Caribbean & Central America - May 2017 (ISSN 1741-4458)

Panama’s legislature last month approved changes to the national electoral code (last updated in 2013) as part of efforts to crack down on corruption in the political system. Addressing the loopholes in the electoral code was widely considered a priority for President Juan Carlos Varela, who won the May 2014 presidential election in part due to his pledge to tackle institutional corruption. The electoral court (TE), which played a key role in drafting the legislative initiative (known as 292), hailed the proposed reform package in its original form as the most important of the last 25 years. However, the final version, approved in the third debate on 18 April by the 71-member unicameral legislature, has provoked criticism both from the TE as well as the civil society platform Foro Ciudadano Pro Reformas Electorales (‘Foro Ciudadano’) which was also involved in drafting the proposal.

In a report on the 2014 general elections, the Organization of American States (OAS)’ electoral observation mission (EOM) highlighted the need to “regulate political campaign financing, including the use of public and private funds as well as interference by the executive branch”. It also flagged up the fact that “current rules set no limits or controls on private donations and/or election spending. This lack of regulation has led to expensive campaigns with little transparency in terms of the source of funds. Money in politics needs to be regulated as a matter of urgency, in order to furnish the democratic system with more fairness and integrity.” Indicative of this corruption, irregularities involving electoral campaign financing had resulted in 11 legislative election results from the 2014 elections being annulled with new contests staged.

Back in January 2015, a national electoral reform commission was duly set up, tasked with coming up with proposals to improve the electoral code. Comprising representatives from the TE, the country’s political parties, and Foro Ciudadano, the commission drafted the package of reforms which then served as the basis for discussions between the TE and national legislature.

According to the TE, the national deputies eventually received a proposal with 27 recommendations and four new articles of which 19 were accepted in the final version of the initiative. Among other things, the changes include: a new formula for distributing state financing and the introduction of caps for private financing for electoral campaigns. These include: US$10,000 for mayoral candidates; US$300,000 for candidates for the national legislature; and US$10m for presidential candidates. Along with new requirements and sanctions (ranging from US$25,000 and US$50,000) for pollsters who manipulate information and tighter rules for electoral propaganda, the reforms also seek to level the playing field by prohibiting state propaganda three months before general elections and setting two months as the limit for campaigning ahead of general elections. It also sets out new gender parity rules, calling for 50% of candidates to be women. According to the OAS EOM report on the 2014 elections, in that contest on average women accounted for about 21.6% of the total number of candidates, while the legislature elected in 2014 comprised just 18% women (although this was up from 8% in the 2009 elections).

Response

In a report issued on 26 April, the TE officially gave its backing to Ley 292. However, it was also very critical of changes made during the approval process in the legislature, calling for a further law to be drawn up in order to address resultant loopholes. The Foro Ciudadano went a step further and called on President Varela to partially veto the new law, on the grounds that it falls far short of the initial proposal. In its report, the TE complained that the caps on private donations were too high while it also criticized as insufficient another provision aimed at making the electoral process fairer. This was the decision to exempt public officials from a provision which prohibited candidates from participating in the inauguration of state-financed public works or activities once an election has been called.

Steps back

While the changes to the electoral code have been hailed as a step forward of sorts, recent decisions by the supreme justice court (CSJ) which effectively shelve three criminal complaints filed against the president of congress, Rubén De León (of the opposition Partido Revolucionario Democrático party), and other national legislators, are serving as the latest source of outrage among local civil-society groups.

The complaints against De León, for alleged crimes against public administration, embezzlement, and illicit association, were filed by two local lawyers, Ernesto Cedeño and Alexis Sinclair, on 15 March and 22 March respectively. On 29 March a local anti-corruption advocacy group, Juntos Decidimos, presented another complaint which also included 13 other deputies.

The complaints, which the CSJ has thrown out, relate to alleged irregularities involving the management of donations and contracts for public services which the national assembly authorised between 1 July 2014 – when President Varela took office – and December 2016. According to the local press, the donations were worth some US$14m while the contracts totalled some US$68m. As a result of the allegations, Comptroller General Federico Humbert ordered an audit of the donations and contracts in question on 8 March, which a seven-member team from Humbert’s office began analysing five days later. A three-member legislative commission has also been set up to look into the claims.

These CSJ rulings prompted outrage from Juntos Decidimos, along with other civil society groups such as the Fundación para el Desarrollo de la Libertad Ciudadana, (the local branch of international anti-corruption NGO Transparency International) and another anti-corruption group, Movimiento Independiente. While Movimiento Independiente slammed the rulings as a “monumental mistake”, the director of Fundación para el Desarrollo de la Libertad Ciudadana, Ramón Ricardo Arias, described them as a clear sign that the CSJ magistrates are not carrying out their duties.

More figures implicated in Odebrecht corruption

Another source of public anger regarding public corruption has been the revelations that emerged at the end of last year that Brazilian engineering firm Odebrecht had paid over US$59m in bribes to Panamanian government officials in 2010-2014 during the Ricardo Martinelli administration (2009-2014), a case which has also implicated President Varela [RC-17-02].

This prompted the latter to announce an audit while, in mid-March, a special investigating legislative committee was set up to look at the circumstances surrounding the awarding of public works infrastructure contracts under the Varela and Martinelli governments along with that of Martín Torrijos (PRD, 2004-2009). The legislative committee is due to present its findings within 90 days, a deadline which can be extended for a further 90 days.

With a string of public figures already implicated, earlier this month Vice President Isabel de Saint Malo de Alvarado became the latest to face embarrassment amid reports that her brother, Raúl Alberto de Saint Malo, had been linked to a US$1.9m cheque used to purchase a helicopter for one of Martinelli’s sons, Luis Enrique Martinelli, who is also under investigation in relation to the case (see sidebar).

• Popularity

The most recent monthly opinion poll by local pollster, Dichter & Neira, released on 24 April 2017, showed President Varela’s approval rating stands at 47% – the highest rating of the last 12 months and up from 41% in March. However, the same poll showed that just 15% of respondents thought the government was operating in a transparent manner (slightly up from 14% the previous month). The poll, which interviewed 1,200 people across the country bar the comarcas (indigenous administrative regions) and Darién jungle region, also showed that 72% of respondents disapproved of the supreme justice court (CSJ) decision not to move forward with the investigation into the deputies over the alleged irregularities involving the donations.

• Raúl Alberto de Saint Malo

The leading national daily, La Prensa, is reporting that Raúl Alberto de Saint Malo, a businessman, is linked to Petro Trading Services Corp which, according to investigations, authorised the payment of the US$1.9m cheque used to pay for the aircraft in 2014. According to La Prensa, Petro Trading Services Corp was created in the British Virgin Islands (BVI) in 2011 and dissolved in July 2016. The local press is also reporting that De Saint Malo is married to Mariana Virzi, the niece of Felipe ‘Pipo’ Virzi, a former second vice-president in the Ernesto Pérez Balladares government (1994-1999), who is reportedly a member of Martinelli’s inner circle and has been accused of corruption.