Blue Apple emerges from the shadows
to suggest systemic corruption
by Eric Jackson
So, what is this Blue Apple mentioned in some of Panama’s news media and carefully avoided by others? Blue Apple Services Inc is a corporation organized in 2003 by attorney Federico Antonio Barrios. Under Panamanian corporate secrecy laws its beneficial ownership isn’t public knowledge. Barrios is reportedly under investigation in the case but seems not to have been formally charged with anything and may not have had anything to do with running the company. It’s business, on the face of it, was factoring, buying accounts receivable from companies at a discount. In this endeavor it is said to have done business with several of Panama City’s largest banks. Customers, it seems, were construction companies, domestic and foreign, which did business with the Panamanian government.
President Varela acknowledges that there is an ongoing criminal investigation. Attorney General Kenia Porcell does likewise but declines further comment because it’s an ongoing investigation. Such details as have been suggested to the public largely come from the National Front for the Defense of Economic and Social Rights (FRENADESO), a hard left coalition led by the semi-underground communist November 29th National Liberation Movement (MLN-29) and whose leaders also include the top people in the SUNTRACS construction workers union.
There are many people who disagree with FRENADESO politics — they were a small fringe as a 2014 participant in electoral politics via the Broad Front for Democracy (FAD) — and for that reason will discount what they say. It’s common belief-reinforcing selectivity, but there are a couple of reasons not to engage in it with respect to these people in this case.
First of all there is the SUNTRACS record. For a generation the union’s leaders have made few mistakes with respect to the construction industry. They are well informed, not only from reading the newspapers and industry publications, not only from having a brain trust of sorts in academia, not only from carefully preserving memories of their dealings with people and companies in their industry, but also most probably from what some might call industrial espionage and others opposition research — surely they have some confidential sources that help them to make very accurate assessments of with whom they deal and what the Panamanian economy will bear for their union at any given time. If FRENADESO or SUNTRACS says something about the operations of the construction industry and associated financial transactions, it is usually accurate. It may not be the entire story, but it is unlikely to be an error or a lie.
Second, although the allegation that SUNTRACS leaders have sold out and are secretly rich seems to be eternally recycling, it has never been demonstrated. Labor leaders Genaro López and Saúl Méndez receive good salaries but do not live in ostentatious luxury, are not known to be business partners with anyone in the local or international business elites and — very important in Panama — are not related to the rabiblanco families. The bonds of family loyalties and business ties that kill many an important story in Panama’s corporate mainstream media just don’t apply to FRENDADESO.
The gist of the FRENADESO allegation is that virtually all construction companies doing business with the Panamanian government, foreign and domestic, with the large exception of Odebrecht, used Blue Apple’s services. There were allegedly not factoring in any usual sense, but rather that the construction companies would deposit 10 percent of the amount of their contracts into Blue Apple, and these funds would be laundered and paid out to people in the government or members of their families or to companies controlled by such as kickbacks from the contracts.
A number that has been reported by various media is of $39.6 million having been traced through Blue Apple. If the scheme is on the scale and involving the cast of characters that FRENADESO suggests, the number is way low and we would be dealing with a partial figure.
From whence the money went into Blue Apple, if FRENADESO is right, implicates a number of the wealthiest people in Panama and indeed a company now controlled by one of the world’s richest men. The payout, FRENADESO alleges, implicate all of the parties of Panama’s political caste, including figures in the Torrijos, Martinell and Varela administrations.
So into what and where did the money that passed through Blue Apple go? Mansions on the beaches are on the list, as are expensive cars. Also, investments in entertainment, gambling and consulting businesses, the former which may be linked to the news media and all three of which are apt for money laundering purposes. In any case people who control the construction and financial businesses suggested would also own stakes in Panama’s large media, or be closely related to people who do.
The Blue Apple affair intersects, by some of the individuals or institutions involved, with the Financial Pacific plethora of scandals, jailed former Supreme Court presiding magistrate Alejandro Moncada Luna’s scheme with corrupt courthouse construction and remodeling contracts and the laundering of the proceeds from them, and former Vice President Felipe “Pipo” Virzi’s manipulations via the old Banco Universal and otherwise.
Another scandal in the orbit of overpriced public works projects with laundered kickbacks Two noteworthy that is in the news of late and on the attorney general’s docket sits on the Panama Canal Authority board of directors in the persons of Nicolas Corcione Pérez Balladares and Henri Mizrachi Kohen. There, through a company named New Business, laundered kickbacks from government contracts were allegedly used by former President Ricardo Martinelli to buy news media properties, most notably the parent company for El Panama America and La Critica. Corcione and Mizrachi have been missing from ACP board meetings for months and there are suggestions of sealed INTERPOL warrants on money laundering charges outstanding. With Corcione it’s not the first time that the ACP and President Varela have done a dance about whether anyone has the power to remove a member of the ACP board who is implicated in public corruption.
The basic design of rigged government contract awards with about a 10 percent kickback was the scheme of the Martinelli administration’s dealings with the Italian state-controlled Finmeccanica companies for helicopters, patrol boats, radar installations and digital mapping services. At the time Silvio Berlusconi was running Italy and this sort of transaction was how he funded his political campaigns. But if the Blue Apple scheme is as FRENADESO suggests, then it would not be be a modus operandi that naive Panamanians learned from wily Italians, nor would it be a monument to Ricardo Martinelli’s creativity.
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