economy

Dozens fired for leaks, but the sleaze is out in the open
by Eric Jackson, mostly from other media

The roots

The Social Investment Fund (FIS) has its roots in the economic devastation wrought by years of economic sanctions culminating in the traumatic and destructive December 1989 US invasion of Panama. The country needed to quickly pump money into selected areas to get the economy up and running again. Thus, by way of Executive Decree 146 of May 30, 1990, President Guillermo Endara created the Social Emergency Fund (FES), the spending of which was exempted from the usual public contract bidding procedures. The fund's management came under the purview of the Ministry of the Presidency.

The lack of customary spending controls was defended because of the pressing economic emergency, but not projected to be a permanent spending practice. Decree 146 had a sunset provision: the program was supposed to last for only three years, with an additional six-month wind-up period.

But the shell of the FES was still there when Ernesto Pérez Balladares took office in 1994. Rather than finishing the wind-up process, Toro quickly pumped $40 million into the organization and made a series of reorganizing moves that put the likes of Balbina Herrera on the board of directors and for a time had the present-day Electoral Tribunal magistrate Gerardo Solís as FES director. A new decree in 1997 confirmed that the FES did not have to go by the normal bidding procedures for government purchases and contracts. Toro essentially turned the fund into a political patronage tool, both to steer contracts to PRD members and to spend money in ways calculated to enhance the party's electoral chances.

But the PRD lost the 1999 election and Mireya Moscoso had a more kleptocratic concept. In a 1999 reorganization the program was expanded and renamed the Social Investment Fund (FIS). Not only was the exemption from bidding maintained, but in 2001 the fund was exempted from the Comptroller General's oversight.

A large government discretionary spending fund, without the usual controls, is a structural invitation to public corruption. It may have been accepted as a temporarily necessary evil by Endara, but by the Moscoso administration it was taken as a plum tree to be harvested by Mireya's in-crowd. The scandals soon began to make their way into the press.

One of the first of these involved the Comptroller General and the Minister of Government and Justice at the time, Alvin Weeden and Winston Spadafora respectively. (Weeden currently holds no public office, but Spadafora is a magistrate on the Supreme Court these days.) The FIS built a 4.6-kilometer road in the La Arenosa corregimiento of La Chorrera, a road that served the farms of Weeden and Spadafora and almost nobody else. A team of journalists from El Panama America caught them, and even caught one of the contractor's machines working on Weeden's property.

Weeden said that he paid privately for the work that was done on his farm by the contractor, which was not done on the time paid for by FIS. He said that it was convenient and normal to make a side deal with the contractor in that fashion, because it saved the added expense of bringing the heavy equipment to the area just to work on his farm. Spadafora filed a slew of criminal and civil charges against the journalists, some of which are still percolating in the legal system to this day. It got so ugly that Spadafora's own siblings issued a public statement denouncing his behavior.

In any case, move ahead to 2010 and we find on the Supreme Court at least one man implicated in a FIS spending scandal that long antedates the current one.

Then there was the $196,700 water treatment system for Pacora that didn't work. Then there was the hospital in Aguadulce with a missing floor, and the equipment for that hospital that FIS lost track of the money to buy.

Then there were all the FIS funds that were illegally spent to buy votes for the doomed 2004 Panameñista election campaign, part of which became public in an Electoral Tribunal trial of former legislator Haydee Milanés de Lay. In that case arising from the Darien, the creative touch was funneling the money to the legislator's re-election campaign through a local government entity that didn't exist.

This is not to say that FIS has not funded necessary or useful things. With the end of funding for the often-abused legislators' circuit funds, many of the things that those discretionary accounts were used for --- ambulances, youth sports programs, materials for the homeless to build their houses, nutrition programs, disaster relief and so on --- were taken over by FIS. According to a 2007 Panamanian report to the World Trade Organization, from 1999 through 2003 alone FIS built 15,000 housing units --- which would have made a number of building contractors aligned with Mireya Moscoso's coalition very happy.

Would you think that after five years of such crude peculations, things would have improved under the next administration? It would appear that they didn't get that much better.

The audit

So Ricardo Martinelli the businessman came to power, and hired restaurateur Giacono Tamburelli as FIS director. Noticing that the books weren't right and there appeared to be money unaccountably missing, Tamburelli made a no-bid contract to hire Consultora López to do an audit.

The result was a 900-page report which Tamburelli said he'd make public, then said was private because done by a private company, then said he might release after an investigation is done. The consultants, Tamburelli complained on the FIS website, "took on attributes that did not belong to them and based part of the report on interviews that were unauthorized."

But while Tamburelli was squirming and keeping the report locked away, others took the report, or parts of it, to reporters for La Prensa. The daily newspaper is in the midst of a series of stories based on the report, and those stories have prompted other news developments in that and other media.

At least 31 people have been fired from FIS over the leaks --- or if you want to believe the administration's version, in a reorganization that happened to coincide with the story breaking. Those firings have prompted some of those now out of work who had not talked to come forward with their stories. One of the most damning of these was a source who told La Prensa that Tamburelli had ordered the leaking of details in the report that were embarrassing to Balbina Herrera and other PRD figures, but not those details implicating politicians aligned with Martinelli's coalition, to the press.

It is reported that at least $12 million is unaccounted for, although some, like anti-corruption activist Enrique Montenegro, allege that the losses may exceed $100 million. Dozens of politicians from past and present administrations have been named, including 19 members of the current legislature. Former Panameñista legislator Francisco “Toto” Ameglio, who figures prominently in La Prensa's stories (and denies any wrongdoing), says that La Prensa is attacking Panama's democratic institutions and warns that the scandal may lead to the closing of the National Assembly.

What La Prensa reports is basically that FIS paid for things that were never received, often through private foundations controlled by legislators, who spent the money on things other than what FIS alleged that the expenditures were for.

In the name of God

One of the current legislators named for questionable practices is Cambio Democratico deputy Dalia Bernal. She is an Evangelical, and one of the deputies who pushed through a resolution declaring September to be Holy Scriptures Month. But much larger than any dealings she may have had with FIS funds, some $1.4 million in various installments was run through accounts in the name of Monasterio de la Visitacion de Santa Maria, a Catholic convent in Las Cumbres. The problem is, the nuns didn't know about it, didn't know about the accounts that were opened in their institution's name through which FIS money passed, did not receive any money from FIS, and don't know where the money that purportedly passed through their hand went.

La Prensa said the money that went through accounts in the convent's named passed into Francisco Ameglio's control. Ameglio isn't directly denying this. He's pleading higher orders: "If anybody benefitted from the management of the FIS, it was the Catholic Church, and Monsignor Dimas Cedeño can prove this," he told La Estrella. "The accord with the monastery was made with the authorization of Monsignor Cedeño."

In recent years Panama's Catholic hierarchy has been on a right-wing offensive against the Liberation Theology wing of the denomination, and has made high-profile alliances with some of the more notoriously corrupt elements of Panama's political class, like former Cocle governor Richard Fifer. Thus Ameglio's claims should not be rejected out of hand as preposterous self-serving fabrications --- but if they are true, then it's a matter of church as well as state tangled up in a financial scandal.

Tamburelli apologizes

Faced with a storm of denunciations and denials from current and former legislators --- which, however, rarely matched what had been alleged --- on the morning of January 20 Tamburelli was called on the carpet at the Palacio de las Garzas, where he faced all of the Martinelli faction's legislative caucus and apologized to them.

That afternoon, deputies of both government and opposition factions took advantage of the period set aside for the comments from the National Assembly floor to denounce the audit report and those who made it. Benicio Robinson (PRD - Bocas del Toro) said that the audit was intended "to discredit the political class of this country" and called for cross-party unity against it.

Named so far

Among the current or former deputies of the parties aligned with President Martinelli, these have been identified in La Prensa as having been linked to questionable FIS spending:

• Dalia Bernal (Cambio Democratico)

• Héctor Aparicio (Cambio Democratico)

• Francisco Ameglio (Panameñista)

• José Muñox (Cambio Democratico)

• Luis Carlos Cleghorn (Panameñista)

• Carlos Afú (Cambio Democratico)

• Osman Gómez (Panameñista)

• Alcibiades Vásquez (Panameñista)

Among the current or former PRD deputies who have been identified in La Prensa as having been linked to questionable FIS spending:

• José Luis Fábrega

• Pedro Miguel González

• Héctor Alemán

• Juan Carlos Arosemena

• Yasir Purcait

• Leandro Ávila

• Benicio Robinson

• Abraham Martínez

• Yasmina Guillén

• Omar Chavarría

But there are more reports to come in La Prensa, the use of FIS money in the 2004 campaign of former legislator Haydee Milanés de Lay is a matter of public record and there are several more cases of illegal campaign use of public resources that involve FIS that are pending before the Electoral Tribunal.

The Comptroller General moves in

On the public relations track, the FIS affair is still unfolding. La Prensa hasn't published half of its stories, a bunch of people who have been fired from their jobs now have nothing much to prevent them from going to the press with whatever they may know, and many lines of inquiry have been pointed out to reporters, auditors and prosecutors. But this is an alleged series of financial improprieties, so before any prosecutors can look into it they have to have a recommendation from the Comptroller General, who was recently selected by the National Assembly.

José Luis Varela, the president of the National Assembly, made the call. He asked Comptroller General Gioconda Torres de Bianchini to investigate FIS and the storm of allegations swarming around it. On the morning of January 21 she accepted that request and sent a busload of forensic accountants over to FIS headquarters.

At this point the matter comes down to motives and personalities, but those may not be dispositive in any case. Gioconda Torres de Bianchini was the top accountant for President Martinelli's private businesses for many years, who followed him into government when he served in prior public posts. She's not a politician and she's not well known to the public. Many presume that although the legislature appointed her, she's a Martinelli loyalist who will respond first and foremost to his wishes. We will no doubt get to see a certain aspect of what sort of a person the Comptroller really is over the coming weeks and months.

And President Martinelli --- what does he really want? Is he a loyal defender of the political class and all of its abuses? Is his ambition such that he'd be pleased to clear the decks of the worst of the old order so as to be in a better position to rearrange things his way? Are his instincts brazenly partisan, or more even-handed? And if he does have an opinion on all of these matters, would he consider it proper to even tell the Comptroller General what it is?

An official finding that nothing untoward ever happened would be disbelieved by many Panamanians and would negatively affect Martinelli's standing in the polls. A result that appears to be the product of a partisan double standard would probably produce negative effects. But a cataclysmic scandal that wrecks the current political elites, in which Martinelli is seen to be standing tall and insisting that whoever looted the Social Investment Fund must pay a severe price, might strengthen the president against any and all rivals. However, the guy campaigned on being crazy so he may have an entirely different set of calculations going on inside of his head.

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