Tags: panama | supreme court | Alejandro Moncada Luna | Ricardo Martinelli | corruption

Panama Struggles to Restore Rule of Law, Credibility

By    |   Monday, 06 April 2015 04:42 PM

March 5 was an historic day for Panama — for the first time in its history a Supreme Court magistrate, Alejandro Moncada Luna, was thrown in jail, sentenced to five years in prison after he pleaded guilty to charges of illegal enrichment and forging documents.

Panamanians are used to corrupt Supreme Court judges. The president of the nation's bar association once called the Supreme Court a "judicial madhouse."

In diplomatic cables published by WikiLeaks, the U.S. ambassador to Panama wrote that the court operated as a "criminal racket." Various magistrates saw their visas to the U.S. revoked as the result of high-profile corruption scandals.

Panama has long had close ties with the United States. In 1914, the United States completed construction of the Panama Canal after President Theodore Roosevelt craftily backed a popular uprising that led to Panama's breakaway from Colombia.

Though the United States began the handover of the Panama Canal Zone in 1979, it has seen fit to intervene from time to time. President George H.W. Bush sent American troops there in 1989's "Operation Just Cause," capturing dictator Manuel Noriega.

The last major U.S. military base in the Canal Zone was turned over to the Panamanians in 2000, but ties continue to remain close. In 2012, President Barack Obama signed a free trade agreement with Panama, further linking the two nations.

Still Panama is a country wracked with corruption, and increasingly a transit point for narco-traffickers and money launderers. The backdrop of the current scandal is the expansion of the Panama Canal, originally estimated at $5.2 billion, which began in 2007 and was set to be complete this year. The plan is to make the canal wide enough for supertankers that cannot can go through the old set of narrow locks.

But it became a huge opportunity for local politicians to cash in — some say in the billions.

Panama corruption is rife because local law dictates that Supreme Court magistrates can be prosecuted and tried only by the National Assembly, while members of that body, in turn, can be tried only by the Supreme Court.

As a result, the two institutions have left each other alone for decades. The Moncada Luna case changed that. Civil society groups, politicians and most of the media welcomed this break with the status quo.

Immediately after the verdict — broadcast live on national TV — Moncada Luna was brought to the El Renacer prison, set in the lush tropical jungle near the Panama Canal.

El Renacer was already home to former military strongman Noriega, who is serving sentences for, among other things, murder. The two men know each other: Moncada Luna was Noriega's special prosecutor, in charge of shutting down opposition media by using the dictatorship's various gag laws.

Moncada Luna became head of Panama's PTJ (the local equivalent of the FBI). He was fired for unethical conduct, only to be appointed as a Supreme Court magistrate years later by then President Ricardo Martinelli, who left office in 2014.


When Martinelli, a wealthy supermarket baron with a hands-on, no-nonsense leadership style, won the presidency in 2009 with a record landslide victory, Panamanians believed he would clean up the mess, end cronyism and put Panama back on a path to the rule of law.

One of the first things Martinelli had to oversee was the contracting of the project to expand the Panama Canal with larger locks.

Since then, the expansion has turned out to be $2 billion over budget and behind schedule.

But the economy appeared to be on a firm footing and other major infrastructure projects soon followed. Public transport in the capital, Panama City, was completely overhauled with a new bus system and a metro. A coastal highway was constructed, hospitals were built, roads expanded, the police were modernized and better paid, and the government launched bi-weekly markets all over the country with subsidized food for the poor.

"Panama is open for business!" Martinelli announced, as the capital started looking more and more like a cross between Miami and Dubai.

But now the holes are beginning to show. Public debt has ballooned. A delegation from the International Monetary Fund that recently visited Panama warned that the country would have to take forceful measures to get its finances in order.

With the mega-projects came fresh scandals.

Italian businessman Valter Lavitola was arrested in 2012 in Rome and sentenced to prison due to a myriad of charges brought against him for corruption and extortion.

Lavitola, formerly the right-hand man of Italian president Silvio Berlusconi, was a regular in Panama, brokering deals for the construction of a new prison, hospitals, the metro system, and the purchase of helicopters and radar systems for Panama's police force.

Those deals, Italian prosecutors alleged, involved massive bribes for Martinelli and members of his administration.

The Italians accused Lavitola of collaborating with Martinelli to extort money from the Italian company participating in the Panama Canal expansion.

Trials against Lavitola in Italy are ongoing, and new investigations are probing more cases that involve Martinelli's government.

It is not yet clear if charges will be brought against Martinelli himself. He holds dual Panamanian and Italian citizenship.


New elections were held in 2014, and after a vicious campaign, Martinelli's hand-picked successor lost to Juan Carlos Varela, who owns a rum distillery and heads the centrist Panameñista Party. Martinelli's wife ran for vice president and also lost.

The new administration has since embarked on a quest to root out corruption.

Unprecedented numbers of former ministers and other high officials have been indicted, sit in prison awaiting trial or have been placed under house arrest, while others have been prohibited from leaving the country.

The cases conservatively run into the hundreds of millions of dollars in bribes, kickbacks and various forms of embezzlement.

And Martinelli himself? First he signed over the control of all his assets — his net worth is believed to be well over a billion dollars — to his wife and his brother.

On January 28, he left the country in his jet for Guatemala, where he visited the Central American parliament.

The ex-president sought confirmation that his membership in the parliament would give him immunity from prosecution in Panama, but the parliament ruled differently.

Stripped of his immunity, Martinelli then announced he was going on an international tour to meet world leaders and inform them of the deplorable state of the legal system in Panama.

He flew to Miami and, unbeknown to anyone, stayed there while his jet continued on to Canada, Ireland and Italy. Pictures of Martinelli in Miami then surfaced on social media and he gave an interview on a local TV station, stating that he would return to Panama only if he had "guarantees."

Shortly thereafter, he alleged that new president, Varela, wants to kill him.

Martinelli did not meet any world leaders and remains hidden in Miami. Several other officials have fled Panama as well, most importantly his former secretary who is now being sought by Interpol.

Martinelli himself denies any wrongdoing and claims that the cases amount to political persecution.

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Panamanians are used to corrupt Supreme Court judges and lawmakers, but on March 5 — for the first time their country's history — a Supreme Court magistrate was thrown in jail, and now Panama has leaders embarked on a quest to root out corruption.
panama, supreme court, Alejandro Moncada Luna, Ricardo Martinelli, corruption
Monday, 06 April 2015 04:42 PM
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