A high-ranking Puerto Rico legislator has charged that the island's Government Development Bank awarded three firms lucrative senior underwriting slots in exchange for campaign contributions to Gov. Pedro Rossello.

In a letter to the Securities and Exchange Commission last week, representative-at-large Jorge de Castro Font charged that Bear, Stearns & Co., Lazard Freres & Co., and Lehman Brothers were named underwriters of commonwealth debt through the bank because of their participation in Rossello's successful 1992 campaign.

"Lazard Freres and Bear Stearns were not members of the commonwealth's underwriting syndicates until the arrival of the Rossello administration," Font said in his letter. "These awards appear to correspond with the level of financial support these firms, and/or some of its employees, have provided to the political campaigns of Gov. Pedro Rossello."

Lehman Brothers has been a senior member, of the bank's underwriting team since 1980.

Font serves as ranking minority member of the Puerto Rico House Ways and Means Committee. The SEC would neither confirm nor deny that it is investigating the charges made in his letter.

Officials representing the governor did not return telephone calls yesterday.

Most of the Puerto Rico's general obligation and revenue bond issuers use the Government Development Bank of Puerto Rico as a conduit agency for their debt. When Rossello was sworn in as governor in January, he installed his longtime friend and adviser Marcos Rodriguez-Ema as president of the bank.

"Ema has been part of the governor's close circle of political advisers for many years," Jose Bengoa, a spokesman for Font, said yesterday.

The legislator charged in the letter that when Rossello installed Ema as president of the bank, he also instructed him about which firms should be chosen to sell and manage commonwealth debt.

"These accusations are utterly preposterous." Ema said yesterday. "There are a lot of political motivations behind these statements."

Ema said there was no member of the governor's office on the board selecting the senior underwriters.

Font is a proponent of keeping Puerto Rico a commonwealth of the United States. He said Rossello - an advocate of Puerto Rican statehood - has used a loophole in commonwealth campaign laws to further his political career and his desire for statehood.

In Puerto Rico, candidates must disclose all campaign contributions made by all Puerto Rico citizens. Candidates are limited to $2,500 from any one contributor and are forbidden to accept campaign contributions from banks or brokerage firms.

However, a candidate does not have to disclose contributions from any person living off the island.

"You can give as much as you want in Puerto Rico, never give your name, and never say how much you give." said a banker speaking on the condition of anonymity.

Font said this discrepancy should be addressed by the SEC if changes are made to campaign disclosure practices for the municipal bond industry.

Over the past few months, the municipal market has been shaken by bond scandals involving political influence peddling in Massachusetts, New Jersey, Louisiana, and Kentucky.

The senior banker from Lazard Freres for the Government Development Bank is Richard Poirier. Poirier's methods of gaining new business for Lazard are reportedly under investigation by the SEC and the Federal Bureau of Investigation.

A spokeswoman for Lazard Freres did not return phone calls seeking comment about the Puerto Rico situation. The firm in recent weeks has stopped responding to inquiries about various investigations of its public finance activities around the nation.

Font said that Bear Stearns' senior banker for the commonwealth, Frank Vasquez, was hired by the firm solely because of his relationship with the governor, Font charged in his letter.

A spokeswoman for Bear Stearns declined to comment.

He said that Vasquez, who had served as a communications officer for the Port Authority of New York and New Jersey, had no experience in investment banking before he was brought to Bear Stearns.

During Rossello's campaign, Vasquez served as the future governor's chief New York City fund-raiser. Currently, Vasquez is involved in fund-raising for a benefit at the end of this month to finance the pro-statehood campaign.

This November, an election will be held on the island that will decide between statehood, independence, or remaining a commonwealth.

Bear Stearns is scheduled to serve as the senior manager for a $700 million Puerto Rico Electric Power Authority issue this fall.

Font said Ivar A. Pietri, managing director in Lehman Brothers' San Juan office, was included as a senior manager for several sales since the beginning of this year based solely on his long-standing friendship with the governor and his membership in Puerto Rico's New Progressive Party.

Font said Lehman has earned more than $15 million in fees since January and Pietri has earned more than $2 million for himself.

"These allegations are completely ridiculous, " Pietri said yesterday. "Lehman Brothers business has not changed because of the new administration. We were number one or two in underwriting in 1990, 1991, and 1992 before this administration."

Pietri said that even though Font is a ranking minority leader of the Ways and Means Committee, he does not have any credibility. "This gentleman has no idea how this business works." he said.

At the beginning of each year, the governor of Puerto Rico must approve a list of revolving senior managers for general obligation sales and another list for senior managers for revenue bond sales. Lehman Brothers is the only firm to appear on both lists.

"Evidence tends to demonstrate a collusion between Pietri. Rossello, and the New Progressive Party to bypass the limits and prohibitions imposed by Puerto Rico's election laws," Font said in a press release. "Mr. Rossello has a moral obligation to explain to the people of Puerto Rico why a person so intimately related to him politically has suddenly been favored with contracts in the millions of dollars."

Rossello succeeded Gov. Raphael Hernandez-Colon, who served for eight years. Colon favored keeping Puerto Rico a commonwealth.

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