Caribbean & Central America - October 2014 (ISSN 1741-4458)

President Juan Carlos Varela is keen to be seen to be moving on the now familiar pledge made by new presidents - to end institutional corruption. This problem appears to have worsened under his predecessor, former President Ricardo Martinelli (2009-2014). Since Varela’s Partido Panameñista (PPA)-led administration took office on 1 July, the 71-member unicameral legislature has approved a resolution calling for the supreme court of justice (CSJ) to remove Comptroller General Gioconda Torres de Bianchini, a close Martinelli ally. Meanwhile, an anti-corruption prosecutor, Lorena Coronel, has announced a probe into the Programa de Ayuda Nacional (PAN), a government fund, while a case has also been opened into a former Martinelli minister.

The move against Torres, whose four-year term is due to end in December 2014, followed her appearance before the legislature on 19- 20 August, where she was called to testify in relation to various corruption concerns surrounding the previous administration. Torres, who served as auditor for Martinelli’s company Importadora Ricamar for 15 years prior to taking up her current post, was quizzed on various cases, including that involving the contracts awarded in 2010 to Finmeccanica, Italy’s state-run aerospace and defence conglomerate, for the purchase of radars, helicopters and digital mapping services. The case had caused major embarrassment for the Martinelli administration, following the April 2012 arrest of Valter Lavitola, a former aide to the disgraced former Italian prime minister, Silvio Berlusconi [RC-12-05]. Five days before Torres’ first appearance before congress, Coronel announced that the investigation into the case (which had been shelved under Martinelli) would be reopened.

Coronel has also announced a probe into the PAN, a government fund used for various initiatives aimed at improving disaster mitigation efforts, nutrition and housing among other things. The investigation into the PAN, which critics have long suggested is a slush fund used to buy political loyalty, is in line with a complaint lodged before the attorney general’s office by a PPA legislator, José Luis Varela (the president’s brother). The complaint is against Rafael Guardia, who headed up the PAN under Martinelli, and it alleges crimes relating to public administration. According to local media, the investigation will probe various contracts awarded to companies, including those linked to Heriberto Vega, a former legislative candidate for Martinelli’s Cambio Democrático. On 5 September, the economy & finance ministry (MEF) announced that it had contracted a local company, Rogers Forensic Auditors, to do the audit, a process expected to take six months. The PAN’s new director, Rafael Stanziola, has said the final report will be made public.

Meanwhile, the first corruption-related case has been opened into a former Martinelli minister. On 19 September, a prosecutor sent a case to the CSJ involving alleged irregular expenses incurred by the former labour minister Alma Cortés during a trip to an International Labour Organization (ILO) meeting in Switzerland in 2011.

The Varela government itself has moved quickly to stamp out accusations of nepotism, after two such cases emerged. While the 2004 code of ethics for civil servants prohibits nepotism, civil society groups were quick to complain about the fact that Minister of the Presidency Álvaro Alemán hired his nephew (Jaime Alemán) as an advisor, while Interior Minister Milton Henríquez appointed his sister-in-law (Florita Ciniglio) to an administrative post in his ministry. In the face of mounting criticism from various sectors, including First Lady Lorena Castillo de Varela, the relatives stepped down - Alemán on 31 August and Ciniglio on 2 September.

• Falling competitiveness & corruption rankings

The most recent Global Competitiveness report by the World Economic Forum, released on 3 September, noted that “Panama continues to follow Chile in the regional rankings and once again scores as the most competitive economy in Central America; it is among the top 50 in the world, despite a fall of eight places to 48th position”. The WEF attributes Panama’s drop to “a slight deterioration in the perceived functioning of institutions (74th), most notably in terms of their inability to fight corruption (94th) and raise government efficiency (55th)”. The latest (December 2013) report by the NGO Transparency International noted that Panama had registered the biggest decline in Central America in 2013, dropping 19 places in its Corruption Perceptions Index to finish in 102nd place (of 175 countries), down from 83rd place in 2012.