Panama’s Upcoming Elections Mired in Scandal and Corruption
– Disgraced financier admits giving funds to PRD presidential and mayoral campaigns, now carving the way for a Martinelli victory
– A change in the ruling party away from the PRD may signal closer ties between Panama and Washington.
– Will Panama City choose a reformer or a political hack?
The Contenders
Martinelli has resorted to considerable political maneuvering to unify a number of significant opposition parties under a common banner of solidarity against the current ruling PRD. As a result, he now has the backing of the Patriotic Union (UP), the Nationalist Republican Liberal Movement (MOLIRENA), as well as the Panameñista Party (PP). His unification of most of the opposition is contributing to his growing and now widespread appeal. Herrera, for her part, is also the nominee of the small Partido Popular (former Christian Democratic) and Liberal parties. In the Panama City mayoral race, in which some of the smaller parties have gone their own ways, Bobby Velásquez of the PRD has maintained a pronounced lead over the highly regarded independent candidate, Miguel Antonio Bernal and the PP’s Bosco Vallarino. But in recent days, the fate of the PRD candidates has taken a surprising and untoward direction.
The Curious Case of David Murcia Guzmán – President Maker
During the past month, a shocking turn of events has cast a dark cloud over the upcoming balloting. On March 11, David Murcia Guzman confessed from his La Picota Jail cell in Bogota, Colombia, that he recently had donated $6 million to the PRD presidential and mayoral campaigns, distributing the funds evenly between Balbina Herrera and Bobby Velásquez. Murcia is currently awaiting trial on charges of money laundering and fraud. His group of companies, DMG, had devised a large pyramid scheme that ended up defrauding numerous individuals and institutions out of hundreds of millions of dollars. Most recently, Murcia has been indicted in the New York U.S. District Court on charges of money laundering, in which Federal prosecutors allege that some of the proceeds from drug trafficking activities in Mexico, the United States and Colombia were laundered through DMG. Furthermore, the indictment claims that Murcia used the Colombian black market peso exchange to launder US dollars made in the drug business. Various Colombian media for some time have been alleging connections between Murcia’s operation and the drug fortunes of jailed figures in the mostly defunct Valle del Norte Cartel drug organization and the partially demobilized AUC paramilitary.
Rumors of Murcia’s financial involvement in the mayoral campaign of Bobby Velásquez began to surface in early February, but at the time, no tangible confirmation of such allegations existed. Now, however, Murcia claims he has security videos documenting his meetings with Velásquez. In a statement reported in the Panama City daily, La Estrella, Murcia explicitly described his involvement with the two PRD candidates: “I personally dealt with Bobby Velásquez’s father, who is one of the PRD’s founders, and with Bobby himself. So I donated $6 million in cash, $3 million for Bobby and $3 million for Balbina. Everything went through the [elder] Velásquez, who came in the name of the PRD. They even told me that [Bobby] Velásquez was Torrijos’s blue eyed boy.”
According to Eric Jackson, a well respected investigative reporter and editor of the hard-hitting Panama News, the alleged arrangement was in exchange for Murcia’s contributions to the campaigns. These terms included the use of agents of Panama’s Institutional Protection Services (SPI), the bodyguards of the president, who would also provide personal security protection for Murcia during his stay in Panama. Assuredly, part of the $3 million paid to Velásquez was used to compensate the American political consulting firm, Greenber, Quinlan and Rosner, which the latter had hired at a monthly rate of $150,000 in exchange for their advisory services during his campaign. Complicating matters even further for the two beleaguered PRD politicians was the fact that the consulting services were not registered with the electoral tribunal, a legal requirement in Panama. This is just another example of an increasingly questionable Velásquez bending the rules to advance his campaign.
All the President’s Men
The nature of the agreement made by the PRD mayoral race candidate serves to exacerbate the magnitude of the scandal. Under the laws governing the SPI, members of the protection services are strictly prohibited from holding outside security jobs unless the President specifically authorizes this. On the face of if, this would then seem to implicate President Torrijos’s involvement in the arrangement. Of course the President has denied any allegations of his participation in the scheme. On March 13, he flatly denied that the SPI had guarded Murcia. The Torrijos administration backed this denial with SPI records that reveal no mention of protection for Murcia. Yet, on March 18, the Minister of the Presidency admitted that the SPI had provided protection to Murcia.
Three SPI guards, including the head of the president’s advance security squad, confessed to serving as personal bodyguards to the fallen financier and were subsequently fired. They admitted to receiving $200 a day to protect Murcia during his time in Panama, but are appealing their dismissals, claiming that what they did was with the authorization from above. Two of their supervisors, including the SPI’s personnel director and its number three man, were subsequently arrested for their alleged involvement in the case. In a recent COHA interview with Marcos Wilson, a Panamanian political analyst, he observed that such a revelation implies falsification of official government records, which would be a criminal offense. Wilson finds it highly unlikely that Torrijos was unaware of these unscrupulous activities. In fact, Murcia claimed that Rafael Mezquita, who is Torrijos’s Minister of the Presidency, personally arranged his security detail.
The evidence suggests that Herrera and Velásquez may have been caught red handed. Yet the two PRD candidates have vehemently denied any financial involvement with Murcia. At first, Velásquez dismissed any affiliation with Murcia, citing that he had never met the man. However, after the security guards’ confessions and Murcia’s threats to provide investigators with security tapes, Velásquez confirmed they had, in fact, met briefly once, at Murcia’s apartment at the Miramar Tower. It was a devastating admission for the PRD mayoral candidate to make, because he initially denied knowing Murcia. But that admission was soon shown to be a lie, with one of the three fired SPI guard’s published story of a meeting between the two Velásquezes in the presidential suite of the Hotel Sheraton, on the way to which the mayoral hopeful, his father and two SPI guards were greeted in front of the hotel elevators by one Dilio Arcia — Panama’s Minister of Government and Justice and the man Torrijos has assigned to “investigate” the Murcia affair. These “brief meetings” between Murcia and Bobby Velásquez are now fixed at a total of three.
The Scandal Spreads
Velásquez is not the only mayoral candidate being dragged down by the Murcia revelations. Most recently, the rightist leaning Bosco Vallarino (whose political style has been often compared to that of former President George W. Bush because of his conservative ideology and lack of intellectual curiousity), was forced to admit his personal business transactions with Murcia’s notorious Brazilian partner and associate, Alex Ventura. Murcia has confessed that Ventura financed a trip to Cancun in order to promote real estate development projects there. Although Vallarino apparently did not get any money from Murcia, this affiliation with Ventura nevertheless complicates his standing in the polls.
These latest disclosures further manifest Panama’s descent into a state plagued by rampant corruption and abuse of power. Additionally, the compromising situations that Vallarino and Velásquez now find themselves in have increasingly altered the dynamics of the Panama City mayoral campaign. The highly admired Bernal, a professor and well regarded gadfly, who many Panamanians consider to be the conscience of his country, now has an opportunity to advance his campaign platform of reform and a war against the taint of corruption suggested by some of his rivals. The financial figures alone attest to the distorted nature of the expenditures going into Panama City’s mayoral elections. In a report issued by the country’s national daily, La Prensa, it was estimated that Velásquez spent roughly $650,000 on television and radio advertisement, trailed by Vallarino, at a figure of $77,000, and then Bernal, who has only spent $14,000 in advertising on his grassroots campaign.
Lack of Transparency equals Lack of Accountability
Any donations on the part of Murcia would have been easily traceable if campaign contribution figures were as publicly accessible as they are in the United States. Under the terms of U.S. campaign finance laws, all donations over $250 must be made public. Furthermore, in a presidential election, there is a cap of $2,300 on the amount of money that can be donated to any one of the candidates. In Panama, there exists no such limitation on contributions or requirements for public dissemination of such relevant information. By virtue of this fact, campaign donations can be clandestine in nature and allow ample room for corrupt practices in dispensing of such funds. Moreover, because of Murcia’s criminal record (that you can click here to view) and the fact that he is a foreigner (under Panamanian law foreigners are strictly prohibited from donating at all to political campaigns), investigators have lifted the barrier impunity otherwise safeguarding Herrera and Velásquez in order to scrutinize their records more closely. Martinelli also has been subjected to the same standard because of Herrera’s accusations that his chain of supermarkets in Panama was a front for Murcia’s pyramid scheme throughout the country. Nevertheless, her inflammatory rhetoric could possibly be a reflection of her escalating desperation in light of her slipping position in the polls.
These allegations have significantly affected each of the last mentioned relative performances of the different candidates in the polls. Herrera is now trailing 20 points behind Martinelli. Although Velásquez was still in the lead in a mid-March poll based on a sampling of a little more than 300 voters, he lost nine points over the previous two weeks and there have been further damaging revelations since then. The outlook for the PRD appears to be increasingly grim for a party attempting to habitually maintain an aura of invincibility and an unstoppable momentum behind its slate of candidates.
Political Standings
According to polls conducted in March by Dichter & Neira, a leading market studies investigative firm that is currently coming under intense criticism for inaccurate polling representations, Martinelli enjoys a 15 percent lead over Herrera. However, a survey conducted March 7-11, released by La Prensa, casts doubt upon this spread. Of the 1,214 respondents, 22 percent revealed that they knew little of Martinelli’s political platform, while 25 percent indicated the same with respect to Herrera. Although the study was conducted prior to the Murcia scandal and the presidential debate between the two candidates held on March 18, the findings are still significant. The results demonstrate that to some undecided Panamanians, who could potentially account for the determining margin of victory, are still not aware of the political platforms of the candidates, even though election day is fast approaching.
Widely circulating reports have noted that during the presidential debate, Herrera questioned Martinelli’s ability to reconcile his interests as head of a major supermarket conglomerate, while simultaneously being the president of Panama. Martinelli fired back by condemning the PRD’s most recent 5 years in office, citing that it has brought more harm than good to Panama. Clearly he was referring to the PRD’s dismal record, namely the mounting crime rate, the economic downturn and the shameful quality of public services, all of which could seal the PRD’s fate and may ultimately fatally damage its chances of sustaining its grip on power. Moreover, Herrera’s choice for her vice presidential candidate, Juan Carlos Navarro, after narrowly defeating him in a hard-fought primary, has only created greater internal divisions within the PRD. Navarro, the aristocratic but popular two-term mayor of Panama City, has maintained a notable silence about the party’s David Murcia troubles.
Each of the presidential candidates are zealously professing that they each embody the change that Panama requires. Martinelli, however, has proved to be a worthy adversary in this venue. He is building momentum due to his ability to capitalize on Panama’s desperate need for reform, and as such, by portraying himself as something of a political maverick. He promised to pry Panama from its bleak past, addressing key societal concerns; Balbina Herrera will undoubtedly face tough competition come May 3. If Panamanians do in fact elect Martinelli, it would signify a political rupture, as there has been either a PRD or PP president in office since 1968. Such a seismic transformation would send a powerful message and indicate that a new generation of Panamanians are truly yearning for a leadership change.
A New Direction for Panama?
Panamanian political analyst Marcos Wilson suggests that a Martinelli victory would mean closer ties between Panama and the U.S. With the Pentagon’s lease on the present U.S. Manta Air Base in Ecuador set to expire in November 2009, Panama could very well present itself as an attractive alternative to the U.S. military. Furthermore, closer ties between Panama and the United States could help to expedite the passage of a Free Trade Agreement (FTA) that is still awaiting ratification by the two countries. Nonetheless, the U.S. Congress would be well advised to proceed with caution. The curious case of Murcia, coupled with the flagrant secrecy that shrouds Panama’s banking laws, makes the country an attractive off-shore tax haven and a prime location for money laundering under the guise of questionable transactions by suspect businesses. These provide reason enough for skepticism in Washington’s crafting a bona fide FTA partnership with Panama. At a time when the U.S. is in the midst of overhauling its entire financial system to prevent the type of gross violations of confidence that have been witnessed during the previous year, it might be wise to avoid entangling itself with yet another Colombia-like toxic partner, the Panamanian political system.