business

The former directors of the Caja de Ahorros, Panama’s state-owned savings and loan association, are being investigated by prosecutors and under attack in the corporate media by the new management. At issue are a series of alleged irregularities, the most noteworthy of which are claims that 112 loans, in the amount of some $600 million were made without proper credit checks or sufficient collateral and at lower than market interest rates, and as a result the institution has suffered losses of some $45 million. It is also alleged that former President Mireya Moscoso financed part of her pre-election spending spree by improperly selling Mogo Mogo Island in the Perlas Archipelago to the institution.

The loan issue became the subject of a criminal investigation on November 15, when Caja de Ahorros manager Eudoro Jaén and the Torrijos administration’s anti-corruption czar Cristóbal Arboleda filed charges against his predecessor Carlos Raúl Piad, the Caja’s former assistant manager Mercedes Villalaz García and former board of directors members Angel Jaén, Julio Córdoba, Julio Vásquez and Rolando Shahani.

Members of the former management, all Moscoso administration appointees, are defending their actions and alleging political persecution. One of the first defenses proffered was the claim, made by Piad at a November 16 press conference, that the Caja had been investigated by the Banking Superintendent and KPMG and in each case no improprieties were found. Piad and Villalaz also deny that there were $45 million in losses on the questioned loans.

There ensued a secondary controversy about exactly what the Banking Superintendent looked for or found at the Caja de Ahorros. According to the organic laws under which financial institutions like the Caja de Ahorros and the National Bank of Panama were created, the public sector is generally not subject to same scrutiny that the Banking Superintendent exercises over private banks. The superintendent’s limited jurisdiction over the Caja relates to reviewing its overall liquidity and ensuring that the rules of corporate governance and laws against money laundering are followed. (So far in the present controversy, no documents from the Banking Superintendent which would substantiate or discredit Piad’s claim have been made public.) But apart from the truth or falsehood of specific allegations, the situation has prompted calls from business leaders to end the public financial institution’s exception and subject them to all the reporting and oversight provisions that apply in the relationships between private banks and the Banking Superintendent.

The Mogo Mogo Island sale is questioned both because the Caja was neither set up for the purpose of nor experienced in managing lands for possible tourist-oriented development, and because the transaction was apparently approved by the Moscoso administration in December of 2003, with the money being immediately advanced, but not formally approved and published in the Gaceta Oficial until a few days before Mireya left office. There are most likely implications to this story that have yet to be aired in public, beginning with the presumption, apparently made without benefit of an environmental impact study, that this undeveloped island is apt for the sort of development that would justify the $10 million valuation.

Also not before the public, although alluded to by the accusers, are the identities of those who received the disputed loans. The insinuation is that they were people with political ties to Mireya Moscoso, but Panamanian banking secrecy laws limit the public disclosure of this type of information.

At the moment the case is in the hands of Attorney General José Antonio Sossa, whose prosecutors have taken the sworn statements of the accuser and the accused and have asked for the relevant documentary evidence. However, in other scandals swirling around the former administration, Sossa has taken the position that it’s up to the Comptroller General, not his office, to investigate finances. The current Comptroller General, Alvin Weeden, is an Arnulfista but will on January 1 be replaced by Dani Kuzniecky, a nominal political independent who served as Martín Torrijos’s campaign treasurer. Sossa is also scheduled to leave office in January, but his successor has yet to be nominated or approved.





Also in this section:
Wicker businesses continue in temporary quarters
Loans by Caja de Ahorros probed
Panama close to acknowledging that it's a Pacific Rim country
Business & Economy Briefs

Back to top