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Access to Odebrecht - PYCSA documents denied

Torrijos administration plays musical cabinet posts, Kuzniecky sued

by Eric Jackson

Just as he was taking off his Comptroller General hat and assuming the role of Minister of Canal Affairs, Dani Kuzniecky was slapped with a habeas data suit that could theoretically dock his government pay. Of greater importance is that the suit, brought by Kevin Harrington, the court-appointed receiver for the insolvent PYCSA consortium that built the Corredor Norte, could determine whether the government can "privatize" and conceal information about major public projects.

PYCSA, founded by Mexican businessman Máximo Haddad (who is now a naturalized Panamanian citizen), had the concession to build a Panama to Colon toll road since the mid-90s but never built it. The company also defaulted on many of its other debts, including payment for land it took from the Metropolitan Nature Park (Parque Metropolitano). The park was the most diligent of PYCSA's creditors and thus the one that finally obtained a sequestration order against Haddad's company.

When a company is sequestered all of its assets are to be turned over to the receiver and it's not supposed to be able to enter into contracts or transfer assets without the receiver's blessing. However, as a publicist for Norberto Odebrecht SA, the Brazilian company that ended up with that part of the PYCSA concession to build the Colon-Panama autopista told The Panama News in October of last year, PYCSA's contract with the government allowed it to sell all or part of its contractual rights with the government, provided it had the government's blessing. It was claimed that the government had given this consent.

However, neither the Torrijos administration, Odebrecht, Haddad or PYCSA ever informed, let alone obtained the permission of, the court-appointed receiver for the transfer of this contractual asset. If the transaction was as Odebrecht's publicist put it to this publication, it was a fraud against Parque Metropolitano, the families of three little boys who were killed when an elevated Corredor Norte overpass collapsed on them in San Miguelito, people whose homes or back yards had been taken without compensation for the Corredor Norte, the Banco Nacional de Panama that has lent PYCSA/Haddad millions of dollars and not been repaid, and myriad other PYCSA creditors.

Ah, but a few months later the Torrijos administration had another story. The government now claims that Odebrecht has the concession not by its blessing of a buyout of a PYCSA asset in 2006, but by way of a January 12, 2007 no-bid contract. On February 26 Harrington filed a habeas data (freedom of information) request with then Comptroller General Dani Kuzniecky, given that under this country's constitution he would have had to approve the contract, asking for the documents related to his approval of the deal.

Under Panama's Transparency Law, when a request is made to the Comptroller General, a cabinet minister or an analogous high ranking public official for a document, she or he has 30 days to deliver the document, say that the institutions which she or he heads does not possess what is request, or deny the request based on a specific exception to the Transparency Law. In this case, 30 days came and went and then Harrington received a note from a functionary with the Comptroller General's office telling him to go to the Ministry of Public Works.

It may well be that said ministry, headed by the former head of General Noriega's Dignity Battalions goon squad Benjamín Colomarco, has all the documents that Harrington had requested. However, the Comptroller General's office surely has them because they relate to its approval of the Odebrecht concession. As Harrington put it, "according to the Supreme Court, the law obliges the functionary to deliver what has been solicited, say that he doesn't have it, or declare it to be confidential information --- there is no other alternative."

Meanwhile, in a sense the game of musical cabinet posts has come full circle. President Torrijos's campaign manager, Carlos Vallarino, was the Minister of Public Works when the negotiations between the government and Odebrecht began. Then he was shifted over to become the Minister of Economy and Finance, with Colomarco taking his former post. Now Vallarino has become Comptroller General and inherited this lawsuit.

There are several reasons to suppose that the information that Harrington requested may be embarrassing enough to the Torrijos administration that it would violate the Transparency Law to keep it out of public view.

One of them is simply that whether as the transfer of another contract or as an original deal, the awarding of a $250 million highway construction contract without a bidding procedure is illegal. Administrative Prosecutor Óscar Ceville has questioned the procedure use in the transaction on this as well other grounds.

And was the government a party, by giving its blessing, to a payment by Odebrecht to Haddad behind a court-appointed receiver's back in exchange for a major PYCSA asset? Even if, as has been claimed on at least one instance, PYCSA gave away rather than sold this asset, it would still be a fraud against PYCSA's creditors. An airing of that, in turn, might lead to a closer examination of the relationship between Haddad and three successive administrations --- Ernesto Pérez Balladares's, Mireya Moscoso's and Martín Torrijos's --- and of Haddad's role in the collapse of the Hamilton Bank in Miami, which lent him a lot of money against insufficient or illusory collateral. Why, after years of non-compliance with its contractual obligations to Panama, was Haddad's company not only not declared in default, but lent additional millions by state-owned institutions? Why the apparent surreptitious dealings with Haddad for the transfer of the Panama-Colon autopista concession to Odebrecht? The revelation of all the details related to these questions is the stuff of a financial scandal that could bring down virtually the entire Panamanian political class, both PRD and opposition.

And then there is the Odebrecht role. The company was at the center of a bribery, kickback and bid rigging scandal that brought down a Brazilian president, but after that made a public show of cleaning up its practices and image. Notwithstanding that, Odebrecht has run into public relations and legal controversies with respect to Angolan diamond mines and Peruvian public works contracts since then. The Panama News has heard, from several independent but very indirect hearsay sources, that President Torrijos's cousin Hugo Torrijos owns a stake in Odebrecht's Panama subsidiary. The rumor can't be verified through public documents, given this country's corporate secrecy laws, and when the question was put to Odebrecht's publicist, the answer we got about whether the rumors are true was "I don't think so." But given revelations about the president's uncle receiving beach-front land on Punta Chame at the ridiculously low prices of eight-tenths of a cent per square meter, and given past allegations of Hugo Torrijos's purported secret ties to PECC, a company that held a contract with the now superseded Ports Authority that the president's cousin headed at the time the contract was made, it may be time to take a more penetrating look at whether a person or persons close to the president have or had a stake in Odebrecht.

(In fairness to Hugo Torrijos, let us remind the readers that what we report here with respect to a stake in Odebrecht is an unverified rumor that's arguably newsworthy because it's so widespread but can't be reported as itself factual. Moreover in the PECC cases, some of which are still pending and some of which have produced some highly criticized court decisions, asset freezes imposed by lower courts against Hugo Torrijos, Ernesto Pérez Balladares and Torrijos's former subordinate at the authority have been lifted and nobody has been found guilty of any wrongdoing; and furthermore a publicized paper trail that's fairly damning of the former president and the former number two man at the authority does not appear to directly implicate Torrijos.)

All ambiguities and questions to which there may be inoccuous and truthful answers notwithstanding, surely there would be people in the government who wouldn't want to uncover a paper trail that might lead to yet more questions of this nature, let alone unflattering answers. But by and large, this isn't their call anymore. -Now it's up to the Supreme Court to see how much of one small part of the PYCSA/Odebrecht saga will become part of the public record.

Bush - Lula declaration makes biofuels an international political issue
Habeas data information lawsuits over Odebrecht highway contract
Bocas oil spill controversy doesn't go away

Ad cartel backs an embattled friend
Business & Economy Briefs