Caribbean & Central America - May 2015 (ISSN 1741-4458)

Last month the El Pueblo Primero (EPP) coalition government led by President Juan Carlos Varela approved a new law cracking down on money laundering, terrorism financing and the proliferation of weapons of mass destruction in Panama. Aimed at getting Panama off the Paris-based Financial Action Task Force (FATF)’s grey list, the bill’s approval – a declared priority for Varela – is just one of recent moves aimed at illustrating his government’s commitment to transparency.

The need to strengthen financial integrity was flagged up as the “most immediate priority” facing Panama by the International Monetary Fund (IMF), which sent a delegation to the country between 3 and 13 March to conduct an annual Article IV consultation.

On 27 April President Varela promulgated the new law – which replaces legislation dating back to 2000 - five days after its approval by Panama’s 71-member unicameral legislature. The fruit of consultations with the private sector, which began in the third quarter of 2014, the landmark legislation toughens supervision of various non-financial sectors, requiring lawyers, real estate brokers, casinos and construction firms, among others, to report suspicious transactions. With the approval of the new law, the economy & finance ministry (MEF) reports that Panama has complied with 70% of the plan put in place to remove the country from the FATF’s grey list.

Moving against Martinelli

The efforts by the EPP government to strengthen fiscal transparency came the same month that the supreme court (CSJ) officially launched a probe into former president, Ricardo Martinelli (2009-2014), for alleged corruption that took place in the government’s social fund (PAN) during his administration. This after the three-member national electoral court (TE) voted to strip Martinelli of the immunity from prosecution he enjoyed as president of his Cambio Democrático (CD) political party, a move announced on 9 April.

The investigations, which began last year [RC-14-10], are one of the biggest into official corruption in recent years. Out of the country since late January and believed to be in the US, Martinelli appeared to anticipate the TE’s move against him. The previous day he presented a complaint against the Panamanian State before the Inter-American Commission of Human Rights (IACHR) for alleged violation of his judicial rights. At the end of the previous month, the local media reported that Martinelli had “provisionally” handed over the CD party leadership to Rómulo Roux, his former foreign minister (2012-2014), with internal elections scheduled to take place on 25 October in order to elect a new leadership committee.

Allegations pile up

Corruption allegations against Martinelli’s former ministers continue to come thick and fast. Most recently, on 12 May, one of his closest allies, former MEF head and CD treasurer, Frank De Lima (2011-2014), was detained in a police cell in Ancón, a district near the Panama Canal, over alleged corruption which took place at the PAN. While the alleged corruption at the PAN is thought to run to some US$45m, this month President Varela told the national daily, La Prensa, that the total cost to the State of corruption committed under the Martinelli government could be as much as US$1bn.

As well as De Lima, other former Martinelli government ministers under investigation include: Guillermo Ferrufino (social development); Lucy Molinar (education); Federico José Suárez (public works); as well as the former deputy minister of the presidency, María Fábrega. Two former PAN directors, Rafael Guardia Jaén (2012-2014) and Giacomo Tamburelli (2009-2012), have also been detained. An arrest warrant has also been issued for Martinelli’s former private secretary, Adolfo 'Chichi' De Obarrio, whose whereabouts are unknown.

• International plaudits

The anti-corruption moves by the Juan Carlos Varela government against its predecessor have come in for international praise. On 11 March in remarks made at the opening in Panama of the international trade fair, Expocomer 2015, José Ugaz, chair of the Berlin-based NGO Transparency International (TI), hailed the Varela government’s anti-corruption efforts and noted that the Ricardo Martinelli administration was “questioned for serious acts of corruption”. More recently, on 8 April, in his address to a forum of civil society organisations, one of the events being held in conjunction with the Summit of the Americas, US President Bill Clinton (1993-2001), congratulated Panama on its recent anti-corruption drive.