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Looting began with Torrijos insisting on relaxed school fund check rules, appointing members of Balbina's crowd to posts for which they were unfit

Equity and Educational Quality
Fund was just a PRD cookie jar
by Eric Jackson

It started in 2005, when President Torrijos insisted that, purportedly because the funds in the Ministry of Education's fund to improve the country's worst public schools, the Educational Quality and Equity Fund (FECE, by its Spanish initials) were in his judgment being spent too slowly, the requirement that the Comptroller General approve all government checks should be waived when they're written against the FECE account for schools that were to receive $15,000 or less in improvement funding. Then Comptroller General (now Minister of Canal Affairs) Dani Kuzniecki signed the order to that effect.

That set the stage for a crowd from Housing Minister Balbina Herrera's San Miguelito entourage, embedded in Education Ministry posts distributed on the basis of political patronage despite laws to the contrary, to run a major scam in dribs and drabs.

Herrera used to be the PRD legislator from San Miguelito, and before that the PRD mayor of San Miguelito. (She's running for mayor of Panama City in 2009.) Among her political faction are the Gallardos. Zonia Gallardo de Smith is the Vice Minister of Education. One of her nieces, Margarita Gallardo, serves under Herrera in the Ministry of Housing (MIVI) as Director of Home Improvements and occupies the post of vice president of the PRD's National Direction Committee (CDN) that's reserved for a San Miguelito activist.

Another of Zonia Gallardo de Smith's nieces, Margarita Gallardo's sister Joaquina, is a fugitive from the law, the former director and book keeper of the FECE program in San Miguelito. Although she is not a CPA as the regulations require the person who keeps the books for an Education Ministry regional program to be, and even though she didn't get her job as head of FECE in San Miguelito through a competitive process as is also required, she found herself first as the acting regional director of the fund, and then later as the book keeper who wrote the checks and kept the records.

Joaquina Gallardo wrote at least 238 bogus checks to a small network of teachers, businesses owned by those teachers or their friends or relatives, and actual or phantom businesses in league with herself. In cooperation with some specific Banco Nacional employees who could be trusted to not ask too many questions, the checks would be cashed and those to whom they were made out would receive 10 percent, Gallardo 90 percent. Purportedly, the payments were for various fictitious improvements to the primary schools in San Miguelito and when the canceled checks came back from the bank both they and the supporting documentation tended to disappear.

And so it was that on a $600 per month salary Joaquina Gallardo and her taxi driver husband built an addition to their house and bought three cars, one of which cost the equivalent of more than three years of her salary. Her half-brother bought himself a Toyota Land Cruiser for $48,000 and paid cash.

All told, at least $1.3 million disappeared into the black hole that was the San Miguelito office of FECE and into the hands of Joaquina Gallardo and her confederates.

But wait a second --- isn't there supposed to be a regional education director, a civil servant rather than a political appointee, to guard against the Joaquina Gallardos of this world?

Theoretically. However, that post was illegally given to a political appointee, one Betzy Guzmán, over teachers' unions' objections. (The Torrijos administration is out to smash the teachers' unions, so those objections would have boosted rather than hurt Guzmán's chances.)

Betzy Guzmán got her job shortly after President Torrijos took office. She's a veteran activist of the PRD in San Miguelito, of Balbina Herrera's faction. She was suggested to then Education Minister Juan Bosco Bernal by none other than the vice president of the PRD's CDN from San Miguelito, one Margarita Gallardo.

Guzmán was surrounded by money scandals from the start of her tenure as regional director, and this past July she was suspended by Education Minister Miguel Ángel Cañizales. But then Cañizales was replaced as minister by Belgis Castro, who reinstated Guzmán in September. That reinstatement, in addition to Guzmán's illegal original appointment on the basis of political patronage rather than a civil service exam procedure, violated a law that prohibits those who have been previously suspended for administrative faults from being regional education directors.

Joaquina Gallardo's mass peculation in San Miguelito has been the stuff of screaming headlines, but it seems that it was not the only place where there were problems with FECE. In the Ngobe - Bugle Comarca there is a rural school that was fully paid for yet not built. In Panama City parents noticed that FECE was paying $1.50 per cinder block for materials used in school improvements, when the going price is one-third of that. Teachers at the Artes y Oficios vocational high school in the capital obtained documents about 35 "dubious expenditures" from FECE purportedly for their school. Law professor and human rights activist Miguel Antonio Bernal --- who plans to run against Herrera for mayor --- alleges that he has obtained a preliminary report on the FECE scandal that estimates thefts amounting to some $6 million.

How did all of this come to light? A report by El Panama America, citing a confidential source, suggests that one of Joaquina Gallardo's front people was not satisfied with just 10 percent and spilled the beans when denied a larger cut.

In May, due to a preliminary Ministry of Education audit, Joaquina Gallardo was demoted from head of FECE to book keeper, but the peculations continued. On November 12 she was asked by the ministry to justify all the San Miguelito FECE expenditures. On the 14th she was asked by the ministry to provide documentation of the same. On the evening of the 16th the Gallardo family was seen loading possessions from their home into a truck and Joaquina Gallardo dropped out of sight. On the morning of November 19, the tale of Gallardo's scheme broke in El Panama America and criminal charges were filed.

There ensued a wave of revelations, the ordering of audits, the removal first of Joaquina Gallardo and a teacher through whom she had cashed FECE checks, the removal of Betzy Guzmán as regional education director, criminal charges against Joaquina Gallardo and two others (the latter couple, teacher Teodoro Castillo and Mitzi Miranda --- Gallardo's assistant at FECE --- were thrown in jail), and the removal of all regional FECE directors.

The Education Ministry has promised "determined action" to get to the bottom of the scandal. It has also blocked public access to information about ministry spending that had previously been published on its website, in violation of the Transparency Law.

At least 11 individuals are under investigation by prosecutors for involvement in the San Miguelito FECE scheme, plus there are others being probed for FECE abuses in other regions.

And what of Joaquina Gallardo? From the underground she sent a lawyer to start negotiations on her behalf. About $11,000 in cash and uncashed FECE checks were returned and a judge was convinced to grant bail in the amount of $200,000 --- less than one-fifth of what the suspect allegedly pocketed. Despite the bail ruling, she has yet to turn herself in to authorities.

Meanwhile the fugitive's aunt, Zonia Gallardo de Smith, remains Vice Minister of Education and her sister, Margarita Gallardo, remains Director of Home Improvements at the Ministry of Housing. Betzy Guzmán has been reassigned to a teaching post at Colegio Fermin Nadeau. Education Minister Belgis Castro hasn't had a word to say about why he reinstated Guzmán or why he blocked access to financial data on the ministry's website.

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