Caribbean & Central America - March 2016 (ISSN 1741-4458)

“A triumph for the country” is how President Juan Carlos Varela is describing the decision by the Paris-based Financial Action Task Force on Money Laundering (FATF) to remove Panama from its ‘grey list’ of countries it regards as having inadequate provisions in place to combat money laundering and the financing of terrorism. Announced on 19 February, the decision is a step forward for the Partido Panameñista (PPA)-led El Pueblo Primero (EPP) coalition government in its efforts to improve Panama’s image abroad. However, it comes amid other transparency-related challenges for the country’s institutions.

According to a presidential press release, FATF recognized Panama’s adherence to a joint-plan for improving its financial system at a plenary session in October 2015 and later reached the decision that Panama does now meet standards on information-sharing, tax compliance, and reporting suspicious transactions, at a meeting which took place in Paris between 12 and 14 January 2016.

Panama was included in the ‘grey list’ in June 2014, the month before Varela took over from President Ricardo Martinelli (Cambio Democrático, 2009-2014), at which point the government made a high-level political commitment to work with the FATF and the Financial Action Task Force of Latin America (GAFILAT) to improve financial transparency. The plan called for provisions – subsequently addressed in an April 2015 law (Ley 23) – which would adequately criminalise money laundering and terrorist financing; establish and apply a legal framework for freezing terrorist assets; establish an effective and functioning financial intelligence unit; create suspicious transaction reporting mechanisms for all financial institutions; and launch due diligence mechanisms to encourage transparency.

Other transparency concerns

While President Varela was quick to hail the FATF’s decision, it comes amid corruption concerns regarding other sectors – most notably the judiciary.

Last month in an interview with a local TV station, TVN, the head of international anti-corruption NGO Transparency International, Peru’s José Ugaz, called for the nine-member supreme court (CSJ) to resign en masse. While the selection late last year of two new CSJ justices who took up their posts for 2016-2025 terms on 4 January, had initially been well-received by civil society groups such as Alianza Ciudadana Pro Justicia (ACPJ) [RC-16-01], the re-election at the start of the year of José Ayú Prado, as its president for the 2016-2017 period attracted widespread criticism and has since triggered a row within the CSJ. A former attorney general (2011-2013) and ally of Martinelli, Ayú Prado’s appointment was slammed by ACPJ and other civil society groups given that a string of complaints have been filed against him before the national legislature’s credentials committee. The crisis in the CSJ then escalated further on 14 January, when a CSJ magistrate Harry Díaz, who Ayú Prado defeated to win the CSJ presidency, made a number of allegations against both his colleagues and Martinelli, whom he accused of interfering in the court during his mandate.

The allegations, which Díaz made in an interview with local media Telemetro and have since led the CSJ magistrates to file a series of legal complaints against each other before the congressional credentials committee, included claims that Martinelli had put pressure on him to pick another CSJ magistrate, Luis Ramón Fábrega, as the CSJ’s vice-president. The local press also cited Díaz as saying that a former CSJ president, Alejandro Moncada Luna (2012-2014), who last year was sentenced to five years in jail for falsifying documents and illicit enrichment, had told him that “regarding Fábrega, there was proof of paedophilia”.

• Transparency International

In the most recent corruption perceptions index (CPI) by international anti-corruption NGO Transparency International (TI), released on 26 January 2016, Panama came 72nd out of 167 countries (second only to Costa Rica [40] in Central America and tying with El Salvador), with a score of 39 (where 0 is highly corrupt and 100 very clean). This was up from 37 in 2014.