Panamanian Corruption Concealed Amidst Free Trade Negotiations

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• Obama welcomes Panamanian President Ricardo Martinelli in the midst of major scandal and corruption in Panama.
• Once again, Obama falls short of his commitments to Latin America as he collaborates with Martinelli to negotiate a flawed trade agreement.


From April 27 to April 29, Martinelli and 11 other Panamanian officials are meeting in Washington D.C. to discuss free trade, regional security, and bilateral cooperation with various U.S. departments and organizations. Today at the White House, President Barack Obama met with Panamanian President Ricardo Martinelli to discuss, among other issues, the pending free trade agreement between Panama and the United States. The meeting with Obama marks the halfway point of Martinelli’s three-day work trip to Washington D.C. and brings the U.S. one step closer towards closing the agreement with Panama.

Free Trade with Panama

The free trade agreement (FTA) was first drafted during the Bush administration, resembling the trade deal that Washington signed with Peru. The agreement was signed by the United States and Panama on June 28, 2007 and was then ratified by the Panamanian National Assembly less than 2 weeks later. As of now, the free trade agreement continues to await congressional approval in the United States. However, on April 18, 2011, U.S. Trade Representative Ron Kirk announced that the last obstacles to U.S. ratification had been met after Panama ratified a tax information sharing agreement with Washington. As the Obama administration prepares to present Congress with the free trade agreements with Colombia, Panama, and South Korea, Democrats remain reluctant to support such agreements while Republicans continue to push for action on all three deals by July.


U.S. policy toward Panama, in light of the country’s realities, reflects a desire to move forward with a free trade agreement. With both countries urgently pursuing an agreement, Washington invented a Panama that has never existed. Rather than a compelling democracy led by a veritable Boy Scout Master, Panama is one of the most corrupt, drug-sodden and scheming societies in Latin America.


Panama offers a relatively boutique market that relies primarily on its service sector and very little on its manufacturing industry. The agreement is likely to increase U.S. agricultural exports to Panama, hoping to create a few hundred jobs in the United States and devastating Panamanian producers, who in most cases are ill-prepared to compete with the subsidized exports of mechanized U.S. agribusiness giants.

Martinelli’s Court Scandal


Embarrassingly enough, the meeting in Washington with President Obama came at a time of a major public scandal in Panama. In less than two years, Ricardo Martinelli has disregarded all of the protective checks and balances that exist in the Panamanian constitution. For example, the country’s Comptroller General, Gioconda Torres de Bianchini, who must approve all significant government contracts, was the in-house accountant for Martinelli’s privately-owned lucrative supermarket and food packing businesses. Bianchini assiduously looks into peculations of the opposition parties, in particular the Democratic Revolutionary Party (PRD), but shies away from investigating members of Martinelli’s coalition. Moreover, she played a central role in the tactical defections of a number of key PRD elected officials to Martinelli’s ruling Cambio Democrático (CD) party. When San Miguelito’s PRD mayor, Mayor Héctor Valdés Carrasquilla, was caught more or less red-handed for skimming at least USD 250 thousand from the city’s municipal coffers, he faced major scrutiny from legal officials, until he switched his party affiliation to the CD. The investigation was eventually abandoned.1 In any case, Martinelli’s CPA had abolished many of the requirements for prior approval of contracts, and since then, no-bid direct contracting has become the name of the game in the country.2,3 Most egregiously, WikiLeaks recently revealed suspicions that the bidding process on the biggest government contracts of them all, the design and construction of the new lock expansion for the Panama Canal, was rigged, to the detriment of a U.S.-based company.4


The former Attorney General (Procurador General de la Nación), Ana Matilde Gómez, was a 10-year appointee who took office during the five-year term of Martinelli’s predecessor. She was driven out on completely trumped up charges. After acceding to an extortion victim’s request, Gómez tapped the victim’s phone, capturing Prosecutor Arquimedes Saez’s demand for an illegal payoff on tape.5,6 The consensual wiretap was alleged to be a crime, giving rise to Gómez‘s subsequent removal from office. The Attorney General’s replacement should have been the office’s number two person. However, Martinelli and a compliant Supreme Court revived a position previously abolished in 2004 in order to override the current constitutional provision. This allowed Giuseppe Bonissi, a highly questionable public official, to be appointed to the Attorney General position.


Bonissi was an associate at Moreno & Fábrega, the law firm headed by Jorge Fábrega, the father of Vice Minister of the Presidency María Fábrega. Bonissi lasted less than a year at the job. At the time, a resident DEA (Drug Enforcement Agency) officer complained of major drug traffickers being let go, even though Panamanian law allows for no bail in drug cases and reverses the burden of proof. These draconian measures were adopted some years ago at Washington’s behest. They were ignored when charges were dropped against four individuals tied to the landing of a small plane on an illegal airstrip on a farm in the Azuero Peninsula. The provincial anti-drug prosecutor, who later ordered the four detained suspects freed, had recently been hired by Bonissi.


According to this prosecutor, the single condition for being given the job at the time was to arrange for the release of the four detainees. The provincial anti-drug prosecutor also named the Public Ministry’s Secretary General Nedelka Díaz and Personnel Director Eva Lorentz as being involved, explaining that both had known about the deal. The Public Ministry is a constitutionally independent organization that encompasses the nation’s prosecutors, medical examiners and other forensic specialists. The Public Ministry, like the courts and legislature, has fallen under Martinelli’s direct and notorious control. As soon as he replaced Gómez, Bonissi brought Díaz and Lorentz into the ministry.


Criminal charges were brought against the three women involved in the case, but Lorentz made a series of allegations about Bonissi’s personal corruption. The latter responded by claiming that a USD 400 thousand bribe had been paid in order to free the suspects.


Bonissi insisted that he would investigate the three women—all of whom he had personally hired—but as new data and swelling calls for his ouster mounted daily, Bonissi resigned on December 22.7 The cases against the three underlings have dragged on, although the two higher-ranking suspects were granted bail.8 As of yet, there has been no investigation of Lorentz’s allegations against Bonissi, or of his role in the freeing of the drug suspects.


Initially, in order to have a job for Bonissi to fill, it was necessary to remove Attorney General Gómez, as discussed above. It turns out that the ouster was choreographed by a group of powerful lawyers that waggishly called themselves PAMAGO (Prejudiced by Ana Matilde Gómez).9The group included, among others, Supreme Court magistrate José Abel Almengor, alternate Judge Zulay Rodríguez (who for years had been the de facto Supreme Court clerk through which culprits paid their bribes to the High Court magistrates), and its organizer, former national ombudsman and head of Martinelli’s “constitutional reform” committee of “notables” Ítalo Antinori.10


Acting as the judge, Zulay Rodríguez granted bail to the three high-profile drug suspects, but the DEA raised complaints.11,12 She was subsequently arrested for bribery, after which she blamed Almengor for setting her up. For months, she tried various motions, arranged her defense, and marshaled evidence for a counter-offensive.


It turns out that while Antinori was the functional coordinator of PAMAGO, Rodríguez was its acting secretary. Full of the kind of hubris that comes with undisputed presumption of presidential backing, the committee to get rid of Gómez talked an awful lot through the medium of email. When Gómez was finally removed, Antinori ordered the various emails erased, but Rodríguez cagily made copies and saved them as a would-be insurance policy.13


Before going public with these files, Rodriguez lined up other pieces of evidence to validate the collection of emails and build a case concerning other examples of judicial misconduct; most notably, an ex parte meeting among Supreme Court magistrates Almengor and Alejandro Moncada Luna (another Martinelli appointee), and Lidio Rancharan, a reputed Belizean-American swindler, regarding a case then pending before the High Court. This sort of thing happens all the time in Panama. It is nevertheless illegal, and the nation’s principal bar association, the Colegio Nacional de Abogados, cried foul. Then, even more astonishing, the High Court’s presiding magistrate, Aníbal Salas, having been informed about the meeting, declared it “necessary”.14


The details of Ricardo Martinelli’s drive to remove the Attorney General were emphatically exposed, with at least three members of the High Court compromised and six complaints filed with the National Assembly’s Credentials Committee. This assembly hears—and almost never acts upon—complaints against High Court magistrates. Antinori then resigned as Martinelli’s constitutional revision czar and Almengor resigned from the Supreme Court. In short order, the complaints were dismissed without an investigation. It was held that complete proof of a crime had not been submitted—a common excuse, but an outrageous denial of the ample evidence that had been presented in this case.15


The Public Ministry declared that since the legislature had previously taken up the complaints and dismissed them, an ordinary criminal investigation against Almengor, who had given judicial immunity, would be tantamount to placing him under double jeopardy.16 However, in addition to her pending bribery case, Rodríguez is being prosecuted for penetrating the PAMAGO members’ privacy by revealing emails that were addressed to her.17


So, how did such an ethically challenged person like Almengor get elevated to the High Court in the first place?18 Almengor was the nation’s chief anti-drug prosecutor under Ana Matilde Gómez. In this position, he was in charge of various cases, including one involving David Murcia Guzmán and his gang.


Murcia was engaged in the business of selling bootleg CDs until he and his taxi-driving brother-in-law set up shop in Colombia’s Department of Putumayo. This move came at a time when the right-wing AUC (United Colombian Self-Defense), a paramilitary organization with the backing of the Colombian government, was on the offensive in Putumayo. Its target, the leftist guerrilla organization FARC (Revolutionary Armed Forces of Colombia), had been forced to retreat into the hinterland, leaving the ability to tax drug trade operations up for grabs. It has not yet been proven in a court of law, but it appears that Murcia was able to create what looked like a giant pyramid scheme—which did not collapse in the ordinary fashion because it was not financed as a Ponzi-style operation—as a money laundering plot for the AUC and their Valle del Norte Cartel business partners.19


As Murcia’s operation spread across the region he bought politicians in the countries in which he was operating—including Panama. He became too flagrant in his personal lifestyle, tooling around little Panama in Maseratis and Ferraris, getting escorted through Tocumen Airport by the National Assembly’s protocol officers. Most controversially, he had given funds to both sides in the 2009 election campaign, but slaughtered the PRD when that party’s Panama City mayoral candidate first denied and later admitted to meeting with Murcia. It was alleged that Murcia gave USD 800 thousand to Martinelli via current Tourism Minister Salomón Shamah (identified in a leaked U.S. Embassy cable as “suspected of links to drug traffickers”) in the form of the purported purchase of gift certificates from Martinelli’s Super 99 supermarket chain.20 Photocopies of alleged checks involved in this transaction were shown on television, and were in the files of the Murcia investigators. At the time, it was ruled that since the campaign finance reports (which are by law kept secret from the public) were not due, there could be no investigation into gangster financing of Martinelli’s campaign, and the matter was then peremptorily closed. To no surprise, evidence of the alleged checks disappeared from the files.


Meanwhile, one of the Murcia cases handled by Almengor was against Ernesto Chong Coronado, a CPA who created Murcia’s maze of Panamanian corporations, through which money of dubious provenance flowed. Months before the Murcia scandal exploded, Almengor allegedly alerted Martinelli to the perils of being caught dealing with Murcia. Later, Almengor issued a house arrest order against Chong, but failed to take the routine step of notifying migration officials that Chong was not permitted to leave the country. Chong, who was defended by Alma Cortés (now Martinelli’s Minister of Labor), stepped onto a plane and flew off to Miami. Gómez suspended him for it.21 In reaction, Almengor quit in a huff, and went to work for Martinelli’s team. It is alleged that he used his connections at the Public Ministry to remove documents establishing ties between Martinelli and Murcia from the files.22 Eventually all Panamanian charges against Murcia and Chong were dropped—but Murcia’s luxury cars were kept as trophies by the Panamanian prosecutors and cops.23 Journalist Eric Jackson was stopped by three security guards from taking a photograph of the Maserati parked in Bonissi’s parking spot at the Public Ministry while Bonissi was acting Attorney General.

Illustrious Family Ties


Some would maintain that the allegations of Ricardo Martinelli’s gangland ties are rather thin. That might be reasonably said if the Murcia allegations were all the evidence that there were available, but there are also the circumstances that led to the downfall of Bonissi. Martinelli himself might be examined according to the standards that are routinely used in Panamanian society to judge everyone else: blood ties, ties of affinity, business and professional associations, and so on.


For example, the cousins of Martinelli, Ramón Martinelli and César Fábrega Sarmiento, as well as Jorge Luis Álvarez Cummings, Ninoska Yariela Escalante Paredes, have all been detained in Mexico at one point or another for money laundering with the Beltran Levya Cartel.24 César Fábrega died of cancer in prison, while the other three defendants have been ordered to remain in preventive custody for a trial process that may take several more years to run its course.


According to a U.S. Embassy cable, the DEA believes that this drug operation was laundering upwards of USD 30 million per month through Panama.25 President Martinelli and his entourage denied any familial relationships with those arrested, but later claimed that Ramón Martinelli had not had any relationship with CD for a decade, and that Panamanian authorities were on the verge of arresting the gang leaders themselves, none of whom were involved in CD.26,27 But all of those denials could easily be refuted and inevitably made it appear at that Martinelli had a number of other things to hide.28,29

Bottom Line


Going beyond the rhetoric that will be heard during Martinelli’s visit are the realities of economic integration and the anti-drug effort. It’s not possible to have economic relations on a “level playing field” when there is hardly any rule of law. It’s not possible to have a reliable anti-drug ally in a Panamanian government that is in bed with the mob.

References for this article can be found here


Additional editorial contributions by COHA Research Associates Tess Burns and Rebecca Tran