In his inaugural address, President Torrijos blasted the preceding administration, announced that audits would begin in all government offices the next day, and vowed to bring anyone found to have raided the public coffers to justice. Now the daily news is dominated by unfolding tales of irregularities and corruption, and it appears that, taken as a whole, this story is assuming a life of its own and will occupy center stage in Panamanian public discourse for some time to come.
So far, these are some of the highlights that have come to public attention:
• The attempt to audit the finances of the Ministry of Public Health immediately ran into an obstacle created by the Moscoso administration, in the form of an allegedly private but now defunct foundation. The government of Taiwan donated a lot of money and equipment for Panama’s public hospitals --- to the tune of some $45 million during the past administration --- but these donations were not made directly to public institutions, but to a purportedly private foundation, the Fundacion Mar del Sur. Former Health Minister Fernando Gracia and several other Moscoso administration officials were the officers and directors of this foundation
Gracia says that the foreign aid was was handled in this way at the request of the Taiwanese government, but Taiwan vigorously denies this, alleging that it was the Moscoso administration that demanded this procedure.
So why would the form in which foreign aid came to Panama really matter? Because the Mireyista-dominated Supreme Court held that this private foundation, through which foreign governmental assistance to Panamanian governmental agencies flowed, is private. That is, it enjoyed all of the protections afforded private businesses under Panama’s corporate secrecy laws, and is not covered by this country’s government transparency laws. Shortly before Mireya Moscoso left office, the Fundacion Mar del Sur closed its offices, leaving an empty office in Ancon and such records as may have been kept in an unknown location.
Thus we do not yet know how much of the Taiwanese aid to our public health care system was siphoned off for “administration,” “professional services,” travel and entertainment and other frivolities. Nor do we know about the foundation’s purchasing and contracting procedures, which if they followed Moscoso administration norms would have been funneled to a few well connected families and may have involved kickbacks.
However, we do know from the records of the Republic of China how much money went into the foundation, and an inventory should identify and put values on things acquired through the foundation, like radiation therapy equipment for the Instituto Oncologico Nacional and things for other hospitals around the country. We also know from records at the state-owned Banco Nacional de Panama that the foundation invested at least $10 million in certificates of deposit at local banks, so the proceeds from those would have to be added to the income totals. Any substantial discrepancy between the “in” and “out” figures will thus appear to be a ballpark number for funds corruptly diverted.
Comptroller General Alvin Weeden, himself a Mireyista insider who will occupy his present position until January, stepped in and announced that he would audit the Fundacion Mar del Sur, arguing that whatever the courts may have held with respect to the nation’s transparency laws, public funds were involved in these transactions.
However, there is yet another complication. Gracia says that the assistance that the foundation he headed given to public hospitals was not given directly, but through yet other “private” foundations.
Finally, under great public pressure Gracia held a September 15 press conference in which he reported his version of the foundation’s finances. Among the figures he released were $1,379,352.08 for “administrative expenses” and $167,050.49 for “indirect costs.”
But that did not come close to putting the matter to rest. The night of Gracia’s press conference, TVN news reported that Gracia had used funds from the Fundacion Mar del Sur to pay off his house mortgage and other personal debts. Gracia denies this.
• In another case of Taiwanese government-to-government aid that was channeled through an allegedly private foundation, some $6 million was funneled through the “Fundacion Pro Educacion Integral de la Niñez y la Juventud,” over which former President Moscoso’s sister, former First Lady Ruby Moscoso de Young, presided. The money was for the “Museo del Tucan,” a children’s museum in Curundu Flats.
The museum building was built at a cost of $4.6 million, according to sketchy foundation documents obtained by La Prensa. Also taken out of Taiwan’s donation were $147,000 for publicity, $60,000 to move a sculpture from in front of the ATLAPA convention center to in front of the museum, $57,112 for travel abroad by undisclosed person to visit museums, and various other sums for sundry expenses. Both Moscoso de Young and the Taiwanese acknowledge that nearly 10 percent of the original $6 million dollars donated to the museum was ultimately returned to Taiwan.
The museum building was built, and when First Lady Vivian de Torrijos took over she found it an empty concrete shell. No exhibits, no publicity materials, no contents whatsoever to show. Moreover, prominent local architects consulted by La Prensa opined that the $4.6 million figure cited for construction costs is inflated, that the building is actually only worth between $3.8 and $4.1 million.
The current first lady demanded receipts and records for the project from her predecessor, who’s relying on the “private foundation” argument and refusing to hand over the documents.
• It turns out that four Bell 212 helicopters purchased by the Ministry of Government and Justice in 2002, under the authorization of former minister Arnulfo Escalona, were purchased as new but were actually used. The choppers, bought from an Israeli company called Aircraft Industries Ltd, were received by the new director of the National Air Service (SAN) in need of electrical and hydraulic repairs, and upon further investigation, it turned out that the government had paid $10.9 million for four new helicopters and accepted four used helicopters with an estimated market value of $3.2 million. Moreover, the Moscoso administration also signed a $1.7 million helicopter maintenance contract with Aircraft Industries, but the Torrijos administration received poorly maintained aircraft.
• Second Vice-President and the new director of the National Maritime Authority, Rubén Arosemena, has announced a clean-up in that notoriously corrupt agency. As part of that he has called for people in the shipping industry who were shaken down for bribes by the previous administration to come forward with that information, and apparently several such persons have. First results are that two officials at the authority have been fired for demanding payments from those seeking certifications as mariners or pilots, and the new director is saying that his predecessor must explain her role in what by many accounts was a systematic bribery under her administration. Arosemena is also auditing the boom in sales of commercial fishing licenses by his predecessor, Bertilda García Escalona.
What next?
On her way out of office, Mireya Moscoso pardoned most of the people around her who were or probably would be major figures in public corruption scandals. The ex-president herself will be a member of the Central American Parliament (PARLACEN), which confers immunity from prosecution or investigation on its members.
However, the form of the pardons and their blanket nature is under legal attack by both Electoral Prosecutor Gerardo Solís and Attorney General José Antonio Sossa. Because the latter has racked up an impressive pro-corruption record in his nearly 10 years in office, and because Mireyistas control the Supreme Court, those appeals are unlikely to flourish.
In fact, given that constitutional changes promoted by the PRD are likely to go into effect about the time Sossa leaves office at the end of the year and that one of those changes specifically authorizes the president and legislature to increase the size of the Supreme Court, Sossa’s appeal appears more than anything else to be designed to allow the Mireyista majority to uphold impunity for corruption under the past administration in the remaining few months that they will retain control over the court.
But Mireya Moscoso did not pardon herself, and if she has parliamentary immunity, so did former Nicaraguan President Arnoldo Alemán, who now resides behind bars. PARLACEN immunity can be and has been lifted in cases of massive corruption.
Moreover, even if people who stole from the public coffers and enriched themselves on bribery and extortion under the past regime have been pardoned, any transactions involving their ill-gotten wealth amount to post-pardon money laundering offenses. Not that the distinction would matter to Sossa, but it might to his successor.
Meanwhile, the revelations of the Moscoso administration’s corruption are only beginning and as the results of the audits and investigations keep coming in the likelihood is that the current administration and the courts would find it increasingly difficult to cite Mireya’s pardons and PARLACEN immunity as reasons why nothing can be done. The majority of politicians of all factions may prefer alternating five-year looting binges for which there is no legal recourse, but at a certain point public patience is likely to wear thin.
With all of that taken into consideration, it seems likely that the legal pursuit of the Mireyistas will first play itself out in civil cases wherein the government seeks to recover stolen assets, cancel concessions that Mireya’s crowd granted itself and so on. On the criminal front, look for election offenses to be investigated and prosecuted before other matters, largely because of the personality differences between Gerardo Solís and José Antonio Sossa.
Will the bottom line be Martín Torrijos’s sincerity when he promised “zero corruption” during his campaign and to bring the sticky fingers to justice in his inaugural address? Probably not. It seems that he has set a process into motion that would be very hard for him or anybody else to stop, even if he wants to do so.
So even if it looks at this moment like there will be no consequences for five years of corruption beyond last May's humiliation at the polls, you should not be too shocked if you seee Mireya Moscoso herself facing criminal prosecution this time next year.
Also in this section:
Panama News Briefs
Mireya's crowd gets audited and investigated
PRD picks up a legislative seat from the Darien
Argentine terror trial revives questions about Panama
Tom McMurrain arrested for massive fraud in the US
