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Varela, Message to the nation

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President VarelaMessage to the nation

by President Juan Carlos Varela

Since the discovery of the Isthmus of Panama we have always been a meeting point of civilizations at the service of the world and global trade. Today we are the most stable and growing economy in Latin America. We are the Hub of the Americas, which facilitates communication and connectivity of the continent with the rest of the world. Panama is the regional headquarters to more than 100 multinationals and we are a country where the law and legal security reign, with an economy open to foreign investment and a government committed to transparency, accountability, the separation of powers and the strengthening of democratic institutions.

The massive leak of coprporate documents from a Panamanian law firm with operations in different jurisdictions has resulted in a controversy that reflects a global problem.

Panama wants to make it very clear that this situation, which has been misnamed “Panama Papers,” is not a problem in our country, but in many countries of the world, whose legal and financial structures are still vulnerable to be used for purposes which they do not represent the common good of the citizens.

In 21 months of our administration the Republic of Panama has taken decisive steps in favor of transparency and the strengthening of our financial system and services platform, which have allowed us to leave the Financial Action Force (FATF) Gray List this year (2016) and move to Phase 2 of the Global Forum joint review, by which the international community has validated our legal framework as compliant with international standards. In addition, as of January 2016 we met the need to provide certainty in the identification of the owners of the shares of companies as a sign of our commitment to transparency.

We recognize that we need to move forward on the government agenda of that we have set to protect our institutions, but we are not going to allow this media situation define us as a country.

Serious and responsible governments do not negotiate the adoption of international obligations through the media, but through diplomacy — serious, responsible and constructive dialogue.

I have asked Foreign Minister Isabel de Saint Malo to go to Global Forum member countries and reiterate to the Organization for Cooperation and Economic Development (OECD) our willingness to talk respectfully and to reach agreements that will contribute to the economic development of our countries. And as it says on its own slogan, our country and our government are also committed to building a stronger, cleaner and more just world.

The government of Panama, through our Ministry of Foreign Relations, will create an independent committee of national and international experts of well-known experience to evaluate our current practices and propose the adoption of measures to share with other countries around the world, to strengthen the transparency of the financial and legal systems. We will work not only internally in our country but also we will lead an effort for the benefit of the rest of the world.

I would like to make it clear that Panama will continue to cooperate with other jurisdictions as we have been doing, both in judicial matters to prosecute crimes that are specified under our Penal Code as well as in the exchange of information to comply with international treaties ratified by Panama.

We reaffirm our commitment as a serious country, respectful of international law, cooperating with the efforts of the international community in finding solutions to this global problem. We call upon all countries to use diplomatic channels and mutual respect at this time.

Thank you very much.

 

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Oliva Corado, ¿Quién quiere ser humano?

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Nairobi
Huyendo el masacre del centro comercial Westgate en Nairobi, Kenia.

“Todos somos Bélgica,” ¿quién quiere ser humano?

por Ilka Oliva Corado — Crónicas de una Inquilina

Cada vez que nos enteramos de un atentado terrorista en países desarrollados -conforme el sistema- sentimos como nuestra esa tragedia, y no se debe a nuestro carácter humano porque claro está que carecemos de éste. Reaccionamos claramente acorde a nuestra doble moral, racismo y clasismo. A la negación lo que somos como sociedad.

Las reacciones en masa son alarmantes por esa falsa indignación. ¿Cuántos de nosotros fuimos Je suis Charlie cuando el asesinato de 12 caricaturistas en Francia? Nos indignamos y exigimos que se respetara la libertad de expresión. ¿Lo recuerdan? Sin embargo en México han asesinado a más de 103 periodistas desde el año 2000, ¿y cuántos de nosotros nos hemos pronunciado? ¿Acaso la libertad de expresión en México nos vale lo que en Francia?

¿Cuántos fuimos nuevamente Francia cuando el atentado sucedió en la sala de conciertos Bataclan? ¿Cuántos fuimos Túnez cuando terroristas entraron al Museo Nacional de El Bardo y mataron a 23 personas?

¿Cuántos de nosotros hemos sido Estados Unidos cada vez que se realizan masacres en las escuelas y universidades del país? Bueno, ¿cuántos de nosotros fuimos Kenia cuando terroristas asesinaron a 148 estudiantes en la Universidad de Garissa? ¿Cuántos fuimos Kenia cuando terroristas asesinaron a 67 personas en un centro comercial de Nairobi? ¿Cuántos de nosotros fuimos las víctimas de la Guarimbas en Venezuela? ¿Las fosas clandestinas en Colombia?

¿Recuerdan la epidemia de ébola?, ¿cuántos de nosotros sentimos las muertes de esos puños que caían en las calles de Guinea, Liberia y Sierra Leona? ¿Cuántos de nosotros sentenciamos lo inhumano de los países desarrollados que se negaron a brindar atención médica? ¿Cuántos nos indignamos por el secuestro de 219 niñas en Nigeria? ¿Tenemos noción de lo que esas criaturas están pasando en manos de terroristas de Boko Haram? ¿De qué estamos hechos que nos indignamos por unos y no por otros? ¿Acaso se trata de continentes, de clase social, de color de piel, de grado de escolaridad, de ideología? ¿De qué trata nuestra conciencia? ¿Tenemos conciencia acaso?

¿Cuántos de nosotros somos los 43 de Ayotzinapa, las desapariciones forzadas, los miles de feminicidios y el genocidio latente en México? ¿Cuántos de nosotros somos el triángulo norte de Centroamérica y las docenas de asesinatos diarios? ¿Cuántos somos los feminicidios y violaciones sexuales que sufren miles de mujeres diariamente alrededor del mundo? ¿Cuántos de nosotros somos las víctimas del tráfico de órganos y con fines de explotación sexual? ¿Tiene que haber un bombazo y en un país específico para que reaccionemos? ¿Así es como trabaja nuestra conciencia, por mapas?

¿Cuántos de nosotros hace unos días dijimos en coro “todos somos Bélgica”? ¿A cuántos nos indignó el atentado terrorista en un estadio en Irak donde murieron 26 personas? ¿A cuántos el atentado en Pakistán donde han muerto más de 70 personas? ¿A cuántos nos ha dolido en el alma la invasión y las innumerables masacres que hizo Estados Unidos en Libia, Somalia, Irak y Siria con la venia de la Unión Europea? ¿Y qué decimos de Israel en Palestina? ¿La de Arabia Saudita en Yemen? ¿Esas muertes no cuentan? A pero el muro de los lamentos es visitado por personas del mundo entero y lloran y oran en éste, pidiendo por la paz mundial. ¿De qué está hecha nuestra conciencia?

Autoridades del gobierno belgas anunciaron que atacarán Siria para “combatir” al Estado Islámico. ¿Qué más quieren hacer con Siria? ¿No es curioso que los atentados sucedieran a pocas semanas de acordarse el alto al fuego en Siria? ¿Qué tuvo que ver Jhon Kerry es decir, Estados Unidos- en esta decisión del gobierno belga? ¿Qué gobiernos capitalistas crearon al Estado Islámico? De la misma forma en que crearon enemigos imaginarios en tantos países alrededor del mundo para invadirlos y robarles la vid.

¿Cuál es la responsabilidad de la Unión Europea -en el contrabando de los diamantes de sangre-, en los genocidios y en los atentados terroristas en África y en la propia Europa? ¿Qué tiene que ver la política exterior de Estados Unidos con todo esto? ¿Qué responsabilidad tiene la Unión Europea y Estados Unidos de los mundos de refugiados que se ahogan en los mares buscando salvar sus vidas? ¿De los mundos que salen de Siria? ¿De los mundos de africanos que buscan sustento en España? ¿Quién es los mundos de inmigrantes centroamericanos que mueren en México y en la frontera con Estados Unidos? Que mueren por la misma razón, buscan salvar sus vidas, buscan sustento, buscan salvar sus vidas. ¿Qué tiene que ver Estados Unidos en las migraciones forzadas?

¿Por qué la palabra refugiados no nos encona como la del terrorismo? ¿Por qué no nos indigna el bloqueo de Estados Unidos a Cuba? ¿Por qué no nos indignan las atrocidades y el genocidio que están haciendo en Palestina y Siria?

Para no ir tan lejos, ¿qué está sucediendo en nuestros países, colonias, comunidades, y pueblos que no es capaz de despertarnos en indignidad contra el sistema de políticas neoliberales que hace de nosotros un partida de títeres? Porque pensamos lo que es el sistema quiere que pensemos. Porque reaccionamos como la polarización lo manda. Porque somos incapaces de pensar por nosotros mismos, de sentir en el fondo del alma todo injusticia como nuestra. Respecto al terrorismo que se ejecuta en pro de los gobiernos de políticas capitalistas hay muchas cosas que decir. No nos quedemos callados, ante lo injusto no podemos ser neutrales.

“Todos somos Bélgica,” ¿pero, quién quiere ser humano?

 

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The Panama Papers context

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insufferable peopleThe Panama Papers context

by Eric Jackson

Panama is a small and anomalous Latin American country, with some things in common with her sister republics in the region, influences from all over the planet due to its role as a world crossroads, and certain things unique to it. Because it is so small — comparable in population with Jamaica with about four million people, roughly the size of the US state of North Carolina — there are few scholars in the English-speaking world who specialize in it and the large news organizations of the industrialized world don’t tend to treat it as an important outpost to staff and cover. But in shipping, boxing, finance and fraud we are a bigger player than our size would suggest. This is some of the background to the revelations that are rocking the world.

Who are these people?

Panamanian history did not start with the Spanish Conquest. There were people here when the first Europeans came. Archaeology, linguistics, metallurgy, paleobotany and DNA tell us of an ancient cultural and commercial crossroads. Manatees are a Caribbean animal — but their bones have been found in ancient trash heaps on the Pacific side of the isthmus. The cardinals and their distinctive red feathers — prized by many of the first nations of the Americas — have and had a range with its southernmost limits in northern Mexico. Cardinal feathers have been found far to the south, in an ancient rock ledge shelter in Panama. We now know that maize was first domesticated thousands of years ago in a valley in western Mexico — and that not long afterward made its way to the South American continent by way of Panama. We similarly know of hot peppers that the conquistadores found in the Bahamas, which originated in Bolivia and spread to Panama along the way. Panama has gold, generally found along with traces of copper and silver. Our ancient golden artifacts can be found in museums to the north, and mostly they have impurities typical to the isthmus. However, some artifacts have mixes of copper and silver that suggest the metal came from Colombia or other South American lands, and some of the artifacts are unmistakably ancient imports from the south. Most of our seven indigenous nations speak languages of the Chibchan family, with their roots in Colombia’s central plateau. When Spaniards came to Panama looking for gold, the people they encountered told them about and directed them to the golden empire of the Incas. Spain conquered an existing crossroads, and continued to employ it for that purpose.

Our dialects of Spanish may have more anglicisms than those of our neighbors, but for starters we don’t have the Castilian lisp. The Spanish that was established here came from southern Spain, with soldiers and sailors from places relatively recently conquered from the Moors at the time of the conquest of the Americas, places where most young men had no attractive future and every incentive to leave. The soldiers and priests of conquest were by and large led by the younger or out-of-wedlock sons of the nobility — hijos de algo or somebody’s sons, or as it has come down to us, Hidalgos.

Hidalgos didn’t work. They managed property and directed other people to work. If they were lucky or ambitious, they got some sinecure atop a cornered market for some essential or very popular good or service. But Panamanian soil is not so rich and before the world developed a taste for coffee and the technologies to usefully ship bananas and meat overseas being a plantation master was not such a lucrative Hidalgo pursuit. Roles in the shipping of Peru’s looted gold and of European luxury items to the Pacific outposts of the Spanish Empire were more profitable. A commercial culture arose around shipping and the fabulous annual trade fairs at Nombre de Dios and then Portobelo. But the exhaustion of Incan treasures to be easily had, along with the predations of the likes of Sir Francis Drake and Sir Henry Morgan, put an end to the era of trade fair prosperity. Most of those who became rich from that era of Panama’s prosperity left for Ecuador or other parts of the Spanish Empire. Panama still was a good overland shortcut to the Pacific, although the longer Mexican route was less pestilential. After the trade fairs we became a sleepy backwater and today’s rich Panamanians who trace an illustrious and prosperous family tree back to the Hidalgos generally sport a forged lineage.

It wasn’t until the middle of the 19th century, nearly two centuries after the trade fairs, that prosperity began to return to Panama. An American company build the Panama Railroad and Americans streamed across the isthmus going to and coming from the California Gold Rush. The French started, and then the Americans finished — in each case largely on the backs of West Indian labor — the Panama Canal. As Panama became a bit richer, British shipping took notice and established its outposts here. International commerce and financial services came as adjuncts to the canal. A new Panamanian aristocracy arose, generally on the strength of its ties with these international forces. These are the rabiblancos — Panamanian Spanish for the White-tailed hawk, but that origin is obscure to most of the people here. rabiblancos are oligarchs and they are infamous for their fraudulent family histories, academic credentials and representations to gullible foreigners whose fortunes they seek to appropriate.

The Hidalgos and the rabiblancos do, however, share a continuity. They embody a set of values, one that has diffused throughout most of Panamanian society. It’s not what you know, it’s who you know. Family values include theft if it makes the family a bit more comfortable, and mean that if you come into a public office with the power to hire people and you do not put as many relatives as possible on the payroll you have betrayed your family. The use of political or judicial power to promote somebody’s business, or to destroy somebody else’s business so that a favored party can move in and take over, is the essence of government. Panamanians are mostly of mixed race and are an international polyglot, but if there is advantage to invoking racism or xenophobia the general culture won’t take that as overly disgraceful.

In a Panama that doesn’t produce very much, much of the upward mobility is by way of a grasping political caste under rabiblanco or foreign sponsorship. At the top of this? General Noriega was a US-trained CIA asset on his way to power. After him? President Endara, an NYU-educated corporate lawyer. Then President Pérez Balladares, Notre Dame and Wharton and then CitiBank. Then President Moscoso, the poorly educated at a Miami community college widow of an old caudillo with powerful backers in the south Florida Cuban exile community. Then President Torrijos, the son of a military dictator and Texas A&M man. Then President Martinelli, a University of Arkansas grad and Wal-Mart intern, also by way of CitiBank. Now President Varela, scion of a liquor distilling family and Georgia Tech graduate. Did some of them acquire this or that along the way, so as to present themselves as “self-made?” Panamanian corporate and banking secrecy, and our historic and current criminal defamation laws, are well designed to limit any inquiries about the legitimacy of such claims.

What is Panama’s offshore industry?

Banking secrecy, providing refuge for criminals from around the world and the celebration of defrauding the tax man go way back in Panamanian culture and law. But the institutions from whence arose the Mossack Fonseca law firm — and a number of others in the “offshore asset protection” sector — mostly go back to the establishment of the international banking sector and the rise of the duty-free import/export industry.

International banks first came here so that ship owners could pay their crews. The large payrolls of the French and American canal construction efforts were largely handled and guarded in-house, without the need for a major banking presence. Once the canal was open the needs of shipping and commerce increased the demand for banking services.

Before that robbers created a huge problem, a public order dysfunction with which the authorities in Bogota — the seat of the the Spanish Empire’s Viceroyalty of New Granada of which Panama was a part, and then the capital of the greater Colombia, of which Panama was also a part until its November 1903 separation — could scarcely be bothered. Starting in the days of the Panama Railroad construction, Bogota authorized the Panama Railroad Company to create a private army, which in its heyday was famously under the direction of Ran Runnels, a former Texas Ranger. Through the French Canal construction days the New York corporation that owned the railroad was the main force for enforcing some sort of order in the transit zone between Colon on the Atlantic Side and Panama City on the Pacific, which was later to become the canal area.

As an independent republic under US tutelage, the need for private armies in Panama all but went away. There are still bank robbers to this day, but mostly they don’t get away with it. The ones who do tend to be those who run the banks, and some of these go on to become major actors on Panama’s political and financial scenes.

(Does anyone remember the acquisition of Banco del Istmo by HSBC? The big fuss here was how about a half-dozen men, including then Vice President Samuel Lewis Navarro, prevailed on the government to write a special capital gains tax exemption worth some $400 million for themselves just for that transaction. The heads of the HSBC branch in Panama and at the home office back in England were rewarded with large bonuses and took their retirement. Then HSBC’s office in London complained that they had not bought so much as had been represented and it wasn’t such a good deal after all. Panama, you see, has its own form of accounting. The Panamanian supreme court even ruled that Generally Accepted Accounting Principles that prevail in the rest of the world are unconstitutional here. Does HSBC allege that their man in Panama at the time didn’t know that?)

The surge in the import/export industry came with the duty-free Colon Free Zone, the businesses of which pay no taxes on the goods that they import and then export. (The business owners do pay income taxes on what they declare as their personal income, and if things imported into the free zone are bought there and taken out into Panama duty must be paid.) This walled part of the city of Colon had its humble beginnings in the late 1940s and its first superstars were the Motta family, Sephardic Jews who came to Panama via the Caribbean and soon had the world’s largest liquor distributorship based in the Colon Free Zone. They branched into different products, split the free zone business between alcohol and everything else, then went into other sectors such as Panama’s Copa Airlines, the TVN television network, a major behind-the-scenes presence in Panama’s boxing scene, a big share of Banco General and more. They are Panama’s richest family and quite influential in the nation’s politics, even if not as politicians themselves.

Panama’s rabiblanco elite was centered in Panama City and could not be bothered with hardscrabble, mostly black Colon. Was their old game to see businesses that others, often foreigners, develop, then use their political influence and maybe a bit of old fashioned bribery to shut those companies down so that they could take over? By the time that the Mottas got big enough for them to look up from Panama City and notice, the Motta family was too rich to be very vulnerable to those sorts of power plays.

Then came the coup in 1968 and many old power equations broke down with it. General Torrijos allowed the Free Zone to prosper. One of its early big customers was Cuba, which under the US embargo laws needed a place to shop for certain things. The duty free zone became the most important regional wholesaling and warehousing center as US exports were replaced by the products of Asian industry. Jews, Hindus, Arabs, Chinese and Colombians, ethnicities that had been disdained by the rabiblancos, went into business in the Colon Free Zone and prospered in a big way. With that commerce came the need for banking and insurance services. The highway robbery of buyers carrying large amounts of cash for Free Zone transactions still happens, but it would be a lot more common had the banks not set up outposts within the Free Zone walls or in any case not on the other side of the isthmus in Panama City’s banking district.

Under the 21-year dictatorship the banking system also prospered from the rise of the drug economy, and the world’s tax cheats and kleptocratic heads of state also took notice of what the drug lords were doing and began to park their ill-gotten fortunes in numbered Panamanian bank accounts as well. Panamanian corporate secrecy added extra layers of protection, the opportunity to play shell games with investigators from elsewhere. There arose an entire “offshore asset protection” industry, mostly centered in law firms but also including brokerages, banks, real estate, investment counselors and CPA firms. The Mossack Fonseca law firm, a merger of two small firms, traces its roots back to 1977, a time when General Omar Torrijos ran Panama.

So is Mossack Fonseca the center of world attention at the moment? With branches in nearly four dozen countries they may be the most widespread Panamanian “offshore asset protection” firm, but there are others and some of these may have more clients, or richer clients. You may have heard this European adage: “There is multilingual, trilingual, bilingual and American.” So many US citizens, including some very rich and supposedly sophisticated ones, only speak English and look for Anglo surnames when searching out a Panamanian law firm with which to do business. Do conspiracy theorists of the weird left and of the online paranoia profession make a big point of of the relatively few Americans mentioned in the Panama Papers? There are Americans named and their relative unimportance in this huge leak may be mostly a matter of US citizens with money to launder or big tax bills to evade prefer the services of other firms.

(One variant of the conspiracy theories about the Panama Papers is that Israel is shielded and thus the revelations must be some variety of Jewish plot. See the coverage of Israelis mentioned in the documents published in Ha’aretz to give the lie to that in the first instance. Then consider that Israelis argue among themselves about who is Jewish, and then in the Spanish Americas — most famously in Albuquerque, New Mexico, USA — there is the legacy of Crypto-Jews, those who hid their prohibited Jewish identity in the times of the Spanish Inquisition. Don’t the theoreticians of The International Jewish Conspiracy have a book burning to attend somewhere? They don’t belong in any serious discussion of the Panama Papers.)

When and where did this story arise?

As the 11.5 million documents in the Panama Papers are more fully published, we shall see the window in time from which they come. Figure that they may not go back to the firm’s foundation in the 20th century, but just to the time when Mossack Fonseca went online. If they do get into the firm’s founding documents, that will be a sign of either an inside job, a product of a law enforcement investigation such as the one in Brazil that led to raids, seizures of documents and hard drives and criminal charges against two Mossack Fonseca lawyers, or of a profound hack that got way beyond the website and email accounts.

What we are told is that about a year ago a source came to a Munich newspaper and began sending them documents. The first of the documents sent, if they are ever identified, ought to indicate much about the source’s thinking, or possibly what she or he expected of the journalists’ thinking.

What was happening in the world of “offshore asset protection” a year ago? Panama was making some token concessions to avoid sanctions by various countries and international organizations. Were those European powers, the Americans and groups like the Organization for Economic Development and Cooperation so gullible as to believe that the problems with Panama were over, or on the road to being resolved? Or were cynical politicians, in the fashion of Iceland’s now former prime minister, David Gunnlaugsson, putting on insincere shows for public consumption? Probably more of the latter than the former, but in any case the Panama Papers are disrupting those shows.

The leaks went to a newspaper in Germany, where Transparency International began, where bankers and politicians have been taking stern postures against corruption and waste in southern Europe. The leaks came at a time when the United States, the European Union, China, Russia and Brazil are all suffering from serious economic problems. Markets may say one thing, but governments in these places are bleeding and massive tax evasion — let alone large-scale embezzlement and corrupt sales of important national assets — are not so easily afforded.

The source of the Panama Papers leak will have a particular world view and set of motives. So will the journalists and editors who report and publish the stories arising from them. But well beyond what anybody ever intended to affect, these revelations are bound to affect business and political reputations. Was it the NSA? Was it a rogue Brazilian prosecutor? Was it a hacker of the Anonymous genre? Was it someone at Mossack Fonseca who didn’t get the raise or promotion that he or she thought should be coming? That’s all beside the point and if Panamanian President Juan Carlos Varela, his cabinet minister and party comrade Ramón Fonseca Mora or persons whose bread and butter come from “offshore asset protection” complain that it’s unfair to call them “the Panama Papers,” pay them no heed. This is about Panama. About crooks in richer countries, too, but it’s about Panama and Panamanians would be well advised to deal with it.

 

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Jackson, Panama denies

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Cunha
Eduardo Cunha, president of Brazil’s Chamber of Deputies, has been leading the charge to impeach President Dilma Rousseff for alleged corruption. However, there has been a bump along his road: documents revealed in the Panama Papers show that the Panamanian law firm Mossack Fonseca set up a trail of shell companies leading to illegal Swiss bank accounts containing unexplained millions. Now he’s the one investigated for corruption. Photo by the Chamber of Deputies.

Panama denies

by Eric Jackson

Denial can be a way of life down here.

The Brazilian construction giant Odebrecht was decapitated in the middle of last year with the arrest of its CEO, Marcelo Odebrecht. It was about bribes paid to officials of the Brazilian state-owned Petrobras oil company. Marcelo was convicted and sentenced to a bit more than 19 years in prison. In a new round of raids police and prosecutors swept down on the premises of his successor. Brazilian authorities claimed that they found the new CEO in possession of a spread sheet detailing payoffs to some 200 public officials. It was old hat for the Odebrechts. In 1992 they were a clearinghouse for construction companies to rig bids and suppress competition. Politicians received kickbacks from the inflated contracts. President Fernando Collor de Mello was forced to resign.

This time, police and prosecutors say, Odebrecht was more sophisticated. The money that went back to Petrobras officials passed through a maze of corporate shells and numbered bank accounts in several jurisdictions, some of them British dependencies. These elaborate money laundering trails were designed by Panamanian lawyers who specialize in that sort of thing. Most of the companies were no more than conduits through which money flowed. Some were Panamanian, some were not.

This time Odebrecht’s activities were more widespread. Against the backdrop of continuing police raids on the offices and homes of construction executives, a political consultant power couple was called home from the Dominican Republic, where they were working on President Danilo Medina’s re-election campaign. João Santana and Mônica Moura were arrested when they got off the plane in São Paulo, formally on charges of using illegal (under Brazilian law) secret foreign bank accounts to receive millions of dollars. Under questioning Moura admitted that this was how she and her husband were paid — by whom she professed not to know — for managing the political campaigns of the MPLA in Angola, the Chavistas in Venezuela and former President Ricardo Martinelli’s Cambio Democratico in Panama. Prosecutors say that the money trails into those accounts lead back to Odebrecht.

A foreign company paying for a Panamanian election campaign? That violates Panama’s laws — which are not enforced. Meanwhile, under the Martinelli administration Odebrecht was paid $250,000 per square meter for a 4.5-kilometer extension of Panama City’s Coastal Strip road and park project. Under the present administration Odebrecht has won several more contracts, a couple of them by specifications rewritten so that only Odebrecht could “win” the “bidding.”

There was a hue and cry, and Varela introduced legislation to bar companies convicted of corrupt practices from bidding on public contracts in Panama — but the conviction has to be in a Panamanian court. The charges and convictions elsewhere are treated as foreign matters which have nothing to do with Panama.

Now come the Mossack Fonseca law firm’s embarrassing files. This is but one of Panama’s “offshore asset protection” operations — it has an impressive string of offices around the world, but others in the industry may have more clients, or richer clients

So is it a British scandal or a Panamanian scandal? UK Prime Minister David Cameron’s late father parked a fortune in offshore tax havens — some to be inherited by the politician son who rails against tax havens. The corporate shells were made in Panama.

It is easy to blame Panama for the corruption of the industrialized world. Faux nationalists now petition to change the phrase “Panama Papers” to “Mossack Fonseca Papers,” so as to protect the nation’s honor. But what honor? The law firm’s partner and co-founder, Ramón Fonseca Mora, is a minister in President Varela’s cabinet. He was the president of Varela’s Panameñista Party.

It is unfair to cast all blame on Panama. However, when other countries are looted, Panamanian lawyers help the crooks do it and proclaim that all is legal under Panamanian law. The natural response of many people around the world is to look at Panama as a variety of international nuisance.

 

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Latin America and the Panama Papers

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Fonseca
President Varela’s minister without portfolio — now on a leave of absence — Ramón Fonseca Mora.

Latin American exposure: The Panama Papers

by Jessica Cruz, Melanie Landa & Christopher Razo — Council on Hemispheric Affairs
editing, added content and hyperlinks by Eric Jackson

On April 3 Suddeutsche Zeitung, Germany’s largest daily newspaper, leaked 11.5 million files from the database of the Mossack Fonseca law firm whose headquarters is in Panama City, Panama. The files exposed financial dealings of some of the world’s richest and most powerful individuals including a number of leaders in Latin America. The sources were shared with the International Consortium of Investigative Journalists (ICIJ) and a network of international partners including the BBC and the Guardian. The millions of documents were shared after a yearlong investigation conducted by the German newspaper on the Mossack Fonseca law firm.i The documents included financial records, legal documents such as passports, and correspondences dating back over 40 years.ii These files reveal offshore accounts of current and former world leaders as well as individuals with close ties to political figures and business moguls around the globe. Some of the well-known and shocking names included in the files were the president of Russia, Vladimir Putin, Britain’s Prime Minister, David Cameron, and the president of Argentina, Mauricio Macri. iii The files also reveal that it is not only politicians who are found to be tied to the alleged laundering of funds but professional football star, Lionel Messi and the former head of European football’s governing body UEFA, Michael Platini as well. Along with those who are allegedly involved with this corruption scandal are Latin American leaders from Argentina, Brazil, Ecuador, Mexico, Panama, Peru, and Venezuela.

Concerns for Latin America

Concerns are high for Latin America not only because the law firm whose files were leaked was based in Panama, but because these files exposed the offshore tax-exempt accounts of a number of Latin American leaders and politicians from all throughout the region. In Argentina the recently elected President Mauricio Macri was linked to the offshore company Fleg Trading Ltd, which was incorporated in the Bahamas in 1998 and dissolved in January 2009. Macri, however, claims he did not recognize any financial ties with the company that would have existed during his time as mayor of Buenos Aries. Following the release of the Panama Papers, Macri’s official spokesman Ivan Pavlovsky stated that the Argentine president did not list Fleg Trading Ltd as an asset because he had no participation in the company and declared that Macri was not a shareholder.iv Along with Macri, former Buenos Aires Finance Minister Nestor Grindetti was linked to the Panama Papers scheme, but he refused to make any comments on such accusations.v The leaked documents also allege that Mossack Fonseca’s US lawyers at its Las Vegas office helped to cover up an Argentine business scandal.

The documents also included Juan Armando Hinojosa, known as the “favorite contractor” of Mexican President Enrique Peña Nieto. The ICIJ reports that in the summer and fall of 2015 Mossack Fonseca aided Hinojosa in creating three trusts that apparently took over accounts valued to $100 million. Hinojosa was mentioned as the primary beneficiary, along with members of his immediate family. It is stated that his network is multifaceted, with units in New Zealand, the United Kingdom and the Netherlands. Hinojosa has not commented on the report.vi Other documents suggest that the affair will reach into Mexico’s state-owned Pemex oil company.

The document also names the former governor of Ecuador’s Central Bank, Pedro Delgado, for involvement in money laundering. Delgado is a second cousin of President Rafael Correa and is a fugitive in the United States who is facing an extradition request by Ecuadorian authorities for forging a university degree. As others accused, Delgado has not provided any comments on his involvement in the Panama Papers.vii

The former head of Peruvian intelligence, Cesar Almeyda, was also cited in the documents. Almeyda was imprisoned for eavesdropping in 2006. In 2010 he was investigated for alleged overseas bank accounts that were in tax havens. ICIJ has not been able to contact Almeyda or any officials that can provide a statement on his behalf.viii The spread of the implications caused by the release of the papers can be seen even in the upcoming Peruvian presidential elections, with its first round of voting on April 10. Also accused in the Panama Papers is Peruvian presidential candidate, Keiko Fujimori. Her father, Alberto Fujimori, the former Peruvian president, is now in jail for embezzlement and corruption. TeleSur, a pan–Latin American television network, notes that Fujimori’s financial backers used Mossack Fonseca to set up their offshore accounts.ix Most — but not all — of Peru’s major presidential candidates in this year’s election have been named in the leaked documents. It could possibly delegitimize the electoral process. Aside from Keiko Fujimori, candidate Pedro Pablo Kuczynsky was cited for recommending Francisco Pedro Mesones for president of the Council of Ministers. Another candidate and former president, Alan García, was linked via mention of the leader of his political party (APRA) in the Panama Papers. Harvard University’s Dr. Alberto Vergara stated that it is highly likely in the coming weeks that more information regarding these candidates’ involvement will be seen as the electoral process continues.x

In Venezuela those involved in the Panama Papers include former security chief of the Venezuelan presidential house, Adrian José Velazquez Figueroa; the former head of the Treasury Office, Claudia Díaz Guillén; and the former commander in chief of the Venezuela Armed Forces, Víctor Cruz Weffer.xi xii

The former head of the Panama state-owned bank Caja de Ahorros and ex-VP of Tocumen International Airport’s authority, Ricardo Francolini, has also been named. The ICIJ reports that Francolini is accused of accepting a $500,000 bribe for a failed irrigation project during former President Ricardo Martinelli’s administration.xiii Martinelli has a history of corruption and embezzlement accusations. A previous Council on Hemispheric Affairs article about corruption in Panama contends that President Varela had “vowed to tackle issues of corruption from the previous administration, and plans to do so by improving government transparency.”xiv The recent leaking of the Panama Papers adds to the woes of the Central American country, which for years has been struggling with a plethora of corruption scandals.

Mossack Fonseca’s history of alleged corruption

The Panama Papers is not the first investigation against the Panamanian law firm. At the end of this past January, apartments registered by Mossack Fonseca’s Brazilian branch were raided as part of the Operation Lava Jato investigation of the Brazilian Petrobras bribery scandal and associated money laundering. Brazilian prosecutor Carlos Fernando dos Santos Lima claimed that the law firm was a criminal organization responsible for the money laundering, bribery, secret offshore accounts and shell companies.xv

Despite these accusations, the law firm declared that there was no involvement in illegal actions that might pertain to Mossack Fonseca. One of the firm’s founders, Ramón Fonseca Mora, stated that those cited in the release of such documents were not direct clients of the law firm. Furthermore, he explained that Mossack Fonseca works with banks and lawyers that, subsequently, work as intermediaries to those involved in the scandal. “We form the corporation and our clients’ resale it; and nothing more,” Fonseca Mora said.xvi CNN released an article explaining that “the documents do not necessarily indicate illegal activity. But shell companies and offshore accounts can be used to mask the origin of financial transactions and ownership.”xvii Fonseca Mora, one of the firm’s founders, has served as the president of the Panameñista Party and is on a leave of absence as a minister without portfolio in President Varela’s cabinet.

President Varela said that his government would proceed with investigations of the law firm and that they would cooperate, nationally and internationally, by providing any information that might be of use for the investigations.xviii According to a statement by the Panamanian Embassy, “In fulfillment of Panama’s commitments to FATF-GAFI and in compliance with the roadmap set up by the Committee Against Money Laundering, Law 23 of 2015 was adopted in order to strengthen our financial system against money laundering and terrorist financing, leading to our nation’s withdrawal from the FATF-GAFI Grey List.”xix Further declarations from the Panamanian government would be of great relevance, given the fact that the leaks included names of drug trafficking organizations and groups with alleged terrorist links that have been blacklisted by the United States.xx

What’s next?

Now that the door is open, new revelations are bound to come forward to expose the depth of the Panamanian corruption scandal. The release of the Panama Papers is merely chapter one of a much more serious and larger case. There are assumptions that a number of Americans are bound to be involved and such information may be disclosed as new developments occur. Further spurs or revelations may include the exposure of a number of Americans involved in land speculation, building booms, and canal exploitation. Although there has been no statement from the US State Department, the US Department of Justice is reviewing the Panama Papers. Spokesman Peter Carr, public affairs specialist for the US Department of Justice, stated, “the US Department of Justice takes very seriously all credible allegations of high level, foreign corruption that might have a link to the United States or the US financial system.”xxi

Given the close diplomatic ties between the United States and Panama, it may be in the US interest to investigate the firm — which has offices in the United States — as a whole. The disclosure of the Panama Papers makes Panama the stage for history’s largest leak of confidential files that shed light on corruption. Much is still unknown. However, the exposure of the vast network involved in the Panama Papers should alert Latin America as a whole. Corruption has not been a small issue in the Western Hemisphere. It is a vicious cycle across the whole region. As new details emerge, Latin America’s stability may be affected.

Notes

[i] http://panamapapers.sueddeutsche.de/articles/56febff0a1bb8d3c3495adf4/

[ii] Lyengar, Rishi What to know about the Panama Papers leak, TIME magazine April 4, 2016

[iii] http://www.euronews.com/2016/04/04/panama-papers-world-leaders-caught-up-in-biggest-financial-leak-in-history/

[iv] https://panamapapers.icij.org/the_power_players/

[v] Ibid

[vi] https://panamapapers.icij.org/the_power_players/

[vii] Ibid

[viii] Ibid

[ix] http://www.telesurtv.net/english/news/Panama-Papers-Macri-Implicated-in-Offshore-Tax-Haven-Scandal-20160403-0026.html

[x] “Peru’s 2016 Presidential Elections,” Washington Office on Latin America, April 4, 2016.

[xi] https://panamapapers.icij.org/the_power_players/

[xii] http://m.libertaddigital.com/economia/2016/04/04/siete-claves-politicamente-incorrectas-sobre-los-papeles-de-panama-1276571156/

[xiii] https://panamapapers.icij.org/the_power_players/

[xiv] Jessica Cruz and Melanie Landa, “Country Brief: Panama,” Washington Report on the Hemisphere, Volume 36: Issue 2, 8.

[xv] http://www.prensa.com/judiciales/Varela-compromete-cooperar_0_4452304843.html

[xvi] http://www.prensa.com/judiciales/Varela-compromete-cooperar_0_4452304843.html

[xvii] http://www.cnn.com/2016/04/04/world/panama-papers-explainer/index.html?adkey=bn

[xviii] http://www.prensa.com/judiciales/Varela-compromete-cooperar_0_4452304843.html

[xix] http://www.embassyofpanama.org/panamanian-government-reaffirms-its-commitment-to-reforms-to-strengthen-transparency-in-its-legal-services/

[xx] [xx] http://www.cnn.com/2016/04/04/world/panama-papers-explainer/index.html?adkey=bn

[xxi] http://theweek.com/speedreads/616539/justice-department-reviewing-panama-papers-links

[Editor’s note: An earlier version of this article was published on the Council of Hemispheric Affairs website.]

 

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Editorial, Do we keep the financial crimes sector?

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Has this notice prompted some people to flee from Panama in great haste? That would be a good thing.

Panama needs to decide

The details are funny for those with the properly perverse sense of humor, horrifying for those with gored oxen, an apparent victory for anti-corruption activists and a sad defeat for Panama’s reputation in the world. The big fuss is about “The Panama Papers,” some 11.5 million documents hacked out of the Mossack Fonseca law firm’s data trove, which will be dribbling out for months, leading to further investigations and much commentary. If some pundit comes on your video screen and tells you how she or he is shocked, turn that mind rot off. That a leak of this magnitude happened was unexpected. The firm’s activities for the sorts of clients it has should surprise nobody who knows anything about Panama and its “offshore asset protection” rackets.

Dozens of public figures, including a number of heads of states and many other lesser or former government officials, have either been directly named or implicated through revelations about close relatives that suggest that these family members were being used as money laundering fronts. Some of the clients’ activities were legal but unseemly, but mostly these people were concealing money for the purpose of tax evasion or hiding the proceeds of public corruption.

This leak comes on the heels of revelations from Brazil about the roles that Mossack Fonseca and Panamanian shell companies have played in that country’s widespread public corruption. At the center of one more scandal that might lead to a Brazilian president’s impeachment, once again we see the Odebrecht group of companies. Were convicted and imprisoned former CEO Marcelo Odebrecht’s emails kept on a server in Panama? Those are “unavailable.” Did Odebrecht bribe money make its way through Panama on a circuitous route to corrupt officials of the Brazilian state-owned oil company Petrobras? The Panamanian lawyers who designed those dodges plead that everything that they did was legal under Panamanian law. Are several recent or current Odebrecht contracts with Panamanian government entities questionable? We haven’t had an investigation, just tortured logic to conclude that nothing is amiss.

Yes, President Varela proclaims “zero tolerance” for anything that Panamanian law doesn’t tolerate. Yes, he presented legislation to bar public contracts with companies convicted of corrupt acts — but only if that corruption is condemned by a Panamanian court. Meanwhile he gave Mossack Fonseca partner Ramón Fonseca Mora a leave of absence from his government post as minister without portfolio in the Varela cabinet in order to “fight for his name.” So far it’s a matter of a politically clumsy president doing the funky ostrich. Nobody will believe the denials. Nobody will be fooled by the distractions.

It is not, however, the Panamanian government’s misdirections that should be of greatest public concern. It’s countries like Russia, China, the United Kingdom, the United States, Saudi Arabia, Israel, Pakistan, Peru, Argentina and Spain (etc.) who will have an interest in diverting attention from their own corruption by pointing the finger at Panama. We saw how bad sanctions can be in the years leading up to the 1989 US invasion. Battering Panama again would be the easiest way out for some of the many countries whose leaders’ corrupt behavior has been exposed or suggested.

At long last, Panama has to decide whether it wants a paper economy based on the pathologies of the industrialized world. Relatively few Panamanians benefit from this kind of economic activity, but the prices we may and sometimes already do pay — inablity to get justice when we are harmed by anonymously held companies, international blacklists and graylists that slow or block financial transactions with Panama, difficulties for Panamanians seeking visas from other countries and the disappearance of foreign investment — are high.

We should end banking secrecy, corporate secrecy, “mirror companies” with names that are misleadingly similar to those of established firms in other countries, the unaccountability of lawyers and law firms and the general perception that we are a nation of accomplices to the world’s financial crimes. Mr. Fonseca should definitively go from the cabinet, but that would only be meanigful if a way of life leaves Panama at the same time. We just can’t afford that stuff.

 

Bear in mind…

 

I always clean before the cleaning lady comes. If not, when I come home, I can’t find anything. Cleaning ladies are always hiding things you leave out.
Celia Cruz

 

I shall do nothing with malice. What I deal with is too vast for malicious dealing.
Abraham Lincoln

 

You measure democracy by the freedom it gives its dissidents, not by the freedom it gives its assimilated conformists.
Abbie Hoffman

 

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Festival de la Pollera Conga — Portobelo 16 Abril

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La pollera conga, una expresión de la cultura afrocolonial de Panamá.

Festival de la Pollera Conga

El próximo sábado 16 de abril la histórica población de Portobelo será el escenario propicio para el III Festival de la Pollera Conga, una de las máximas expresiones vernaculares que resaltan la cultura afrocolonial panameña, organizado por la Fundación Portobelo, el Grupo Realce Histórico y el Municipio de Portobelo, en alianza con la Autoridad de Turismo de Panamá y el Instituto Nacional de Cultura.

Este un evento cultural y turístico bienal que busca reforzar la conservación, el desarrollo y la divulgación de las ricas tradiciones de la región, enfocándose especialmente en el invaluable aporte que ha tenido la mujer negra y cimarrona en la historia de estas poblaciones y en la supervivencia y preservación de todas las manifestaciones que componen la llamada cultura conga, desde la época de la esclavitud.

El III Festival de la Pollera Conga ofrecerá un día de actividades que incluirá venta de bebidas y comidas propias de la costa colonense, desfile acuático de barcas de cada población participante, el desfile de polleras congas por las calles del pueblo, el gran encuentro de grupos congos con 15 delegaciones invitadas en el escenario principal y un cierre con una rueda de tambores en la plaza central. Mayor información al 6677-0341 y festivaldelapolleraconga@gmail.com

 

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US State Department money laundering report on Panama

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D6C4D486-6EBE-401E-95EA-F9BA307ACDF2_cx0_cy10_cw0_mw1024_s_n_r1Money laundering and financial crimes in Panama

by the US Department of State

Bureau of International Narcotics and Law Enforcement Affairs 2016 International Narcotics Control Strategy Report (INCSR) Report

Panama’s strategic geographic location; dollarized economy; status as a regional financial, trade, and logistics center; and lax regulatory system make it an attractive target for money launderers. Money laundered in Panama is believed to come in large part from the proceeds of drug trafficking due to the country’s location along major drug trafficking routes. Tax evasion, financial fraud, and corruption also are believed to be major sources of illicit funds. Numerous factors hinder the fight against money laundering, including the existence of bearer share corporations, a lack of collaboration among government agencies, lack of experience with money laundering investigations and prosecutions, inconsistent enforcement of laws and regulations, and a weak judicial system susceptible to corruption and favoritism. Money is laundered via bulk cash and trade by exploiting vulnerabilities at the airport, using commercial cover and free trade zones (FTZs), and exploiting the lack of regulatory monitoring in many sectors of the economy. The protection of client secrecy is often stronger than authorities’ ability to pierce the corporate veil to pursue an investigation.

Panama has 16 FTZs, including the Colon Free Zone (CFZ), the second-largest FTZ in the world.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/

Do FINANCIAL INSTITUTIONS engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the US; or illegal drug sales that otherwise significantly affect the US: YES

CRIMINALIZATION OF money laundering:

All serious crimes” approach or “list” approach to predicate crimes: List approach

Are legal persons covered: criminally: YES civilly: NO

Know-your-customer (KYC) rules:

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

KYC covered entities: Banks, savings cooperatives, savings and mortgage banks, and money exchanges; investment houses and brokerage firms; insurance and reinsurance companies; fiduciaries; casinos; FTZ companies; finance companies; real estate brokers; and lawyers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,005 in 2014

Number of CTRs received and time frame: 554,879 in 2014

STR covered entities: Banks, cooperatives, money exchanges, money transfer companies, casinos, betting and gaming companies, fiduciaries, insurance and insurance brokerage companies, the national lottery, investment and brokerage houses, real estate brokers, construction companies, precious metals and mining companies, pawnshops, and FTZs

money laundering criminal Prosecutions/convictions:

Prosecutions: 295 in 2015

Convictions: 251 in 2015

Records exchange mechanism:

With US: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Panama is a member of the Financial Action Task Force of Latin America (GAFILAT). Its most recent evaluation can be found at: http://www.imf.org/external/pubs/ft/scr/2014/cr1454.pdf

Enforcement and implementation issues and comments:

In June 2014, in response to continued criticism, Panama developed an action plan to address its AML deficiencies, and the Government of Panama offered a high-level commitment to implement the necessary actions. In 2015, the government approved and passed legislation to criminalize money laundering, address countering the financing of terrorism (CFT), and cover designated non-financial businesses and professions (DNFBPs). A key factor contributing to Panama’s vulnerability to money laundering was that not all financial and non-financial sectors were subjected to regulations and supervision, which has now been addressed in legislation. Government agencies responsible for AML issues are under-resourced and often lack the personnel and training to investigate and prosecute complex money laundering schemes.

In 2015, Panama strengthened its legal framework, amended its criminal code, and passed a new AML/CFT law and other legislation enhancing the framework for international cooperation. Panama is beginning to develop an adequate legal framework for freezing terrorist assets and effective measures for customer due diligence to improve transparency. Panama passed a series of laws, which brought its legal regime more in line with international standards. Law 10 and Law 34 amend the criminal code by adding predicate offenses that typify terrorist financing and money laundering. Law 11 addresses provision of international legal cooperation and assistance in criminal matters. Law 23 of 2015 includes many new reporting entities, in particular a broad array of DNFBPs as well as money service businesses. For the banking sector, the law sets out key customer due diligence requirements. The government also amended or adopted new regulations pertaining to the identification of suspicious activity by banks and other entities. Additionally, Panama’s financial intelligence unit, the UAF, has significantly improved its analytical capacity under the leadership of its new director. Panama has started to implement the various AML/CFT laws; however, implementation efforts are in early stages.

Panama’s Law 18, 2015, which came into effect in December 2015, provides for the custody of bearer shares. The law will severely restrict the use of bearer shares; companies still using these types of shares must appoint a custodian and maintain strict controls over their use. Bearer shares issued before the law was approved must be replaced with nominative shares or handed over to a custodian by December 2015. Until the law is fully implemented, financial institutions face a risk associated with clients who maintain bearer share companies. Additionally, only banks have enhanced due diligence procedures for foreign and domestic politically exposed persons (PEPs).

The judicial branch’s capacity to successfully prosecute and convict money launderers remains weak and judicial branch employees remain susceptible to corruption. Panamanian officials have given assurances they will complete the transition to a US-style accusatory judicial system in all provinces, which began in September 2010, by 2016. All known money laundering convictions are tied to bulk cash cases with an obvious connection to a predicate crime. Panama does not adequately track criminal prosecutions and convictions specifically related to money laundering. The numbers of prosecutions and convictions shown in this report represent partial figures from the drug and anti-corruption prosecutors for 2015, because not all provinces reported figures.

The Panama Customs Authority’s collaboration with US agencies increased passenger scrutiny and notable seizures of undeclared cash at Tocumen International Airport. However, regional airports are undergoing renovation and gaining prominence and could be new channels of access for money launderers. Although Panamanian Customs can identify potential trade-based money laundering with information from the Trade Transparency Unit, a regional trade data-sharing entity, it can only levy fees for customs tax evasion.

The CFZ remains vulnerable to illicit financial activities and abuse by criminal groups, due primarily to weak customs enforcement and limited oversight of trade and financial transactions. Bulk cash remains easy to introduce into the country by declaring it is for use in the CFZ, but no official verification process exists to confirm its end use for lawful business in the free zone. The lack of integration of the CFZ’s electronic cargo tracking system with Panamanian Customs hinders timely analysis. The CFZ administrator, appointed in July 2014 by the president, has reinstated the CFZ’s Office of Money Laundering Prevention and is aiming to expand its control over CFZ businesses and transactions. Under Law 18, 2015, the CFZ comes under the supervision of the Intendencia, the body within the Ministry of Finance that supervises DNFBPs.

On October 22, 2013, the Government of Panama signed a case-sharing agreement with the United States, creating a bilateral committee to manage $36 million of forfeited assets for use by the Panamanian government to strengthen AML practices. However, there is limited cooperation and communication among the various government agencies to propose and approve projects to use the funds, and the Government has not finalized a process to disburse the funds. The US and Panamanian governments jointly administer these shared funds to address AML issues.

Panama must continue to strengthen the prosecutor’s office and the judicial system, increase transparency in financial and trade networks, and enforce the legal framework approved to freeze terrorist assets. The government should criminalize tipping off to ensure the integrity of STR reporting. Panama should also work diligently to fully implement its new laws and regulations and ensure all relevant agencies and departments have adequate resources to effectively fulfill their responsibilities. The government’s action plan is providing a roadmap for Panama to achieve these goals.

 

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Avnery, Under the lime trees

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Yemenis search for belongings in the wake of Saudi air strikes on their village.

Under the lime trees

by Uri Avnery — Gush Shalom

One of the most famous lines in German poetry is “Don’t greet me under the lime trees.”

The Jewish-German poet Heinrich Heine asks his sweetheart not to embarrass him in public by greeting him in the main street of Berlin, which is called “Unter den Linden” (“Under the Lime Trees”).

Israel is in the position of this illicit sweetheart. Arab countries are having an affair with her, but don’t want to be seen with her in public.

Too embarrassing.

The main Arab country in question is Saudi Arabia. For some time now, the oil kingdom has been a secret ally of Israel, and vice versa.

In politics, national interests often trump ideological differences. This is so in this case.

The area referred to by Westerners as the “Middle East” is now polarized into two camps, led respectively by Saudi Arabia and Iran.

The northern arc consists of Shiite Iran, present-day Iraq with its Shiite majority, the main Syrian territory controlled by the Alawite (close to Shiite) community and Shiite Hezbollah in Lebanon.

The Southern bloc, led by Sunni Saudi Arabia, consists of the Sunni states of Egypt and the Gulf principalities. In a shadowy way, they are connected with the Sunni Islamic Caliphate, a/k/a Daesh or Isis, which has lodged itself between Syria and Iraq. Except for Egypt, which is as poor as a mosque mouse, they are all stinking rich with oil.

The northern arc is supported by Russia, which just now has given the Assad family in Syria a massive military boost. The southern bloc has been supported until recently by the US and its allies.

This is an orderly picture, as it should be. People around the world don’t like complicated situations, especially if they make it difficult to distinguish between friends and enemies.

Take Turkey. Turkey is a Sunnite country, formerly secular but now ruled by a religious party. So it is logical that it quietly supports Daesh.
Turkey also fights against the Syrian Kurds, which fight against Daesh, and who are allied with the Kurdish minority in Turkey, which is considered by the Turkish government as a deadly menace.

(The Kurds are a separate people, neither Arab nor Turkish, who are divided between Iraq, Iran, Turkey and Syria, and generally unable to unite. They are mostly Sunnis.)

The US is fighting against Assad’s Syria, which is supported by Russia. But the US is also fighting against Daesh, which is fighting against Assad’s Syria. The Syrian Kurds are fighting against Daesh, but also against Assad’s forces. The Lebanese Hezbollah strongly supports Syria, a traditional enemy of Lebanon, and keeps the Assad regime alive, while fighting against Daesh, side by side with the US, a deadly enemy of Hezbollah. Iran supports Assad and fights against Daesh, side by side with the US, Hezbollah and the Syrian Kurds.

Can’t make sense of this? You are not alone.

Recently the US has changed its orientation. Until then, the picture was clear. The US needed the Saudi oil, as cheaply as the King could supply it. It also hated Iran, since the Shiite Islamists threw out the Iranian Shah of Shahs, an American stooge. The Islamists captured the American diplomats in Tehran and held them as hostages. To get them out, the US provided the Iranian army with weapons, via Israel (this was called Irangate). Iran was at war with Iraq, which was under the Sunni dictatorship of Saddam Hussein. The Americans supported Saddam against Iran, but later invaded Iraq, hanged him and effectively turned Iraq over to Iran, their deadly enemy.

Now the US is having second thoughts (if all this mess has much to do with “thoughts”). Its traditional alliance with Saudi Arabia against Iran does not look so attractive anymore. The US dependence on Arabian oil is not so strong as it was. Suddenly the Saudi religious tyranny does not look so much more attractive than the Iranian religious democracy and its beckoning market. After all, against the 20 million native Saudis there are 80 million Iranians.

So now we have a US-Iranian agreement. Western sanctions on Iran are being lifted. It looks like the beginning of a beautiful friendship, threatening to leave the multitudes of Saudi princes seething with anger and shaking with fear.

Where is Israel in this mess? Well, it’s a part of the mess.

When Israel was established in the middle of a war with the Arabs, the government favored something called “the alliance of minorities.” This meant cooperation with all the peripheral factors in the region: the Maronites in Lebanon (the Shiites were disdained and ignored), the Alawites in Syria, the Kurds in Iraq, the Copts in Egypt, the rulers of Iran, Ethiopia, South Sudan, Chad, and so on.

There were indeed some loose connections with the Maronites. The Shah’s Iran became a close if half-secret ally. Israel helped the Shah to build his secret police, and the Shah allowed Israeli officers to pass through his territory in order to join and instruct the Kurdish rebels in North Iraq – until, alas, the Shah made a deal with Saddam Hussein. The Shah also became a partner in the oil pipeline that brought Persian oil from Eilat to Ashkelon, instead of going through the Suez Canal. (I once spent a day building that line, which is still a joint Israel-Iranian venture, subject to arbitration.)

Now the situation is quite different. The Shiite-Sunni divide (about the succession of the prophet Muhammad), which has been slumbering for many generations, has come to the fore again, serving, of course, very mundane worldly interests.

For Saudis, their competition with Iran for hegemony in the Muslim world is vastly more important than the old fight with Israel. Indeed, years ago the Saudis published a peace plan that resembles the plans put forward by Israeli peace forces (including my own). It was accepted by the Arab league but rejected by Sharon’s government and then totally ignored by successive Israeli governments.

Binyamin Netanyahu’s advisers boast that never has the geopolitical situation of Israel been better than it is now. The Arabs are busy with their quarrels. Many Arab countries want to strengthen their secret ties with Israel.

The ties with Egypt are not even secret. The Egyptian military dictator openly cooperates with Israel in strangling the Gaza Strip with its close to two million Palestinian inhabitants. The Strip is ruled by Hamas, a movement that the Egyptian government claims is connected with its enemy, Daesh.

Indonesia, the largest Muslim country in the world, is close to having open relations with us. Israel’s political or economic ties with India, China and Russia are good and growing.

Tiny Israel is considered a military giant, a technological power, a stable democracy (at least for its Jewish citizens). Enemies like the BDS movement are mere irritations. So what’s bad?

This is where we return to the lime trees. None of our secret Arab friends want us greet them openly. Egypt, with which we have an official peace treaty, does not welcome Israeli tourists anymore. They are advised not to go there.

Saudi Arabia and its allies do not want any open and formal relations with Israel. On the contrary, they continue to speak about Israel as during the worst stages of Arab rejectionism.

They all quote the same reason: the oppression of the Palestinian people. They all say the same: official relations with Israel will come only after the end of the Israeli-Palestinian conflict. The masses of the Arab peoples everywhere are far too emotionally involved with the plight of the Palestinians to tolerate official connections between their rulers and Israel.

These rulers all embrace the same conditions, which were put forward by Yasser Arafat and included in the Saudi peace plan: a free Palestinian state side by side with Israel, mutually agreed borders based on the June 1967 lines with minor exchanges of territory, an “agreed” return of the refugees (“agreed” with Israel, meaning at most a symbolic return of a very limited number).

Israeli governments have never responded to this plan. Today, under Binyamin Netanyahu, they are further from these peace conditions than ever. Almost every day our government enacts laws, enlarges settlements, takes measures and makes declarations that push Israel further away from any peace that Arab countries could accept.

Future generations will look at this situation with wonderment.

Since the foundation of the Zionist movement, and most certainly since the creation of the State of Israel, Israelis have dreamt of overcoming Arab resistance and inducing the Arab world to accept the “Jewish and democratic” State of Israel as a legitimate member of the region.

Now this opportunity is presenting itself. It can be done. Israel is invited to the Arab table. And Israel ignores the opportunity.

Not because Israel is blind, but because the occupied Palestinian territories and more settlements are more important to them than the historic act of making peace.

That is why no one wants us to greet them under the lime trees.

 

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¿Wappin? Fools and such…

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Alice Playten and her ride.

¿Wappin? Fools and such…

Frankie Lymon & the Teenagers – Why Do Fools Fall In Love?
https://youtu.be/2sAHiR0rkJg

Alice Playten – Pizza Man
https://youtu.be/MP1uEmQHtiw

Billie Holiday – I’m A Fool To Want You
https://youtu.be/Xs9P-pfqF6Y

The Beatles – The Fool on the Hill
https://youtu.be/gxqz13VDBZs

Monchy y Alexandra – Dos Locos
https://youtu.be/ESBMw9-ht2o

Peter Tosh – Reggae Mylitis
https://youtu.be/F6aB2xqVuZA

Bob Dylan – Idiot Wind
https://youtu.be/4iIuuNHV9PE

Natalia Lafourcade – Nunca es Suficiente
https://youtu.be/410cZw2YI0g

Javiera Mena – Esquemas Juveniles
https://youtu.be/zVDqA4k4Y3Q

Lord Cobra – Fool Them
https://youtu.be/REdZ8DCGODw

Ray Stevens – Guitarzan
https://youtu.be/293Irm-vxtE

Héroes Del Silencio – Maldito Duende
https://youtu.be/SqB4FSettTI

Mad Professor – Inverted Minds
https://youtu.be/TPy360eoT-o

Elvis Presley – Devil in Disguise
https://youtu.be/1iFn_wKZpn8

The Rolling Stones – Fool To Cry
https://youtu.be/B-2MenrnR2U

 

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The announcements below are interactive. Click on them for more information

 

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