, the largest amount of tax credits in the history of the local film industry, according to official data Department of Economic Development and Commerce (DDEC) held by the Research and Data Unit of El Nuevo Día.
The DDEC has approved $ 63 million in tax credits for seven of its productions; two thirds of the incentives were obtained under the administration of Rosselló Nevares. This figure contrasts with the $ 223,000 typically received by productions, based on the median of all credits between fiscal years 2013 and 2019.
Similar to a complaint published yesterday by the Metro newspaper, which indicates that Ruiz Ruiz and his wife, Belinés Torres Aponte, donated to the Vázquez election campaign, the couple also donated $ 5,000, in March 2018, to Rosselló Nevares, according to the registry of the Office of the Election Comptroller (OCE) reviewed by El Nuevo Día. The donation took place a month before a press conference was coordinated in La Fortaleza to announce the filming of the “Primal” production, which Nicolas Cage starred.
Originally, the DDEC had approved $ 13 million in credits for “Primal”, according to the breakdown of projects approved by the film program, which represented 50% of production expenses. However, he subsequently received an additional $ 7.8 million, according to the same document. This represented 32% of production expenses.
If the percentage granted in both fiscal years is added, “Primal” received authorization for 82% of production expenses, which involved a dispute within the Rosselló Nevares administration for exceeding the 50% cap previously established.
How was the established ceiling exceeded?
Almost three months after the press conference in La Fortaleza, the then governor asked to repeal the committee that controlled the tax credits. The former director of the Financial Advisory Authority and Fiscal Agency (Aafaf) Gerardo Portela signed the administrative order to repeal the measure, but stated his opposition in writing to the governor, according to this newspaper from another source.
In the administrative order, Aafaf justified the revocation on the grounds that the fiscal narrowness that led to control over tax credits no longer existed.
The Committee on Authorization of Disbursements and Tax Concessions (CADCC) had agreed to limit credits to the film industry to 50% of all production expenses, covered by a study by the firm Technical Studies Inc., which established that this modality produced greater return on investment for the State. Some Puerto Rican producers also endorsed limiting the credit given the belief that it would help them pay the $ 50 million fund that the film program had under Law 27 of 2011.
The agreement to limit the credits had also achieved the support of Senator Laboy Alvarado, who presided over the Senate Commission for Social and Economic Revitalization.
Similarly, the secretary of the DDEC, Manuel Laboy Rivera, recommended amendments to the law on film incentives so that the credit does not exceed 40% and, “in this way, encourage more local productions to take place and that Puerto Rico is most frequently used ”as the setting for the filming, as established in an explanatory memorial examined by this newspaper.
As soon as the CADCC was eliminated, Ruiz Ruiz and those who represented him legally requested that the committee’s decision be reversed and that the tax credit be increased, Laboy Rivera confirmed to this newspaper.
“Those who had asked us to make changes to the tax credits were the legal representatives of those productions. My position was always that they were all or none, ”said the head of the DDEC during the interview.
“I am not going to lend myself to say that I am favoring only some,” the official added.
After the removal of the committee, the Department of Finance The amount of money to be awarded in incentives for “Primal” and “Driven” productions increased. The amendment was made covered by Law 27 of 2011, which allowed to cover up to 90% of production costs if certain requirements were met.
However, El Nuevo Día knew, by sources, that while some filmmakers wait for years to receive a response from the government, Ruiz Ruiz and his lawyer Valerie Rodríguez Erazo allegedly had immediate access to the various government entities with the power to make the credits viable, between them, the Department of the Treasury.
Asked by this newspaper, Ruiz Ruiz denied that private meetings were held between his lawyer and the head of the Treasury.
“To my best knowledge, absolutely not. At least, I never authorized her to represent me in the Department of the Treasury. She did not have permission, but I have no record of what happened, ”the filmmaker told this newspaper.
He also defended himself from criticism of the tax credits he has received, by ensuring that it is due to his ability to obtain financing.
“There is a visibility that, to my company, credits are granted before other productions because I have the investment. I have been working on this for 20 years, earning a name and prestige, filling all expectations of production values and delivering products with the quality that Hollywood demands of me, and that has given me space for financiers to trust my operation and invest in Puerto Rico, ”said Ruiz Ruiz.