Corruption: It's always a social program, isn't it?

Allegations of corruption plagued Ricardo Martinelli's term as president of Panama. One of President Juan Carlos Varela's first priorities upon taking office last year was to investigate any irregularities that had occurred under his predecessor. On Wednesday, in a unanimous vote, Panama's Supreme Court voted to appoint a special prosecutor to launch a corruption investigation into the former president.

While there have been several allegations over the years, including kickbacks from an Italian military contractor involving Martinelli's family, the special prosecutor in this case only seems to be charged with investigating kickbacks from a government social program, the National Assistance Program. Why a billionaire would need to skim a few million dollars from government coffers is beyond me.

Two former heads of the program, Rafael Guardia and Giacomo Tamburelli, have implicated Martinelli in the scheme to inflate government contracts. Martinelli, meanwhile, is in Guatemala right now where he is attending a meeting of PARLACEN.

It's always a social program, isn't it?

Panamanian Supreme Court justice suspended

Like every other recent administration in Central America, there were a number of allegations of corruption and abuse of power during Ricardo Martinelli's presidency - infrastructure spending kickbacks and court packing to name two.

Well, there's some movement in Panama right now to hold one Supreme Court Justice accountable for some unexplained wealth accrued during the last few years.

Alejandro Moncada has for weeks been battling accusations he profited from his ties to the former conservative leader after documents emerged showing he paid mostly in cash for two luxury apartments valued at over $1.7 million. Such properties are seemingly incompatible with Moncada's $120,000 a year salary and don't show up in a sworn affidavit delivered shortly before joining the bench in 2010 in which he declared a 4x4 truck and an expensive watch as his only assets.

As part of the ruling by lawmakers leading an impeachment probe, Moncada's assets were temporarily frozen. He was also ordered to turn over his passport and remain confined to his residence.

Moncada denies any wrongdoing and said he's the victim of a campaign by Martinelli's political foe and successor, President Juan Carlos Varela, to reshape the nine-member high court.

They are looking for revenge because I did not let them put an inmate in this place...whom they wanted to assassinate

Prensa Libre

Guatemalan authorities, with the help of the International Commission Against Impunity in Guatemala (CICIG) arrested, Byron Lima Oliva, an army captain serving time for the murder of Bishop Juan Gerardi, and Edgar Camargo, director of the Guatemalan Penitentiary System. Camargo was arrested on charges of conspiracy, bribery and conspiracy to launder money. Twelve other individuals were also implicated in the organized crime racket, although it is not clear if they were all arrested.

Lima, on the other hand, is the big catch.

Prosecutors said Wednesday that Byron Lima Oliva took money from other inmates in return for favors such as prohibited cellphones and appliances, as well as special food and conjugal visits.

"Lima represents for many of the inmates the true authority, and so they turn to him to seek transfers, favors and rights. Lima Oliva exerts undoubtable influence in the penitentiary system," Ivan Velasquez, head of the U.N. International Commission Against Impunity in Guatemala told reporters.

CICIG's Ivan Velasquez, Attorney General Thelma Aldana and Interior Secretary Mauricio Lopez Bonilla announced that the investigation was launched last year. If you remember, Lima was apprehended last February while going to the dentist. He seemed to have been able to come and go from the prison whenever he desired. Perhaps, he was traveling in his Porsche, Jaguar or armored Land Rover to one of the many properties he acquired while in prison? Maybe even his beach property which Lima says that Lopez Bonilla has visited.

How did Lima respond to the charges?

Reached by phone, Lima denied the allegations and said he is the target of a vendetta by government officials because he prevented extortion and other crimes in the prison.

"They are looking for revenge because I did not let them put an inmate in this place ... whom they wanted to assassinate," Lima told The Associated Press.

The possible fallout?

Lima, 44, has boasted in the past of having a friendship with current President Otto Perez Molina, also a former soldier, and says he had campaign T-shirts printed for the 2011 election. On Wednesday, he said he also provided the campaign with money from businessmen, delivered through Lopez Bonilla.

The president's office declined to comment Wednesday.

When Lima was taken into custody last February, he and his entourage were traveling in vehicles used by the Patriotic Party during their 2011 campaign.

If Byron Lima built this empire over the last fifteen years, as has been alleged, there are hundreds of people, perhaps more, complicit in this single case.

(Yahoo, Fox News Latino, ABC News, The Globe and Mail / AP)

Corruption in the Northern Triangle: The siren song of crime

Ivan Briscoe has a new report on Corruption in the Northern Triangle: The siren song of crime.

More than ever, it seems clear where Central America’s people and government should direct their efforts: to controlling money laundering, stiffening the autonomy of oversight bodies, bringing development to border regions, and eliminating graft from security forces and judiciaries. But in democracies where money and fear are important sources of mobilization, achieving public backing for these policies requires making lucid, tangible connections between progress in combating civil insecurity and improvements to the integrity of the state. It is this virtuous cycle that is needed to replace the current vicious cycle of emergency, militarization and crime, and the siren song of the ice-cream bell.

It is the third installment on a three part series for The Broker. Pien  Metaal and Liza ten Velde produced Drugs and violence in the Northern Triangle: Two sides of the same coin? while Wim Savenije and Chris van der Borgh wrote Anti-gang policies and gang responses in the Northern Triangle: The evolution of the gang phenomenon in Central America.

You can also check out Bastiaan Engelhard's Preventing crime and violence is better than fighting it.

Happy Labor Day!

Portillo and Flores probably not only Central American heads of state to have received kickbacks from Taiwan

Boz and I spoke with Jan-Albert Hootsen for his recent story on China and Taiwan’s Secret Battle for Central America.

Flores is one of a number of Central American officials and former heads of state who have recently been accused of getting kickbacks from Taiwan roughly a decade ago. Analysts say the money is part of a silent diplomatic tug-of-war between the island and mainland China over Central America, where both countries are fighting over natural resources and Taiwan’s status as an independent country.

China and Taiwan have been playing out their differences in Central America for quite awhile. During the Cold War, military officers from the region (at least Guatemala) traveled to Taiwan for training. It seems as if guerrillas traveled to communist China but it's not exactly clear what the received from them other than a nice tour. Taiwan gave its support for the region's peace processes in the 1990s with economic assistance. They've been going at it ever since.

But analysts say the battle for Central America is far from over. Some think China is now throwing enormous sums of money into Central America to eventually buy loyalty away from Taiwan without actually violating the truce. And in the long run, there’s no way the island neighbor can compete with its larger and wealthier neighbor.

That could spell major trouble for the island if the current truce with China fails. Which is why even though the Portillo and Flores bribes allegedly happened roughly decade ago, some analysts think Taiwan may still be playing dirty. As Mike Allison, a professor of political science at the University of Scranton, says: “[Portillo and Flores] are probably not the only heads of state in Central America to have received kickbacks from Taiwan or simply pocketed donations meant for their citizens.”

There have been several scandals involving misappropriated money from Taiwan, including Costa Rica and several Caribbean countries, over the last decade-plus. I'm not sure that the competition has increased. I'm more comfortable saying that it has just been going on under the radar.

And some people thought this was going away after the elections

According to the BBC, more troubling information is coming to light against former president of El Salvador, ARENA's Francisco Flores.

El Salvador President Mauricio Funes has said there is new incriminating evidence against former President Florencio Flores, who is facing corruption allegations.

Mr Funes said prosecutors in Costa Rica found bank accounts in the name of Mr Flores.

The former president had denied under oath having any accounts abroad.

The government accuses Mr Flores, who governed between 1999 and 2004, of misusing funds donated by Taiwan.

Mr Flores told a congressional panel in January that he had received cheques worth $10m (£6.5m) from Taiwan during the last two years of his presidency.

But Mr Flores denied the funds were for his personal use. He said Taiwan donated the money to El Salvador.

"I would like to say that I have never deposited a cheque from Taiwan's government in any account; that is key for me, to make clear that I have never deposited a cheque from Taiwan's government in any account," Mr Flores told the congressional panel set up to trace the money.

But Mr Funes said that Costa Rica "will send the documents of the Flores case" this week.

"According to Costa Rican Attorney General [Jorge Chavarria] there are bank accounts in the name of President Flores in Costa Rica," said Mr Funes in his radio programme, Conversando con el Presidente.

Former Guatemalan President Alfonso Portillo is serving time in the US for corruption-related crimes involving cash payoffs from the government of Taiwan. Francisco Flores looks to have done the same. Given some of the statements made by Portillo and Flores, they are probably not the only heads of state in Central America to have received kickbacks from Taiwan or simply pocketed donations meant for their citizens.

If Flores is charged and convicted in El Salvador, what's the likelihood that we will see other former heads of state cut deals to avoid the same sort of criminal investigation and prosecution? Is the likelihood that they will be investigated and prosecuted still so low that they will play the odds?

Potential fallout from another ARENA corruption scandal

Boz has some thoughts on the fallout from corruption allegations against Francisco Flores in El Salvador. You might as well read all four points. The investigation into former ARENA president Flores seems to have been going on for a year or more but has really picked up steam since September. The investigation could be because of campaign season prior to the February 2nd elections (probably) or because of US pressure on the Funes government to crackdown on corruption as a condition of a second Millennium Challenge Corporation Compact. Senator Leahy and others remain disappointed with the slow pace of cleaning up El Salvador's institutions after years of ARENA governance.

Obviously the motivation could be a little or a lot of both. Or it could simply be coincidence - the investigation had been going on for some time and with information from the US, the government went public when it could. Regardless of whether the corruption allegations are true, Funes' public comments have politicized the investigation in El Salvador and might have angered some US government officials for revealing details to the public.

Francisco Flores isn't the only former president in trouble for allegedly taking a little off the top of Taiwanese donations. Former Guatemalan President Alfonso Portillo is in a US jail in part for stealing from Taiwan's multi-million dollar donation to Libraries For Peace. That's right, stealing from school children.

Murder and corruption in Panama

Over 100 police officers accused of criminal activities, including the shooting and killing of unarmed civilians, have avoided prosecution during the current government because of Law 74 (See here, here, here and here.) Human rights advocates have asked for the repeal of Law 74 which protects police from prosecution.

In the meantime, prosecutors are now awaiting a decision to move ahead with homicide trials for twenty-four National Police officers. Several of the accused are on desk duty while others are "under office arrest, similar to house arrest." None of the twenty-four officers are in jail.

Obviously I don't want to overemphasize the implications but a decision to prosecute and convict a number of the accused will go a long way to demonstrating that no one is above the law in Panama.

Panama's Corruption Perceptions Index score from Transparency International recently dropped from 38 in 2012 to 35 in 2013, tied for 102nd in the world.

According to Haley Moncrief with BNamericas

Panama's economic growth and heavy investment in infrastructure projects like its US$5.25bn Panama Canal expansion is attracting investors' attention. The country is also the fastest growing in Latin America, boasting an average annual growth rate of 8.5%, and per capita GDP has more than doubled in the last decade, according to the International Monetary Fund (IMF).

Attracting foreign capital and companies has been a main priority of the administration of President Ricardo Martinelli. Yet a daunting and worsening corruption perception could thwart the country's efforts to reel in foreign capital, and taint its growing appeal.

Some of the country's corruption woes include a lack of judicial independence, issues with transparency - particularly regarding availability of Panamanian companies' ownership information - as well as the availability of accounting information regarding entities that do not receive Panamanian-source income.

I'd say that it probably doesn't help that several of the developing corruption scandals are tied directly to the president, members of his family, his administration and his political party. It's tough to see which of the charges are going to stick but the allegations can't help the perception of corruption in Panama.

Say it ain't so - Corruption in the Saca administration?

I haven't been following the corruption scandal that closely but I wonder if Senator Leahy's threats are starting to pay off. The investigation in wrongdoing during the Saca administration, the recent arrests of members of the Texis cartel, and the possible investigation into former President Francisco Flores might have bought El Salvador some good will.

It was no secret to most Salvadorans while construction was under way on the Diego de Holguín that large sums of money were disappearing into politicians’ and businessmen’s pockets given the constant and numerous irregularities in the project: inexplicable changes in the highway’s route; sudden, lengthy pauses in construction; illegal tree-cutting; and multiple lawsuits. However, it was not until 2010 that the parameters of this elaborate corruption scheme began to be outlined in a suit submitted to the attorney general’s office by the new Minister of Public Works, Gerson Martínez. Martínez, a founder of the leftist Farabundo Martí National Liberation Front (FMLN) party, came to office under President Mauricio Funes’ administration in 2009, becoming the first non- right wing government in El Salvador’s history. .

In large part, Funes’ electoral victory can be attributed to earnest campaign promises to increase governmental transparency and on his tough-on-corruption stance. Martínez took this message to heart and ran with it upon entering office, initiating the most well documented corruption investigation in recent Salvadoran history involving some of the country’s biggest players. To date,18 people, among them former ministers, vice-ministers, government functionaries, and high-profile businessmen, have been charged in a move that illuminates just whose interests the various political parties running for office in the February 2014 elections have at heart.

Go read the whole thing. I can honestly say that many of us were expecting more investigations / arrests like these over the last four plus years.