The ex-governor charged with embezzlement and his controversial mining concession

There’s gold in them hills. Also, copper, silver molybdenum and other mineral resources. Proof of that is the frequency by which the police have to move in to eject wildcatters, many of them Colombian, who wash away hillsides in the forest with high-pressure hoses to get the gold.

But how much of the metal that drives white men crazy, extractable at what cost? And is Cerro Petaquilla really a world-class copper deposit?

These questions could come front and center in Panamanian political discourse within the year, as soon as the Panama Canal Authority issues its plan to expand the canal. If previous suggestions to flood areas west of the canal are part of the plan, then all of a sudden the Cerro Petaquilla mining concession would become the largest single property for which compensation would have to be paid.

Now if that compensation is for mineral rights that have never been proven, let alone exploited, that would lead to one set of assumptions about the value of the concession. But if the concessionaires can claim that they were busy developing a mine when the government came in and declared eminent domain, that could support a different valuation.

In recent weeks a series of reports have appeared in La Prensa and El Panama America, announcing the imminent start of work at the Cerro Petaquilla mining concession, actually a set of nine concessions encompassing some 250 square kilometers of northern Cocle and western Colon provinces, held by Petaquilla Minerals Ltd. That limited partnership includes Vancouver-based Adrian Resources Ltd (listed as ADL on the Toronto Stock Exchange), among whose directors and shareholders is former Cocle Governor Richard Fifer, and Inmet Mining, another Canadian outfit. Richard Fifer is chairman of the board of Petaquilla Minerals Ltd.

In the face it presents to Panama, Cerro Petaquilla has always been Fifer’s project. He first claimed mineral rights at Cerro Petaquilla in 1987. Through his company GeoInfo, this reporter was taken along with other journalists on a tour of Cocle province back in the mid-90s. In the recent corporate mainstream media reports on the project, the Fifer connection is always prominently mentioned. The press releases by the promoters invariably appear over Fifer’s signature.

There are a several interesting features about the recent Cerro Petaquilla stories.

One is that they state certain figures about the amount of copper, gold, silver and molybdenum in the ground at the Cerro Petaquilla concession, generally without attribution and always without question. The figures cited are invariably the concessionaires’ estimates, but are usually presented as undisputed facts.

Another oddity about many of the recent Cerro Petaquilla stories is that they are not by journalists on the staffs of the publications involved, but by freelancers.

And then there’s the story that Reuters disseminated, which announced that a Canadian company had obtained $1 billion in financing and the word to start mining work. But the company denied that it had obtained a line of credit.

Most importantly, Richard Fifer now stands accused of embezzlement. After more than two weeks as a fugitive sought for embezzlement from the government between 1999 and 2002, when he was the governor of Cocle, a court has rescinded a warrant for his arrest but forbidden him to leave the country and required him to report tro police every 15 days while his criminal case is pending. Earlier, from his hiding place he had his lawyers surrender $68,000 he allegedly pilfered from the funds at the Cocle governor’s disposal, and another $47,000 allegedly diverted from Spain’s contribution toward the Arias Brothers Museum in Penonome to the Office of Patrimonial Responsibility. No admission of wrongdoing was made, but prosecutors aren’t calling off the criminal prosecution.

In a February 23 press release by Petaquilla Minerals Ltd, the company implied that on February 20, while Fifer was a fugitive from Panamanian authorities, he met with Vice-Minister of Commerce and Industry Manuel José Paredes to discuss the Cerro Petaquilla project. That missive included a link to a photo of Petaquilla Minerals chief financial officer Ken Morgan with President Torrijos, and claimed the Torrijos administration fully supports the Cerro Petaquilla mine development. A press spokesman for the Ministry of Commerce and Industry said that there is no such meeting listed on the ministry's logs for February 20, but that he'd check. The press spokesman for the Presidency declined to answer this reporter's questions, refused to seek the truth of the matter and said to talk to Richard Fifer's company about it.

That press release also invoked the name of the Inter-American Development Bank, which is financing a series of road improvement projects, one of which includes a $5 million paving job for the road to Coclesito, a town in northern Cocle province that's at the southwestern edge of the Cerro Petaquilla concession. But despite the prominent use of the bank's name in the photo headline and text of the press release, no direct financing of the Cerro Petaquilla project by the bank was claimed.

In the Panamanian corporate mainstream media reports on Fifer's legal troubles, one curious omission is the lack of any reference to a connection between Fifer and the Cerro Petaquilla mining project. Most of the mainstream reporting on Cerro Petaquilla has a rather flagrant pro-company spin to it.

One might think that a project for exploitation of mineral rights granted by the government, mostly lying underneath government land, might just be placed in jeopardy if the project’s promoter was not only a prominent figure in a notoriously corrupt prior administration whose slate of candidates was less than a year ago humiliated at the polls by the one led by the current president, but who now finds himself the target of corruption charges.

Political ties all over the place

Maybe the politics would be an important part of the story. But maybe news media with partisan alignments would find this part of the story embarrassing to the factions they support.

Fifer would be on a first-name basis with top people in the present administration. In the 1999 elections Fifer, as one of the leaders of the Partido Liberal Nacional, backed Martín Torrijos against Mireya Moscoso. Moreover, as past president of the more or less dormant state-owned mining company CODEMIN and as a member of the small club of Panamanian mining promoters and executives, one of whom is Minister of the Presidency Ubaldino Real, Fifer would have his personal ties to people in the current government.

But his associates in the Torrijos administration might or might not like Fifer, let alone be disposed to do him favors. After all, had Fifer not jumped ship to the Mireyistas after the 1999 elections and held a meeting in his house in La Pintada, where the “La Pintada Pact” was hammered out, the PRD and its allies would have controlled the legislature in the first year of the Moscoso administration. Eventually the alliance forged in the La Pintada Pact broke down and a coalition of the PRD and the Christian Democrats (now the Partido Popular) gained control of the assembly for two years, until Mireya Moscoso procured the defections of several PRD deputies and regained her hold on the legislative branch for the last two years of her administration.

If some people in the Torrijos administration might be inclined to view Fifer as some well-known species of venomous snake, they would not be alone. He also managed to alienate many Mireyistas --- with the notable exception of Mireya Moscoso herself. In fact he offended the Partido Liberal Nacional in Cocle, to the extent that the provincial organization demanded his removal as governor, something that Mireya ultimately did. The complaints about Fifer that surfaced in the press had to do with him rarely being in his office, and about permits for pushbuttons that offended neighbors and the Catholic Church.

For Mireya, who doled out fiefdoms among her coalition, the Liberals had dibs on the Cocle governorship and as the party no longer wanted Fifer, she replaced him.

However, Mireya kicked him upstairs to a series of other posts with higher pay. Although deposed as governor of Cocle, he remained the payroll as a member of Mireya’s National Security Council. Plus he was appointed as Panama’s minister plenipotentiary to the World Tourism Organization.

Meanwhile, having been run out of the governor’s office by his own party, Fifer quit the Liberals and joined Ricardo Martinelli’s Cambio Democratico party. At the time Martinelli was Minister of Canal Affairs, and, as we shall see, someone in a position to affect the Cerro Petaquilla project and Fifer’s personal fortunes. But Martinelli bolted from the Mireyista alliance to run a splinter campaign for the presidency, and whether or not Fifer remained with Martinelli’s party, he did not campaign with Cambio Democratico and remained in his posts with Mireya’s government.

Such party-swapping and switches in allegiance might seem the height of perfidy to someone accustomed to other political systems, but in Panama that’s how the small party game is played. We don’t have any communist, fascist, libertarian or vegetarian splinter parties here. In Panama a third party is a business, not an ideological faction. The way it’s played here, minor party caudillos seek to get some of their people elected to the legislature, hoping that the votes he or she (usually he) controls will be the balance of power, or part of the balance of power, between major players who can’t muster an assembly majority on their own. In exchange for votes the small party expects government jobs and contracts for its members.

But it does seem that Fifer played all sides for personal advantage to the extent that most of the political class has been both allied with and betrayed by him, which might not be such a terrible handicap given the moral standards in those circles but for two salient facts of the moment. First, although the PRD maintains its alliance with the Partido Popular, it holds a majority of seats in the assembly in its own right. Second, Fifer speaks for no party these days, and thus has no legislators’ votes to deliver.

The canal connection

Back in the waning months of the Pérez Balladares administration, when Richard Fifer was a member in good standing of Ernesto Pérez Balladares’s coalition, the government quietly elaborated a significant and controversial proposal to be jammed through the legislature. It was a law to expand the Panama Canal, which authorized the creation of a new lake to the west of Gatun Lake (or, viewed another way, extending Gatun Lake to the west). The “Western Watershed” to be flooded would have put much of western Colon province and much of northern Cocle province underwater. The proposal has prompted furious resistance from among the 20,000 of so rural families that would be dislocated, but the single biggest flooded property for which compensation would have to be paid would be the Cerro Petaquilla mining concession.

Sometime this year it is expected that the Panama Canal Authority will issue a canal expansion recommendation. President Torrijos has given some cryptic assurances to the protesting farmers, and it is possible to capture the water needed to run a third set of locks big enough to accommodate post-Panamax-sized ships without flooding the Western Watershed.

But if the plan that Toro had in mind when the canal expansion law was jammed through the assembly with little debate in the lame duck weeks of 1999 is any guide, the government would have to buy back the Cerro Petaquilla mining concession. This, despite the fact that Toro’s administration had renewed that concession just a little more than two years earlier.

Any major public works project in this country is likely to cross paths with a mining concession. In a study on how various development projects might affect indigenous rights, Marcial Arias García of the Fundacion para la Promocion del Conocimiento Indigena de Panama noted that about 25 percent of Panama is subject to mining concessions, and when one adds in those areas for which concessions have been applied, it comes to about half of the national land.

(Territorial waters are not included in these calculations, but there are also mineral extraction concessions in the nation’s offshore economic zones, most notoriously for the taking of sand off of the sea bottom for use in concrete. The use of such material without first having extracted the salt is why you see so many new buildings with flaking exteriors in Panama City.)

Compensation for a working mine would be one thing and what would have to be paid for a concession that has never been commercially exploited would be something else. Moreover, the amount of resources in the ground that would be put underwater would form the best basis for figuring the market value upon which compensation would have to be paid.

And really, what is the Cerro Petaquilla concession worth?

According to Petaquilla Minerals, Ltd, “A Final Bankable Feasibility Study (H.A. Simons 1998) has been completed on only three of the principle Cu-Au-Mo-Ag porphyry deposits within the Minera Petaquilla Project Lands.... A 1996 site visit and detailed analysis/evaluation by the well respected copper industry consultancy, CRU International, ranked Petaquilla as one of the world's top five undeveloped copper projects....” The company claims that only one of the nine pieces of its concession has “9.4 Billion Pounds of Copper[,] 1.4 Million Ounces of Gold[,] 24.1 Million Ounces of Silver [and] 131.1 Million Pounds of Molybdenum.”

But when you read those figures on the Internet, if you scroll down to the bottom of the page it says “users should not rely on information contained in this website without independently verifying the accuracy of all such information.”

And in fact, in the late 1990s another Canadian company that was interested in Cerro Petaquilla didn’t take Fifer’s experts’ word for it, and did drill test cores of its own in the area. That company backed out of the project within three weeks of when the core samples were taken.

From different points on the political spectrum, Fifer’s claims about Cerro Petaquilla’s value have been questioned. In an El Panama America opinion column, attorney Juan Manuel Castulovich, a member of one of the clans favored by Mireya Moscoso, dismissed talk of Cerro Petaquilla’s value as a modern day version of the “El Dorado Legend.” Calling the government’s investment in copper mining concessions that have never produced “a scandal” of major proportions, Castulovich heaped scorn on representations made long ago that Cerro Petaquilla will become “the biggest copper mine in the world.”

Former deputy canal administrator Fernando Manfredo Jr., who tends toward the PRD and his allies in politics, complained that Panama’s mining business is a matter of “speculators, who form a company with an extravagant name, get a concession and then go to the United States or Canada and sell shares with their promotion the myths that have existed about big mineral deposits.” But, Manfredo wrote, “the evidence is up to now that Panama, because of its geology, is not a country with mining potential, contrary to what has been said.” He specifically dismissed the claims about Cerro Petaquilla: “Great propaganda has been done. It’s not true. The mines are abandoned.”

But if the right strings can be pulled, Fifer and his partners wouldn’t have to actually extract and sell copper, gold, silver and molybdenum to cash in on Cerro Petaquilla. All they’d need to do is have the Panama Canal Authority declare eminent domain over the concession assign to it a valuation in the ballpark of what the promoters claim, and they’d become very wealthy indeed.

But of course, any canal expansion project would have to be approved in a public referendum. There are all sorts of opponents lining up, for all sorts of reasons. (One of them is Manfredo, who believes that it’s unlikely that the cost of a third set of locks could be amortized through ship tolls.) While polls suggest that most Panamanians would buy the idea of an expensive canal modernization project, if part of the deal is the purchase of the Cerro Petaquilla mining concession according to anything like the valuation that Petaquilla Minerals Ltd suggests, public perceptions of the referendum could easily be converted by opponents from a question of yes or no on canal modernization to one of yes or no on corruption.

This, if one thinks about it, would notwithstanding any personal feelings about Fifer, give the Torrijos administration sound reasons of state to erase Fifer and his ambitions from the canal expansion picture.

Opposition for other reasons

Aside from the suspicions of corruption revolving around Fifer and skepticism about the true value of the Cerro Petaquilla mining concession, there are the usual objections to a mine next door.

Petaquilla Minerals Ltd’s stated plan is to export metallic compounds extracted from excavated ores by sea to processors elsewhere. What this means is the treatment of the ores with caustic chemicals, and experiences elsewhere indicate that this tends to be a high-pollution enterprise. The separation of gold from rock is done with cyanide, and at other sites in Panama we have experienced the deaths of fish and cattle downstream from where cyanide is used for this purpose.

Thus El Panama America reports that Jaime Luna, the representante of Escobal (which is located between the Cerro Petaquilla mining concession and Gatun Lake), complained to his colleagues that the sort of mining contemplated nearby would be a “curse” on surrounding communities.

And thus La Prensa reports that the provincial director of the National Environmental Authority (ANAM), Roberto Caicedo, told the same audience that there is a concern because there are people who want to turn the Donoso Nature Reserve, which is encompassed by the Cerro Petaquilla mining concession, into a national park.

And though it’s not as big a sports fishery as in the days when there was a marina full of Zonian fishing enthusiasts in the lagoon just below the Gatun Spillway, you still have anglers who make their way to the rivers and streams that would be affected by any chemical runoff from Cerro Petaquilla when the snook go up those waterways to spawn at the height of rainy season late in every year.

According to Marcial Arias García’s study, “Several cases can be mentioned in Panama of the mining industry's destructive consequences on forests and on the peoples living in them. For example, the Cerro Petaquilla Project in the province of Colon will imply the loss of at least 2,500 hectares of forests to set up the facilities for the mine itself and the highways that will enable access to the zone. It is also feared that the project will affect the neighbors in the El Cope National Park and Donoso Forest Reserve. Between 1986 and 1992, this province had the second highest rate of deforestation, representing 22.35 per cent of the total forest loss.”

These matters, rather than Richard Fifer’s legal problems, doubts about the mining concession’s true value and political considerations, are where the project is probably most vulnerable. To begin mining Petaquilla Minerals Ltd would have to get a permit from ANAM, and for reasons not only environmental it may prove politically inconvenient for this to be denied.

Also in this section:
Gómez reports on corruption cases
Legal and political issues abound in Cerro Petaquilla mining concession
Panama News Briefs

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Just as the Cerro Petaquilla mine promoters say they're set to start, problems arise