Caribbean & Central America - May 2012 (ISSN 1741-4458)

President Ricardo Martinelli is facing one of the biggest scandals to hit his government since taking office in July 2009. Last month he was forced to publicly deny receiving bribes in exchange for the promise of construction contracts following allegations that came to light with the arrest (in Rome) of a former aide to the disgraced former Italian prime minister, Silvio Berlusconi (1994-1995; 2001-2006; 2008-2011). With the full impact of the scandal yet to emerge and Martinelli’s popularity already having been dealt a blow as a result of his recent attempt to back-track on a promise not to liberalise the mining sector [RC-12-03], the case has raised some uncomfortable questions for the President – himself of Italian heritage - whose dealings with Italy have long attracted media attention.

The scandal broke with the 16 April arrest of Valter Lavitola, who had been on the run for months. The Italian authorities wanted him in relation to various charges, which include acting as a middleman for the delivery of bribes by an Italian company to governments in Latin America, including Panama. Court documents cited by the international press suggest that Lavitola offered cash and goods worth €28m (US$36.6m) to Martinelli and other officials in exchange for a €176m (US$230m) contract to build prisons. Both the Panamanian and Italian media report that Martinelli, his cousin Francisco and the Panama City mayor, Roxana Méndez (a close Martinelli ally), among others, received suitcases stashed with cash.

Martinelli’s insistence that the Italian authorities clarify the allegations – which Lavitola himself has come out and denied – has done little to dampen the media frenzy, particularly given that Martinelli’s ties to Lavitola have already attracted attention on various occasions. In a statement issued in response to the allegations, the President did not attempt to deny these links, underlining Lavitola’s importance to key bilateral accords such as the double taxation treaty signed last year. The relationship between the two men had previously come under the media glare in September last year when it emerged that, during a spell in Latin America as part of efforts to evade the Italian authorities, Lavitola had been given the use of an official car and allocated bodyguards. Vice-President Juan Carlos Varela (with whom the President has strained relations following the break-up of the ruling alliance between Martinellis’ Cambio Democrático and Varela’s Partido Panameñista [RC-11-10]) also revealed that, during his stint as foreign minister, Martinelli asked Varela on three occasions to name Lavitola as Panama’s honorary consul in Rome. Another aspect of the Martinelli government’s dealings with Lavitola that attracted media attention last year, but which he failed to address in his initial clarifying response, concerned contracts awarded to Italy’s Selex, a subsidiary of Finmeccanica, the Italian state-run aerospace and defence conglomerate, for the purchase of radar installations, helicopters and digital mapping services. Both the Panamanian and Italian press suggest that the contracts were inflated and that Lavitola, who reportedly played a “fixer” role in the talks, received kickbacks, some of which went on bribes to local officials. The case had already threatened a possible scandal for Martinelli late last year, after the CEOs of both Selex and Finmeccanica were forced to step down over corruption allegations.

With Planning Minister José Domingo Arias acknowledged that Panama is suffering “tremendous damage” as a result of the bribery allegations, the scandal once again illustrates that, despite Martinelli’s insistence prior to taking office that tackling corruption would be a priority, his administration has failed to distinguish itself from its predecessors. This is also suggested by the latest Corruption Perceptions Index compiled by the international NGO Transparency International (TI), released on 1 December 2011, which showed Panama scored just 3.3 out of 10 in 2011, down from 3.6 in 2010 and 3.4 the previous year.

It is, however, worth noting that while a March poll by Dichter & Neira revealed that that 79.2% of respondents perceive the government to operate with little or no transparency, only 1.7% of those polled named general corruption as their main worry. Also worth pointing out is the fact that various scandals have broken during the course of Martinelli’s mandate, involving key members of his entourage, who ultimately appeared to have little long-term impact. Examples include Guiseppe Bonissi, Martinelli’s choice of attorney general, who was forced to resign in December 2010, less than a year into his 10-year term, amid concerns raised by the US Drug Enforcement Administration (DEA) regarding possible links to drug traffickers [RC-11-01]. Another case was that of Tourism Minister Salomón Shamah, the chief strategist in Martinelli’s 2009 electoral campaign, who US embassy cables released by WikiLeaks accused of having alleged ties to drug traffickers and to a convicted Colombian financier, David Murcia Guzmán. The release of the cables in June 2011 caused Martinelli to float the possibility of replacing Shamah, but the minister has since remained in his post.

Railing against the press

Martinelli further complicated the situation for himself in relation to the latest scandal by verbally attacking a journalist in the press conference he gave to refute the allegations – the latest illustration of his testy relations with much of the media. In a response to a question from a radio journalist, Hugo Famania, Martinelli refused to answer the question, reportedly saying instead to Famania, a recovering substance addict, “I hope you never fall back into the scourge of drugs”. His remarks sparked outrage from the main journalist organisations which called a march in protest, forcing Martinelli to issue an apology in response. The incident follows the President’s 2 January address to the nation in which he delivered a scathing attack on the owners of media outlets that have been critical of his government [RC-12-01].  Bar the group Epasa, which controls the national dailies El Panamá-América and La Crítica, the national media is largely critical of the Martinelli government.

• Ties with Lavitola

In his initial 11-point response to the bribery allegations, President Ricardo Martinelli traced his relationship with Valter Lavitola back to September 2009 following his first official visit to Italy. During the trip, the Italian company Ital Tecno – then representative of Svemark – began talks with Panama’s interior & justice minister, José Raúl Mulino, about the possibility of constructing prisons in Colón, David and La Chorrera. According to the statement, both former Italian Prime Minister Silvio Berlusconi and Lavitola visited Panama in June 2010 to sign a memorandum of understanding (MOU), but the Panamanian government later opted not to go ahead with the project.

• Popularity

The Lavitola scandal broke just as Martinelli’s popularity, which hit an all time low in February amid his attempt at back-tracking over a promise not to liberalise the mining sector [RC-12-03], was beginning to recover. A Dichter & Neira poll, published on 18 April, put his rating at 46%, an increase on the 33% registered in February. The February result saw him tied with Chile’s President Sebastián Piñera as the second most unpopular president in the Americas, above Costa Rica’s Laura Chinchilla (26%), according to a Mitofsky poll.