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Petaquilla Minerals Ltd, which has an extensive but never operational mining concession for northern Cocle and western Colon provinces that may be in the way of plans to expand the Panama Canal, may be in trouble with Canadian authorities over transactions on the Toronto Stock exchange.

Former Cocle governor Richard Fifer, the CEO of Petaquilla Minerals Ltd, was charged with embezzling public funds while serving as governor of Cocle on February 4. An arrest warrant was issued and Fifer went into hiding while his lawyers sought to quash the warrant. On February 10, while Fifer was a fugitive from Panamanian justice and before there had been any mention at all about his trouble in the Canadian press, Petaquilla sold 500,000 company shares on the Toronto Stock Exchange. On February 21, a court in Cocle province cancelled the arrest warrant but not the charges, and required Fifer to report to police every 15 days and prohibited him from leaving the country.

On February 20, while Fifer was still sought by Panamanian authorities, President Martín Torrijos and officials of the Inter-American Development Bank (IADB) appeared at a ceremony in La Pintada, Cocle, to announce a $20 million contract for several projects, including improvements to the road to Coclesito.* At that event Torrijos was photographed with Petaquilla CFO Kenneth W. Morgan, and the company used that photograph and a deceptive headline to imply that the bank is supporting the company’s purported mining development. (That clipping is found on the Internet here.) In another press release about the event, Petaquilla claimed, without citing a date, that Morgan and Fifer met with the Vice-Minister of Commerce and Industry (See here.)

The Panama News asked the Presidencia and the Ministry of Commerce and Industry whether officials of the Torrijos administration had met with Fifer while he was a fugitive from justice. A spokesman for President Torrijos referred The Panama News to Petaquilla for answers to that question. A spokesman for the Ministry of Commerce and Industry said that no such meeting showed up on the ministry’s logs.

Meanwhile, this reporter contacted the Ontario Securities Commission (OSC), which oversees activities on the Toronto Stock Exchange, asking if it would have constituted insider trading for Petaquilla to sell shares on the exchange when the fact that its CEO was a fugitive from justice was undisclosed to the Canadian market.

In a delayed response to the questions from The Panama News, the OSC acknowledged the February 10 transaction, and said that "your email has been forwarded to appropriate OSC staff for further review" but added that "the OSC does not generally disclose the existence or status of a review or investigation until we issue a Statement of Allegations and the matter becomes part of the public record."

The OSC also pointed out that "[o]n February 25, PTQ responded to news reports in Panama regarding the investigation of their Chairman and CEO Richard Fifer.... [t]he News Release posted on www.sedar.com does not seem to have had a dramatic effect on the stock price."

From the company's perspective, continuity in the stock price was the objective. But the problem is that the Petaquilla press statement was a lie.

Under the signature of Petaquilla CFO Morgan, that press release claimed that "The Company has been informed that there are no oustanding... charges...."

But in fact as of February 25, and as of the time this story was written, Fifer was indeed facing accusations that as governor of Cocle he diverted aid sent by the Spanish government for a museum in Penonome and funds from the governor’s office by way of hiring phantom employees and pocketing their paychecks --- the time-honored Panamanian "botella" scam.

A spokeswoman for the Panamanian Attorney General’s office told The Panama News that not only are the charges still pending, but that Fifer has been ordered to appear before prosecutors for an indagatoria --- formal interrogation for use at trial --- later this month.

It might be argued that since a court has not bound Fifer over for trial, there are no charges. But that would be a bit of sophistry to deceive foreigners used to Common Law criminal procedure --- in fact Fifer has been specifically accused by a prosecutor, criminal proceedings are underway and, even though the arrest warrant was quashed after Fifer’s lawyers deposited the money he allegedly stole with the Office of Patrimonial Responsibility (DRP), travel restrictions and police reporting requirements have been imposed upon the former governor while this matter is pending.

And under Canadian law the company's deceptive statement about Fifer's legal status may well constitute securities fraud, on top of Petaquilla’s potential insider trading problems.

Meanwhile, the company has been on a public relations offensive within Panama, in some cases using public officials to bolster its claims that the Cerro Petaquilla mining concession is viable and would be beneficial for the communities affected.

Fifer, through various business fronts, has had mining claims to the area since 1987, but there has never been any actual mineral production there. Some observers here have alleged that the value of the concession has been inflated in order to attract gullible foreign investors. As part of the concession is within the Western Watershed that may be flooded to expand the Panama Canal, the mining claim’s value could also become a major political issue in any canal expansion referendum, because if that area is to be submerged it would be the single largest bit of property for which compensation would have to be paid.

In a March 3 press release, Petaquilla stated that “On February 25, 2005, Humberto Alvarez, the Company's Panama-based manager of the Mine Development Plan, met with the Provincial Council of Colon. The meeting was held in order to bring the local governing representatives up to date on the Company's plans for advancing the Petaquilla copper/gold project and conversely for the local authorities to have input and participation in the development of a mine.

"In attendance at the meeting were: Olgalina de Quijada, Colon's Governor.
Luis Macias, Donoso's Mayor.
Raul Esquina, Representative of Rio Indio.
Sixto Lopez, Representative of Miguel de la Borda.
Representatives from Donoso and communities in Northern Cocle, San Jose del General, Govea and Guacimo also attended."

The company claimed in its press release that it had begun "the first socio-communitarian integration steps in that region," promising 30 construction job" STYLE="text-decoration: none; border-bottom: medium solid green;" HREF="http://search.targetwords.com/u.search?x=5977|1||||job|AA1VDw">jobs at a mining camp. "A schedule of visits to the Donoso communities was also established for Company representatives, where they will conduct workshops informing the local people about the project and its importance in the development of one of the country's poorest regions, as well as its plans for environmental mitigation," the company press release added. Without actually making any promises, the release continued to assert that "A community development plan in Donoso was also discussed. Dialogue focused on the refurbishing of health centers, schools, school supplies and academic preparation."


*In the first version of this story, this ceremony was erroneously described as a disbursement of funds for road building projects. Actually, it was the announcement of a contract between the IADB and the Panamanian government for several projects, not all of them road works. The IADB's representative in Panama, Jeremy Gould, pointed out that error to The Panama News and added that the bank does not do business with Petaquilla Minerals.






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