Category Archives: Panama

Martinelli detained in FL on extradition warrant from Panama

It feels like old news already, but former Panamanian President Ricardo Martinelli was arrested in Coral Gables on Monday. The US acted on an extradition warrant from Panama, where Martinelli is wanted on political espionage and corruption charges. He should have appeared before a judge sometime today.
Panama's government had requested Martinelli's extradition last September to face accusations that he spied illegally on his political rivals and intercepted the telephone calls of more than 100 people, including politicians, business and labour leaders, and critical journalists, during his 2009-14 term as president.
Just more evidence that wealthy heads of state are not immune to corruption.

It will be interesting to follow whether the Trump administration gets involved in extradition proceedings against Martinelli and El Salvador's Inocente Montano (wanted in Spain). Donald Trump is somewhat of a blank slate when it comes to Latin America and there is some room here for advisors to whisper in his ear. On the other hand, the Trump and Martinelli families have done business together.
Now, the extradition request highlights the potential conflicts of interest that have swirled around Trump: A decision that is usually made on the merits by career diplomats could be complicated by the president’s personal and business ties to Panama. Officials at the State Department could be inclined to approve the extradition, mindful of not antagonizing the current government of Panama, which exerts plenty of influence over the fate of a development that makes millions for the president’s family—or to decline the request out of their awareness of Martinelli’s support for the Ocean Club and his admiration and kind words for Trump.
Martinelli presided over the opening of Donald Trump's hotel in Panama and he sat (sits?) on the board of a bank that manages funds going from that hotel to Trump. Just a slight conflict of interest.

Noriega to the FMLN: Don’t do anything behind my back

A few days ago former Panamanian strongman Manuel Noriega died at the age of 83. Noriega had been imprisoned for most of the last thirty years and had spent the last few in and out of hospitals in Panama. See the New York Times and Wall Street Journal. Noriega built a reputation as a man who worked both sides of the East - West conflict.

During an interview I carried out in El Salvador two years ago, I asked about the FMLN's relations with Panama. Here is what Salvador Guerra responded.
En Panamá, con Torrijos era el apoyo abierto, totalmente. Con la Universidad con... Torrijos directamente ¿verdad? Yo tuve la oportunidad de tener varias reuniones con él, entonces, y con Noriega,
Noriega era el de Inteligencia en aquel momento, en los ochentas, en el ochenta, pues, y nos dijo que ahí podían aterrizar lo que quisiéramos, y nos daba el ejemplo de cuántas armas habían pasado ahí por los sandinistas y todo..., y nos decía de que todo el mercado negro de armas ellos ya sabían de dónde venía ¿verdad? y que Estados Unidos estaba detrás de todo el tráfico de armas ahí en Panamá; entonces nos recomendaba de que no hiciéramos nada a espaldas de ellos, sino que todo lo que nosotros hiciéramos allá en Panamá se los teníamos que informar, porque nosotros habíamos metido un avión brasileño ahí en Panamá lleno de armas y nos lo había secuestrado Noriega, ni lo hizo público, nos pidieron dinero para liberar el avión y el piloto, dimos el dinero, y de ahí se fue el avión brasileño, descargamos las armas y hasta ellos nos ayudaron para ir a las bodegas que teníamos ahí en la zona libre de ahí de Panamá. Entonces la relación con ellos era bien legal, y a partir de ese incidente fue que ellos nos dijeron eso,
Que ahí en Panamá funcionaban todas las agencias de inteligencia del mundo y que ya se sabía qué era lo que hacía cada quien y que nosotros no podíamos estar funcionando así aparte, sino que teníamos que entrar en todo eso ¿verdad?, entonces nosotros después nos metimos en todo lo que fue el tráfico ahí en Panamá ¿verdad? En el primer Libro Blanco que lo presentó allá en Estados Unidos ahí en el ochenta creo yo, para la campaña electoral contra los demócratas, contra Carter, creo que fue contra Carter, ahí en ese Libro Blanco ahí me ponen a mí como el principal traficante de armas, con el seudónimo de Vladimir. Entonces ahí te puedo contar todas las anécdotas que se daban ¿verdad? Entonces ahí decían lo de la influencia de los cubanos, que nosotros teníamos el mercado de armas y el tráfico y todo. Y lo otro es que ahí llegaba armamento de Estados Unidos, y fue en la época de Oliver North y todo el tráfico de armas que había ahí, entonces llegaban armas del sur, llegaban armas de Estados Unidos y todo. 
As I've said before, popular support was valuable to the FMLN. However, so was its ability to work throughout Mexico and Central America. They developed a sophisticated network to funnel people, weapons, and resources in and out of El Salvador and the region under the US' watchful eyes.

Like Panama did with the Sandinistas, they allowed the FMLN to operate relatively freely as long as it did not do anything behind Noriega's back.

We didn’t forget about you

The Panamanian government has officially requested former president Ricardo Martinelli's extradition from the United States where he is believed to be hiding out in the Miami area. Martinelli is alleged to have engaged in a variety of illegal actions during his term as president of Panama, including using public money to spy on his political enemies. Martinelli claims that the charges against him are part of a political vendetta.

Martinelli has also been accused of having been involved in several other corruption schemes, some of which I mentioned in last year's Freedom House report. While there are always political considerations when pursuing charges against former presidents, I do think that Central American prosecutions against former leaders of the left and the right are important symbolically. Now it is up to the US government to act on Panama's extradition request.

Panama wants Interpol help

2015 was the year of criminal investigations in Panama. The new government went after a number of individuals from the previous Martinelli administration, including the former president himself. From the Freedom House report that I contributed to last year:
Over the course of 2015, a number of Martinelli’s associates were arrested in connection with various investigations, including his former social development and finance ministers, as well as two former directors of the National Security Council. In August, the Supreme Court cancelled a $120 million radar system contract Martinelli had signed with an Italian company, due to concerns that the deal had involved bribes and kickbacks. Former minister of public safety José Mulino was arrested in October for his involvement in the radar scandal. In September, Ignacio Fábrega, the former director of the country’s securities regulatory agency, was sentenced to five years in prison after pleading guilty to corruption charges; Fábrega told the court he had illegally shared information from his office’s investigation of the brokerage firm Financial Pacific with Martinelli, and had then dismissed the probe. Separately, former vice president Felipe Virzi, who served from 1994 to 1999 and is considered an ally of Martinelli, was arrested on money laundering charges in June; he was under house arrest at the year’s end. Martinelli’s nephew was arrested in late December in Colombia, on an Interpol notice, in connection with millions of dollars’ worth of inconsistencies in public works contracts.
I can't say that I've read too much progress turning investigations and arrests into prosecutions so if you know, leave it in the comments.

Anyway, the Panamanian government is now requesting that Interpol double its efforts to help them locate suspects who are believed to be outside the country.
Panama on Wednesday asked Interpol to "speed up" at least 34 requests for alerts regarding corruption sent to it by the Public Ministry so that the Panamanian judiciary "can give a response" in the assorted legal procedures under way.
"The Panamanian Public Ministry has requested more than 129 alert requests, of which 34 have to do with corruption. We, taking advantage of this international forum, are asking that those procedures be speeded up," said Panamanian Attorney General Kenia Porcell at the inauguration of Interpol's 13th Americas Regional Conference.
The Interpol notifications are international alerts that help security forces of member countries to identify, locate, arrest and extradite citizens wanted by the judiciaries of other countries.
Former President Martinelli is not one of the cases. Like most countries in the region, Panama has a long way to go in cleaning up corruption. Successful prosecutions will no doubt help.

10/4/16: The Real ‘Panamas’ Of Tax Havens… Are Not In Central America

The story of the Panama Papers leak has brought, on a 3.6 terabyte scale, the issue of money laundering and tax evasion back to the forefront of the mainstream media. However, quietly, and unnoticed by the majority of the punters, tax optimisation and tax evasion have been moving closer and closer to the homesteads of the Governments so keen on reducing it elsewhere, beyond their own borders.

Here are just a couple of links worth checking out on the matter:

  1. The role of Nevada (yes, one of the U.S. states) as an emerging tax haven of choice:
  2. The role of the UK (yes, another - alongside the U.S. - leader in BEPS process and the driver of the G20 push to close down ‘other nations’’ tax havens) :

Of course, the shocker no one wants to highlight when it comes to Panama Papers is that Panama became a tax haven conduit for the world on foot of U.S.-approved and / or U.S.-tolerated policies choices that stretch decades after decades after decades.

Panama’s first dappling with tax haven status was in 1927, when the country accommodated first registrations of foreign ships in a move designed to shield Rockefeller's Standard Oil from U.S. taxmen. The law allowed foreign owners to set up tax-free, anonymous corporations with little disclosures, including no requirement to disclose beneficial owners.

By 1948, the country set up its first ‘free trade zones’. One of these - the Colon FTZ - became the largest free trade zone (or tax free zone) in all of the Americas, a hit spot for trading for narcos and black marketeers.

By 1980s, Panama was saturated with offshore accounts schemes and by 1980s these started to attract large volumes of drug money. By the late 1990s, the former were pushed deeper into secrecy and the top trade became politicians, wealthy individual investors and others.

A good summary of Panama's tax haven history is available here:

The U.S. always knew this. And the U.S. knew this when in penned and subsequently implemented the 2011 Free Trade Agreement (with both Presidents George W. Bush and Barak Obama being behind that pearl of ‘free trade’ wisdom). One side of the coin was that FTA required Panama to enter into a separate tax information exchange treaty with the U.S., on the surface, implying improved transparency. But behind the scenes, Panama gained effectively an ‘all-clear’ sign from the U.S., making the country officially ‘compliant’. This meant that Panama could operate even more brazenly in the global markets, as long as it satisfied minimal U.S. requirements on disclosures.

Worse, until February 2016, the Financial Action Task Force (FATF), an international body responsible for setting and monitoring anti-money laundering rules, had Panama on its "blacklist" of non-compliant countries. Something the U.S. knew too. It was removed from the list because the Government passed some new laws designed to curb inflows of outright criminal funds into its financial system

In February 2014, the IMF carried out review of Panama’s regulatory and enforcement regimes relating to FATF regulations. Here is the first line conclusion from the IMF: “Panama is vulnerable to money laundering (ML) from a number of sources including drug trafficking and other predicate crimes committed abroad such as fraud, financial and tax crimes” (see full report here:

When it comes to money laundering (ML), the IMF states that “According to the [Panamanian] authorities, the largest source of ML is drug trafficking. Other significant but less important predicate offenses and sources of ML are cited to include: arms trafficking, financial crimes, human trafficking, kidnapping, corruption of public officials and illicit enrichment. With respect to predicate crimes committed outside of Panama, the authorities indicate that these would include activities related to financial crimes, tax crimes (tax evasion is not a predicate crime for ML in Panama) and fraud. These foreign offenses are likely to be linked with Panama’s position as an offshore jurisdiction. It is believed that ML related to these crimes is conducted electronically through the use of computers and the internet using new banking instruments and systems both in Panama and internationally. The authorities indicated that the diversity of foreign predicate crimes has been increasing in recent times.”

Overall, Panama laws still do not cover, even under the U.S. ‘enhanced transparency’ regime actions of lawyers, accountants, insurance companies, notaries, real estate agents or brokers dealing in precious metals and stones.

This all is now coming as a shocker for the U.S. and UK and European authorities in the wake of the Panama Papers leak? Give me a break!

The co-founder of Mossack Fonseca, Ramon Fonseca, recently accused the BEPS-leading countries, the U.S. and UK of hypocrisy. "I assure you there is more dirty money in New York, Miami and London than there is in Panama," he told the New York Times (see: And just in case you wonder, here are top 30 countries in terms of financial secrecy laws:

Yep. USA - Number 3... and so on...