On October 5, the decomposed remains of eight-month-old Makiel Rodríguez were found about 250 meters down the Cabra River from where the baby was last seen on September 17, adding one more digit to the death toll and subtracting one from the list of the missing.
That gruesome discovery, however, by no means meant “closure” to the aftermath of the deadly floods. In fact Panama is witness to a scandal that is growing in several directions, and Housing Minister Balbina Herrera has been prompted to make some policy decisions that will have far-reaching consequences, as the result of the disaster.
The corruption behind the disaster that befell the Prados del Este housing project along the Rio Cabra on Panama City’s east side became readily apparent by reference to building permits and an inspection of the neighborhood. The approved plans called for landfill to raise the houses about five feet and for a levee along the river, and those plans were not followed. It would logically follow that some inspector allowed this to happen, and that would be the making of a garden variety crooked developer and corrupt building inspector tale.
But over at La Prensa, investigative reporter Guido Bilbao dug much deeper, and came up with a sordid tale that reaches much higher.
Even before the flood waters had receded, there was a circular finger-pointing game underway.
The first glance went in the direction of Hogar Ideal, the promoter. Whatever alibi that these folks offer, they won’t be able to show that they disclosed the deadly danger of a housing project built in a flood plain without the safeguards required in the plan.
But the promoter pointed the finger at the builder, PRONAVI.
Meanwhile, flooded out residents and people connected with institutions that are likely to end up footing much of the bill for the disaster looked behind PRONAVI. For the residents it was natural, because the financier held their mortgages. That financier was the state-owned National Bank of Panama (BNP, by its Spanish initials).
Prados del Este and PRONAVI were the brainchildren of one Abraham Crócamo. But he didn’t have the money for the job. So partners were acquired, one of them a Freddy Lanza. Another was a company called Rodeo Holding, a principal of whom is one Luis Fasano. Another was a company called CIASA, which had the conflicting interest of being the firm that did the environmental impact studies and had the contract to do the final inspections on the works.
These were useful partners to have. Lanza is the consuegro of then National Bank of Panama director director Bolívar Pariente --- they have children that are married to one another. Fasano is married to Ivonne Young, who was Minister of the Presidency, is the niece of former First Lady Ruby Moscoso de Young and was the closest of confidantes in former President Mireya Moscoso’s inner circle. Moonlighting at CIASA, according to La Prensa, were a number of functionaries from the Ministry of Public Works.
And thus it was not so hard to get the BNP to put up 90 percent of the money for a housing development in a flood plain, a project that no bank run on sound principles would ever back.
The initial Prados del Este plans were rejected by the National Environmental Authority, so new plans, specifically to ameliorate the flood risk, were submitted and approved. But PRONAVI didn’t follow those plans.
It wasn’t us, PRONAVI now claims. They’re pointing the finger at a Colombian construction company, Ingenieria de Vias, which began the actual building of Prados del Este.
But meanwhile, PRONAVI has an estranged Abraham Crócamo telling a different and unflattering story. After construction got underway, the Colombian contractors decided not to recognize the SUNTRACS construction workers’ union. (Back in Colombia, union organizers are frequently shot, and for a number of reasons that are outside the scope of this story it just may be that the increased Colombianization of Panama’s business culture will be the most important aspect of Mireya’s economic legacy.) The union walked off the job, and the BNP took the opportunity of the three-week strike to intervene in PRONAVI, purportedly to protect its investment.
Actually, to push Crócamo out of control and put Bolívar Pariente’s relative, Freddy Lanza, in charge of PRONAVI. Extensive litigation has ensued as Crócamo fought back in court.
With the change of management at PRONAVI, the Colombian subcontractor was also thrown off the job, and has also been fighting in the courts ever since.
Replacing the Colombians as the builder was --- CIASA. Now might an ordinary financial backer, or an ordinary government, look askance when one company does the environmental impact statement, the building and the inspections of its own work? Those are, of course, rhetorical questions. There was little that was ordinary about the Moscoso administration or the National Bank of Panama during her watch.
By the time of the September 17 flood, 523 of the projected 700 homes in Prados del Este had been built, and most of these had been sold at an average price of $16,000, with residents paying $74 per month on 35-year mortgages.
Also by the time of the flood, it was known that corners had been cut on construction, with changes in plans and materials that reduced the support for and strength of the houses’s roofs. The developers were cited by city inspectors and fined for this. But that hasn’t released Mayor Juan Carlos Navarro from an uncomfortable position, because Balbina is now posing the question of why the city, which was cognizant of the project’s deficiencies, nevertheless allowed construction to continue in the two years between their inspections and the September flood.
After the flood, Hogar Ideal and PRONAVI posed as wronged third parties, and suggested various alternatives to retrofit their project and save something of its value. Initially, Balbina left open the possibility that measures like dredging the Rio Cabra to make it less prone to flooding might be the solution.
But many of the residents were having none of this. Suits were filed against Hogar Ideal, PRONAVI and the BNP. When CIASA tried to resume work on the project after the waters receded, they were met by an angry crowd, which refused to let them work, then later by officials of the new administration, which ordered them to cease work.
The Legislative Assembly, MIVI and Panama City municipal officials all began separate investigations of various aspects of the Prados del Este affair, and revelations in the press enhanced the sense of urgency and public outrage.
So now the debate is not about dredging the Rio Cabra. The government appears ready to order the complete demolition of Prados del Este.
MIVI has also begun an audit of other housing projects built in flood plains, and Balbina Herrera is now talking about the possibility that several of these may also have to be evacuated and razed. She’s has proposed mandatory flood insurance for all new residential developments. These may seem to many people, especially those outside Panama, like ordinary, common-sense measures. However, for Panama’s construction industry and housing market they would be radical departures from the way that business has been done.
So far there have been no criminal prosecutions in connection with the Prados del Este affair. However, the conduct involved --- a reckless disregard of building safety requirements that resulted in a number of deaths, and plenty of self-dealing financial misconduct to go around --- was flagrant. With a number of investigations still underway, it’s too early to tell whether this case will turn into a penal matter.
Also in this section:
Torrijos moves to oust Pereira from the Supreme Court
Mireyista political corruption under multi-pronged attack
September's floods spark unusual responses
Panama News Briefs
