US embassy cable - 05PANAMA778

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 000778 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
VANCOUVER FOR CG ARREAGA 
 
E.O. 12958: DECL: 03/18/2015 
TAGS: PGOV, PREL, PM, POLITICS & FOREIGN POLICY 
SUBJECT: PANAMA ATTORNEY GENERAL TESTS TORRIJOS 
ADMINISTRATION, REOPENS CEMIS AND SUPREME COURT BRIBERY 
CASES 
 
REF: PANAMA 629 
 
Classified By: Ambassador Linda E. Watt for Reasons 1.4 (b) & (d) 
 
SUMMARY 
-------- 
1. (C) Panama's independent Attorney General Ana Matilde 
Gomez may have put the government of Martin Torrijos in an 
uncomfortable position in March when she asked the Supreme 
Court to reopen two three-year-old bribery investigations 
into a government contract for Centro Multimodal, Industrial 
y de Servicios (CEMIS), along with the January 9, 2002 
legislative confirmation of two Supreme Court judges.  Both 
investigations date from the Moscoso administration.  Many 
observers believe that the CEMIS bribery scandal -- allegedly 
more than $1m in cash changed hands -- may implicate many 
sitting and former legislators (including GOP Ministers 
Balbina Herrera and Hector Aleman), as well as President 
Martin Torrijos and former President Mireya Moscoso.  How the 
GOP handles the two investigations could become a litmus test 
for the current government's dedication to improving 
transparency and combating corruption.  Torrijos has not 
commented publicly on the two cases.  By popular calculation 
the cases heavily involve PRD members, which highlights the 
Attorney General's intention to act unhindered by the 
government.  Thus far, we have not seen compelling evidence 
that would implicate him in the CEMIS scandal.  End Summary. 
 
TV Drama and a Little Piece of Paper 
-------------------------------------------- 
2. (SBU) The CEMIS case is not the biggest corruption scandal 
in Panamanian history, but it probably is the one that evoked 
the most public revulsion.  CEMIS is identified with 
Democratic Revolutionary Party (PRD) Legislator Carlos Afu 
and his fifteen minutes of fame.  On January 16, 2002 Afu 
appeared on TV waving a large wad of cash, which he claimed 
was a $6,000 down payment on a $20,000 bribe to vote for 
CEMIS.  Afu was trying to make the point that a large number 
of PRD legislators had received CEMIS bribes.  Afu's 
extraordinary public revelation and the lack of any arrests 
following it brought public confidence in government 
officials to new lows. 
 
3. (SBU) Afu's dramatic TV escapade came after the Assembly 
had been roiled by contentious and controversial Supreme 
Court confirmation votes for Moscoso nominees Alberto 
Cigarruista and Winston Spadafora, in which Moscoso allegedly 
bribed several PRD legislators (Afu included) in the 
PRD-controlled Assembly to ensure their confirmations.  On 
January 14, 2002, the day before the Assembly voted to 
approve CEMIS, then-opposition PRD legislator Balbina Herrera 
publicly denounced Afu for taking a bribe to vote for 
Cigarruista and Spadafora.  In retaliation, Afu went on TV on 
January 15 to wave the cash and claim that he was not the 
only PRD legislator whose vote had been bought. 
 
4. (SBU) (Note: The genesis of the Supreme Court case is that 
at the end of 2001 Arnulfistas needed PRD votes for Spadafora 
and Cigarruista in the PRD-controlled Assembly.  Spadafora 
reportedly had been involved romantically with President 
Moscoso.  Cigarruista and Spadafora were confirmed with the 
support of three PRD votes, Afu's included.  Later, the PRD 
expelled Afu, who won re-election in May 2004 to the National 
Assembly as an Arnulfista.  During the campaign Afu and 
then-President Moscoso posed on the dance floor for press 
cameras.  Complicating the CEMIS case is the legislative 
immunity Panamanian legislators then enjoyed, which later 
constitutional changes removed.  End note.) 
 
5. (SBU) The CEMIS bribes allegedly came from the privately 
owned San Lorenzo Consortium.  Public Ministry investigators 
later came across a piece of paper in San Lorenzo's files 
with nothing more than names and amounts scribbled on it. 
"Martin," "La Dona," and "Aleman" (possibly Martin Torrijos, 
Mireya Moscoso or Balbina Herrera, and Hector Aleman) were to 
receive $150,000 each.  The rest were to receive smaller 
amounts.  That piece of paper is the only concrete evidence 
turned up by CEMIS investigators directly indicating who was 
paid off, and it is unclear at best. 
 
6. (U) Following the Public Ministry investigation, in 
September 2003, the Supreme Court voted 6-3 to close and 
nullify the Public Ministry's investigation.  CEMIS 
construction never got under way.  In her March 3 petition to 
the Court, AG Gomez requested that the Court hold separate 
investigations of the CEMIS and Supreme Court cases which her 
predecessor, Jose Antonio Sossa, had ordered joined. 
 
Why CEMIS? 
---------- 
7. (SBU) On November 15, 2004 Article 155 of Panama's 
constitution was amended to permit the Supreme Court to 
investigate legislators while they remain active in the 
National Assembly.  The demise of legislative immunity became 
the legal rallying ground for public officials and civil 
society organizations demanding that AG Gomez formally 
request the re-opening of the cases. 
 
8. (C) Two heavy hitters in the private sector-- the powerful 
Motta family and Hutchinson Whampoa/Panama Ports -- are 
pushing to re-open CEMIS but for different reasons, according 
to Embassy sources.  The Motta family, holders of one of the 
largest investment enterprises in the Colon Free Zone (CFZ), 
want the case settled so they can buy part or all of CEMIS 
from San Lorenzo and get the project restarted.  The Mottas, 
along with their U.S. partners in the Manzanillo 
International Terminal port facility, are already 
constructing a new "logistics park" on land adjacent to San 
Lorenzo's property.  Panama Ports Company (PPC) wants CEMIS 
separated from the case against Spadafora and Cigarruista as 
political payback against Justice Spadafora, who according to 
Palace insiders wrote an opinion declaring PPC's 
multi-decade, multi-billion-dollar tax exoneration 
unconstitutional.  (Note:  PPC administers the Cristobal and 
Balboa ports.  The Moscoso administration, specifically 
former Minister of Commerce Joaquin Jacome, granted PPC an 
exoneration from paying $30 million a year in taxes for the 
next 45 years.  Current Minister of Commerce Alejandro Ferrer 
asked the Supreme Court to strike down the exoneration upon 
entering office.  A decision is pending.  Rumors abound of 
huge PPC bribes paid to Moscoso officials and to Hugo 
Torrijos, the president's cousin.  Hugo Torrijos, known 
popularly as "Mr. Ten Percent," has been implicated in at 
least two major bribery scandals relating to abuse of his 
former position as Director of the Maritime Authority of 
Panama (AMP).  End Note.) 
 
Torrijos Is Silent on CEMIS 
--------------------------- 
9. (C) Well-placed PRD sources informed Embassy personnel 
that President Torrijos had allegedly asked his private 
attorneys for advice on how to keep CEMIS closed.  Senior 
Solidarity party legislator Leopoldo Benedetti, who said he 
"knows for a fact" that Torrijos accepted a large CEMIS bribe 
while he was head of the PRD, told PolOffs recently that he 
believes that the president would block any actual 
investigation into CEMIS.  On the other hand, Panamanian Bar 
Association president Carlos Vasquez told PolOff that no 
clear evidence exists to implicate any senior GOP officials. 
Vasquez added that the government's handling of CEMIS would 
be a defining moment for its leadership. 
 
Comment: 
-------- 
 
Politik-ing the Court 
--------------------- 
10. (C) No one in Panama is clear on where CEMIS will wind up 
or even why the GOP asked the Court to rule on the case when 
it seems incapable of rendering impartial justice.  The 
pending Supreme Court decision on whether to re-open the 
investigations into CEMIS and the buying of votes for 
magistrates of the Court comes in the midst of public demands 
for the dismissal of all nine justices.  (See Reftel.)  The 
reemergence of the two corruption scandals has only sharpened 
the overlapping and conflicting personal interests of the 
parties involved, which presumably include present and former 
GOP officials and the justices themselves. 
 
Diminishing Support for the AG? 
------------------------------- 
11. (C) Torrijos's apolitical appointment of Gomez, who 
serves for a ten-year term and who is independent of the 
administration, undoubtedly is a key decision which he may 
come to regret.  Her active pursuit of Moscoso-era corruption 
and illicit enrichment cases such as PECC, Panama Ports, 
DuroDolares, and Fundacion Mar Del Sur comes on the heels of 
a predecessor, Antonio Sossa, who took virtually no action 
against corruption for ten years.  Gomez has had the support 
of the president, as well as that of Minister of the 
Presidency Ulbaldino Real, and Comptroller General Dani 
Kuzniecky. (Note: Kuzniecky, Gomez and Torrijos all attended 
the same private grade school.  End Note.)  Though she 
continues to act independently, Gomez's initial hesitation to 
request the re-opening of CEMIS at first created a public 
perception that she was either inexperienced or subject to 
GOP pressure.  After she willingly reversed her decision, she 
regained public support for her actions.  It is too early in 
her term to determine how Gomez will respond to GOP pressure, 
or how doggedly she will pursue cases that may be inimical to 
the GOP's interests.  We suspect that the president's support 
for Gomez is now more tenuous than before the re-opening of 
CEMIS. 
 
WATT