Radar deal not investigated by authorities here, but in Italy it is

Marina Grossi: jobless and under investigation

Attorney General José Ayú Prado says he has no complaint, nor evidence before him to start an investigation of the radar deal scandals. However, Italian prosecutors are turning their attention to the matter.

Radar deal looks ever less tenable
by Eric Jackson

It wouldn't be quite fair to accuse Panama's Procurador General José Ayú Prado of being "pro-corruption" based on his declaration that he's not investigating the apparently corrupt purchase of at least $250 million worth of radar installations from the Italian company Selex, which is a subsidiary of Italy's state-controlled Finmeccanica conglomerate. He has to have a complaint and he has to have evidence. More difficult yet, to the extent that the affair touches public officials, there is the infamous "summary proof rule" --- which holds that to start an investigation of a public official, conclusive proof that a crime was committed and that the official did it must be attached to the complaint, any prior investigation precludes all legal proceedings against the official, and attachment of summary proof to the complaint is evidence that somebody conducted an illegal investigation that bars prosecution of the case.

The Italians had the mafia scandals that wiped out the Christian Democrat - Communist political paradigm of the Cold War era. Their history of dealing with public corruption goes way back. Even Caligula wasn't all that new in his time, and Berlusconi's parties weren't nearly as decadent as his. So the jaded Italians have nothing like the summary proof rule. Their prosecutors and magistrates are also much more open about putting files in ongoing investigations and trials on the public record.

And so the daily newspaper Il Fatto Quotidiano reports that prosecutors in the Selex / Finmeccanica financial scandal case have now turned their attention to private entities created to receive party of the money from overpriced sales contracts and distribute it as bribes and kickbacks to foreign public officials. As in, for example, Valter Lavitola's Panamanian front company, Agafia SA.

It's bad for Martinelli. How bad? Notice how many of the top government officials have gone to ground for the holidays, for example leaving acting ANAM director Lucia Chandeck in charge of the Ministry of the Presidencia in the absence of both the minister and the vice minister. Notice as well the repeated reminders by press flacks that the president won't answer any questions not related to the event he's attending.

It's hard to say what records may have been destroyed at Selex, but consider the downfall of the subsidiary's corrupt administration. On the eve of a board room showdown between new Finmeccanica CEO Giuseppe Orsi and then board chairman Pierfrancesco Guarguaglini, an investigation of kickbacks in Selex's sales to the Italian state-owned ENAV air traffic control company had landed one of the Selex directors, Manlio Fiore, in jail. The government appointees on the Finmeccanica board may have been Berlusconi appointees, but on apparent orders from the new Prime Minister Mario Monte they voted to oust Guarguaglini.

Orsi called for the resignation of Guarguaglini's wife, Marina Grossi, as general manager of Selex. But she balked and the Selex board backed her. Retribution was promised, and meanwhile Orsi got three Selex directors to defect from the Guarguaglini/Grossi camp and the Finmeccanica board restructured Selex to add two new directors. There was now a board majority to oust Grossi from Selex. The old guard was in any case distracted from any defense of its position in Selex. Both Guarguaglini were called by prosecutors for repeated interrogations, as was the Selex assistant general manager, Letizia Colucci. Colucci resigned her management post but says she will stay with the company. She denies ever having been at meetings where false billings or the diversion of funds to politician was discussed, but prosecutors have a paper trail that indicates that these things were done regardless of what meeting Colucci or anyone else at Selex may have attended. While these former executives were tied up in court, Italy's Financial Police made repeated raids on Selex offices, carting away crates of documents and computer hard drives. On December 15, Grossi formally stepped down from her post at Selex, although she had effectively not been in charge for several days.

Meanwhile in Panama, the Martinelli administration backed down ever so slightly and agreed to multiple Transparency Law requests for information about the radar contract with Selex. What the government here is still keeping secret is the addendum about "consultants" --- the Lavitola front company Agafia SA skimming 10 percent from the purchase contract. However, copies of this document surely exist in Italy, or at least there are witnesses who have seen it and will testify about its contents if they want to keep their jobs with Finmeccanica.

Just before Grossi's departure, President Martinelli published a translation of a cryptic letter from Selex to Valter Lavitola's Panamanian front company Agafia, wherein Selex purported to cancel its deal to let Agafia skim the proceeds of the radar sale to Panama. Operating under the assumption that the letter was neither a backdated self-serving Grossi plant nor a Martinelli forgery, it still raises several interesting points:

It objected that the contract guaranteed that no resident of Italy would receive commissions, and argues that it appears that this was breached.
It argued that the contract provided that none of the people at Agafia SA were dignitaries of the government nor affiliated with dignitaries of the government, and this clause was apparently breached. However, the letter doesn't say which people specifically, or which government. Valter Lavitola held no post in the Italian government but was "affiliated with" Silvio Berlusconi.
It invoked Selex's right to rescind the contract in the event that there was a substantial change in Agafia's management or ownership, just what it did not specify.

Also in Panama, La Estrella began looking into those parts of the Selex contract that the Panamanian government did release, and consulting with military technology experts. It turns out that, although these radars were designed to keep an eye on traffic through Panamanian waters, they are not capable of picking up a motorized inflatable boat. It also turns out that in the "Boston Big Dig" style of accounting which is widely practiced by the Martinelli administration, the cost of roads, electrical hookups and other infrastructures for the radar installations were not invluded. But the original Selex defense of the apparent overcharge for the radar systems is that some of them are in remote areas without such facilities.

Now Panamanian opposition politicians are calling for the the radar contract's rescission. They don't have the votes to force the issue. They can, however, make the government here look so bad that it backs down and cancels the deal.

Party time in Panama: Berlusconi's bagman Valter Lavitola, center, figurehead
Agafia president Karen De Gracia Castro on the left and an unidentified woman