Revocación: Winston Spadafora

C O N F I D E N T I A L SECTION 01 OF 06 PANAMA 001553



SIPDIS



DEPARTMENT FOR WHA/CEN



E.O. 12958: DECL: 07/25/2025

TAGS: PREL, PGOV, PM, POL CHIEF

SUBJECT: (C) VISAS DONKEY: CORRUPTION 212(F) VISA

REVOCATION: WINSTON SPADAFORA



REF: A. 04 PANAMA 1274

B. 03 PANAMA 3294

C. 04 PANAMA 0823

D. PANAMA 0629

E. PANAMA 0778



Classified By: AMBASSADOR LINDA WATT FOR REASONS 1.4 (B) AND (D).



Action Request

---------------

1. (C) Embassy Panama is seeking a security advisory opinion

under section 212(f) of the Immigration and Naturalization

Act in accordance with Presidential Proclamation 7750,

suspending entry into the United States and revoking the visa

of Winston Spadafora (DPOB: 22 DEC 1941; Panama). Embassy

information indicates that during his ongoing tenure as a

Supreme Court Justice, Spadafora has directly benefited from

public corruption, specifically bribery, which has had and

continues to have a direct and serious adverse effect on U.S.

national interests, as defined narrowly and broadly. End

Action Request.



Who Is Winston Spadafora?

-------------------------

2. (C) Widely rumored to be Moscoso's lover, Winston

Spadafora ran Mireya Moscoso's successful 1999 presidential

campaign. He then served as Minister of Government and

Justice until Moscoso named him to the Supreme Court in 2001.

The Legislative Assembly by a single vote confirmed him and

fellow Supreme Court magistrate Alberto Cigarruista on

January 9, 2002 in a proceeding marred by egg throwing and

accusations against President Moscoso for allegedly bribing

legislators. Spadafora entered politics following the brutal

torture and murder of his brother, Hugo Spadafora, in 1985 at

the hands of Manuel Noriega's Panama Defense Forces. The

murder marked a turning point for the dictatorship's

fortunes. Spadafora worked unceasingly to publicize

Noriega's involvement in his brother Hugo's murder, meeting

frequently with U.S. congressional staff, and even going on

an extended hunger strike. Blacklisted by Noriega, Spadafora

was forced to close his law practice for lack of business.

Not surprisingly, the experience left Spadafora a rabid

opponent of the Democratic Revolutionary Party or PRD, which

at that time was the party of the dictators.



What Did Winston Spadafora do?

------------------------------

3. (C) Embassy possesses credible and compelling information

indicating that during his 2002-2005 tenure as a Panamanian

Supreme Court Justice (magistrado), Spadafora has willfully

participated in and personally gained from an established

system of bribery in which payoffs are actively solicited or

accepted from claimants with cases before the high court. In

some cases he actively solicited and accepted bribes on his

own. Spadafora is hardly alone. He is part of a group of

seven justices on the nine-member Court, who routinely accept

bribes and issue legal decisions contrary to reason. He

epitomizes everything that is wrong on the Court, where

unbridled venality and a culture of entitlement to ill-gotten

riches continue to reach new depths. (Note: Embassy may seek

security advisory opinions for several more Court magistrates

of varying political stripes. End note.)



Panama's Justice Problem

------------------------

4. (C) The Supreme Court's corruption, exemplified by

Winston Spadafora, is a fundamental cause for the Panamanian

public's lack of confidence in the rule of law. The

politicized judiciary stands at the axis of a dangerously

delegitimized political system. Increasing public disgust

and cynicism about the system are fueled by accurate

perceptions of official impunity, a culture of shameless

entitlement, and growing indices of poverty and income

disparity. The Court's actions and the attitudes they breed

directly undermine Panama's democratic institutions. The

Supreme Court is the final arbiter of disputes relating to

interpretation of the law and must rule on issues relating

directly to Panama's constitution. To the extent that

justices base their decisions on personal enrichment instead

of applicable law, they undermine not only the Court, but the

legislative branch which enacts the laws and the executive

branch which enforces them.



How Judicial Corruption Affects U.S. Interests

--------------------------------------------- -

5. (C) Panama's politicized, corrupt Supreme Court damages

U.S. interests in two ways: narrowly, through corrupt Court

actions that negatively affect specific U.S. policy

objectives; and broadly, by undermining respect for the rule

of law, taxing an already impoverished polity, and corroding

the bases of popular support for democracy. Both are serious

impositions on U.S. interests, though the broad effect is the

more dangerous one over time, as poor, cynical voters may

turn for relief to anti-democratic populist demagogues, a la

Venezuela's Hugo Chavez. More concretely, the Embassy's

principal Mission Program Plan objectives include

anti-corruption and increasing transparency in government.

The actions of the Court have thwarted both objectives and,

in the process, frustrated a sizable USAID program (see Para

12). The Embassy's Narcotics Affairs Section also is a major

contributor to improving judicial processes, in particular

with its "Culture of Lawfulness" program.



The Corrupt Court and the Torrijos Government

---------------------------------------------

6. (C) How to reform Panama's judicial system is a conundrum

for President Martin Torrijos. Torrijos, who was elected in

2004 on a "zero corruption" pledge, has not yet found a

method of legally attacking the corrupt justices and forcing

Panama's dysfunctional judicial system to take action against

the obviously corrupt figures from the previous

administration. In February 2005, after public name-calling

among Magistrates unloosed a public outcry for Torrijos to

fire them all, the president appointed a commission to

investigate judicial reform. That commission will make its

findings known in August 2005. (See PANAMA 0629, "PANAMANIAN

SUPREME COURT FRACAS BLURS GOVERNMENT FOCUS ON SOCIAL

SECURITY REFORM," Reftel D.) Embassy believes that revoking

Spadafora's visa will give a big fillip to Torrijos's resolve

to "do something" about the Court.



Shameless Cases, Senseless Decisions

------------------------------------

7. (C) Panama's Napoleonic-law-based legal code requires the

Supreme Court to adjudicate every case brought before it.

Thus, virtually every important Panamanian legal case, quite

regardless of merit, eventually winds up before the Court.

And anything can become a legal case. (See Para 12.) Must

the former President's sister account for $8.5 million in

public funds donated by Taiwan? Must the former President

produce receipts and vouchers to show how she disposed of $25

million in "discretional" spending? Is a company under

investigation for fraudulently obtaining government subsidies

entitled to "damages" because of the investigation? Can a

known drug trafficker be investigated and tried in Panama?

Is a Panamanian-flagged ship illegally carrying arms to

Colombian guerrillas and bearing falsified Panamanian police

documents a proper subject for investigation? Does a

developer (and close associate of Spadafora's) have to pay

$2.1 million back taxes to the authority that administers the

reverted areas in the former Canal Zone? All these and more

are standard fare for the Court, which always seems to come

out on the wrong side of justice, contrary to the dictates of

reason, with Magistrate Spadafora in the lead.



Running the Court as a Racket

-----------------------------

8. (C) The Court sets the tone for society which has grown

ever more cynical by the Court's own example, and that tone

can be summed up as, "Everyone lies, cheats, and steals and

no one is punished, so why shouldn't we?" Crudely put, the

Justices run the Court as a racket. Panama's Supreme Court

magistrates decide cases based on a careful calculation of

political or financial benefits, to themselves, their

friends, and their political patrons. They run the Court as

a money-making venture, without regard for the law, the needs

of the country, or the public good. Very often, the arcane

legalisms and arguments that are the Court's stock-in-trade

make it very difficult for the average person to follow what

is going on and act shields the magistrates from public

scrutiny. Nonetheless, people assume that venality rules at

the Court and they are right.



For Sale to the Highest Bidder

------------------------------

9. (C) A well-placed, reliable source recently detailed for

EmbOff the path of a typical Supreme Court case in Panama.

He explained that in virtually every case brought before the

high court, Justices openly discuss among themselves the size

of the payments they expect and exactly how each Justice will

rule. The Justices decide cases based on each party's

perceived ability to pay. They then negotiate the price of

their votes with the attorney from the designated "winning"

party. They even prepare well-argued dissenting opinions to

elicit money from the losing clients and attorneys, who pay

to maintain good relations with the Court in the future.

Legal arguments are irrelevant. Precedents are used

arbitrarily, if they fit the Court's needs of the moment.

"There is no such thing as a successful trial attorney in

Panama," the source said. Everything depends on money. (See

04 PANAMA 1274, "SOMETHING'S ROTTEN IN PANAMA'S SUPREME

COURT," Reftel A.)



Follow the Money

----------------

10. (C) The Magistrates ask those who come before the Court

"What ruling do you want? What do you want us to do? And

how much are you prepared to pay?" After decisions are set,

negotiations begin between the Justices and parties to the

case. Once the bribe money is agreed upon, the Justices

split it evenly, including those who lodge dissenting

opinions. Settlements often are six figures and up. The

source noted that even attorneys who believe they have an

iron-clad case are willing to pay off the magistrates to

build "good will" for future cases. (Comment: Magistrate

Adan Arjona, whose personal relations with the other

magistrates are bad, verging on openly hostile, appears not

to participate in this graft. His frequent lone, dissenting

vote is an indication of his probity. End Comment.)



Institutionalized Conflict of Interest

--------------------------------------

11. (C) The orchestrated logistics of the Court's purchased

decisions are chillingly crass. Many of the Justices'

alternates (Suplentes) work for and receive salaries from

both the high court and influential Panamanian law firms

pleading cases before the Court. They are the nexus between

the Supreme Court and prosecution and defense attorneys.

(Comment: "Conflict of interest" does not exist as a concept

in Panamanian political culture, including the courts.

Politicians and Supreme Court magistrates routinely use

public office for private gain. The heart of the Supreme

Court's business, in other words, is routine,

institutionalized conflict of interest. End Comment.)



Thumbnails of the Court's Misdeeds and Spadafora's Role

--------------------------------------------- ----------

12. (C) The Court's already notorious judicial behavior

seemed to decline even further during the nine-month tenure

of Cesar Pereira Burgos as Chief Justice, and continued after

his October 2004 ouster (having passed the retirement age of

75 for public officials).



During 2004-2005, Panama's Supreme Court has



-twice ordered restitution of a controversial government

contract and freeing of assets blocked by Comptroller Alvin

Weeden, concerning the Ports Engineering Consulting

Corporation (PECC) scandal (see Reftel B). (Spadafora voted

with the dissenters on 6/11/2004 in the 6-3 vote, apparently

to protect his good friend Weeden, who had gone after former

president Ernesto Perez Balladares and Martin Torrijos's

cousin, Hugo Torrijos.)



-quashed an investigation (9/17/2003) of several legislators

who allegedly took bribes to approve the controversial CEMIS

case, even after one legislator admitted taking a bribe on

television. (Spadafora voted with the 6-3 majority. Arjona

dissented. See Para 16.)



-in separate cases, threw out well substantiated charges

against an Israeli arms trafficker on 3/30/2004 (see Para 13

below), and a Colombian narcotrafficker on 4/30/2004 (see

Para 14 below), and freed them both. (In both cases,

Spadafora voted with the 8-1 majority and Arjona dissented.)



-thumbed its nose in (late May 2004) at $170,000 in FY2004

USAID funds to improve judicial transparency by pulling the

plug on instant internet publication of Court decisions, an

Arjona initiative. (This decision involve a ruling by chief

justice Pereira Burgos, not a formal Court vote. According

to a Court insider and Embassy confidant, Chief Justice

Pereira and Spadafora in particular were "very interested" in

keeping the Court's activities and decisions as much out of

the public eye as possible.)



-blocked an investigation and public disclosure (5/11/2005)

of how former presidents Moscoso and Perez Balladares each

spent $25-million-plus in "discretional" funds. (Spadafora

was not involved in this provisional decision. Arjona was

the lone dissenter.)



-blocked an audit (2/28/2004) into the use of $12 million in

funds donated by Taiwan, purportedly to build Museo del Tucan

and a public hospital, because the funds were deposited in

Mar del Sur, a private foundation controlled by former

president Moscoso's sister, Ruby Moscoso. (Spadafora voted

with the 8-1 majority. Arjona was the lone dissenter.)



-blocked an order (6/22/2005) from a state finance bureau

requiring the Figali Convention Center to pay $2.1 million in

back taxes. (Spadafora voted with Magistrate Hoyos in this

2-1 provisional decision. Arjona dissented. Jean Figali is

a close friend and business associate of Spadafora. See Para

19 below.)



-blocked an ongoing investigation (6/24/2005) at Pana

Habanos, a Panamanian cigar company under suspicion for

fraudulently collecting $2.3 million in state subsidies, and

ordered the state to pay hundreds of thousands of dollars in

damages. (Spadafora again voted with Magistrate Hoyos in

this 2-1 decision. Arjona dissented. See Para 20.)



Yelenik-Otterloo -- Insufficient evidence?

------------------------------------------

13. (C) The Yelenik-Otterloo case (See 04 PANAMA 0823,

"PANAMANIAN SUPREME COURT THROWS OUT CHARGES AGAINST ISRAELI

ARMS SMUGGLER," Reftel C) involved a group of alleged

conspirators, led by Israeli citizen Shimon Yelenik, who used

a Panamanian-flagged vessel (the Otterloo) to smuggle arms

(among them 5000 AK-47s and 2.5 million rounds of ammunition)

from Nicaragua to Colombia, for use by the Colombian AUC

Paramilitary Forces (Autodefensas Unidas de Colombia).

Investigators of the Organization of American States (OAS)

determined that Shimon Yelenik had fraudulently claimed to

represent the Panamanian government in making the arms

purchase and had used forged Panamanian National Police

purchase orders to arrange the sale. The Otterloo filed

documents claiming its destination was Panama, though in fact

its true destination was Turbo, Colombia. Panama's Supreme

Court Justices found the evidence did not link the case

"sufficiently" to Panama and ruled they had no jurisdiction.

They ordered Yelenik, who at that time was incarcerated in

Panama, to be released immediately.



What About Henao Montoya?

-------------------------

14. (C) Reminiscent of Yelenik, the Court more recently

ruled (date) that Panamanian prosecutors had not presented

sufficient evidence to continue to hold known drug trafficker

and money launderer Lorena Henao Montoya. They ordered her

immediate release. La Prensa reported the ruling in an

article titled "Another Ruling to Remember" that begins,

"While the Supreme Court of Justice frees presumed

narcotraffickers in Panama, in Colombia they put them behind

bars." (Note: Colombian authorities arrested Lorena Henao

Montoya immediately upon her arrival in Bogota. She is the

sister of convicted drug dealer Jesus Arcangel Henao Montoya,

who was remanded to USG custody in DATE after residing for

several months in Panama under an assumed identity. Arrested

in Panama in January 2004, she also was the wife of Ivan

Urdinola Grajales, who headed the Colombian Valle Norte drug

cartel until his murder in prison in 2002. Lorena later

married Urdinola's bodyguard; both were suspected to be

complicit in Urdinola's murder. End note.)



28 Volumes of Evidence Were Not Enough

--------------------------------------

15. (C) Supreme Court Magistrate Adan Arjona (protect), the

Court's outspoken reformer and one of only two justices not

in the Embassy's 212(f) cross hairs, gave AID Director and

POL Counselor a copy of his dissenting opinion in the Henao

Montoya case. Arjona's dissent notes that the arrest order

contained 28 volumes of evidence and alleged that Lorena

Henao Montoya used her driver's name to register her illicit

property in Panama. Investigators presented evidence that

allegedly identifies her as "the true leader of a

macro-criminal apparatus." Arjona said that the Court's

ruling on Lorena Henao Montoya and similar cases have had an

extremely demoralizing effect on dedicated government

prosecutors. (Note: The other justice who has not attracted

negative attention from the Embassy is Esmeralda Arosemena de

Troitino, whom President Torrijos appointed in September 2004

to finish out the term of then-Chief Justice Pereira Burgos.

End note.)



A Good Month For Bribes

-----------------------

16. (SBU) Spadafora's role in the CEMIS corruption case has

linked his name inextricably with a scandal that probably has

evoked the most public revulsion in Panama's history. CEMIS

-- an ambitious, $400 million air, land, and sea

infrastructure project, to be built on reverted land near

Colon -- was approved by the Assembly on December 29, 2002.

In highly contentious, controversial votes on January 9, the

Assembly confirmed Winston Spadafora and Alberto Cigarruista.

Then-President Mireya Moscoso allegedly bribed several PRD

legislators in the PRD-controlled Assembly, one of them

Carlos Afu, to ensure the confirmations. The new justices

took the oath of office on January 12, and Moscoso signed the

CEMIS bill on January 15. On January 14, 2002, PRD

legislator Balbina Herrera (now Minister of Housing) publicly

denounced Afu for taking a bribe to vote for Spadafora and

Cigarruista. On January 16, 2002, Afu appeared on TV waving

a large wad of cash, claiming it was a $6,000 down-payment on

a $20,000 bribe to vote for CEMIS and crowing that he was not

the only PRD legislator whose vote had been bought. (Note:

During 1/16/2002 news conference, Afu kept his mouth shut

about any Spadafora/Cigarruista bribes. Afu got away with

bucking the PRD on the Spadafora/Cigarruista and CEMIS votes,

kept his seat in the Assembly, never was prosecuted, and

finally won reelection as an Arnulfista (Panamenista) in the

2004 election. The CEMIS bribes allegedly came from the

privately owned San Lorenzo Consortium. See PANAMA 0778,

"PANAMA ATTORNEY GENERAL TESTS TORRIJOS ADMINISTRATION,

REOPENS CEMIS AND SUPREME COURT BRIBERY CASES." See Reftel

E. End note.)

CEMIS And Spadafora

-------------------

17. (C) Following Afu's widely viewed TV escapade, the

Public Ministry mounted an investigation into CEMIS for its

allegedly corrupt practices, which CEMIS challenged before

the Supreme Court. The Embassy has developed specific and

credible information of a substantial payoff made to

Spadafora for a favorable ruling in the CEMIS case.

According to Embassy information, Spadafora, though his

agent, solicited a bribe of $500,000 to rule in the

claimant's favor. The claimant eventually was successful in

negotiating the payoff amount down to $250,000. After the

payoff, the case was decided in the claimant's favor.

Following a Public Ministry investigation, in September 2003,

with Spadafora voting with the majority, the Supreme Court

voted 6-3 to close and nullify the Public Ministry's

investigation. CEMIS construction never got under way.



Spadafora Shakes Down a Banker

------------------------------

18. (C) A Panamanian banker recently told POL Counselor the

following story that implicates Spadafora in what essentially

was a shakedown. A year or two ago a Panamanian company

stopped making payments on a six-figure loan to his bank,

only several months after the loan was made. The banker

moved swiftly to seize the firm's major new equipment assets,

which the firm had bought with the loan, as was his right

under the terms of the loan. The firm's partners protested

the seizure and threatened to sue. The banker then received

a visit from one of the attorneys regularly associated with

the Supreme Court. The attorney said, "We think you'll have

to settle for 30%." "Why should I settle for 30%?" the

banker countered. The lawyer then made a call on his cell

phone. "Winnie," he said, "can you fax over that decision

(fallo)?" (The banker confirmed that the lawyer was talking

to Winston Spadafora.) The case had not actually reached the

Supreme Court yet, the banker explained to POL Counselor, but

Spadafora had written a decision in advance, with the

expectation of spurring a speedy out-of-court settlement and

pay-off. The "decision" finding in favor of the plaintiffs

arrived by fax and the banker read it. The banker said he

had no choice but to settle out of court for 30% of the

principal. He assumed some portion of the remaining 70% was

split between Spadafora and the attorney.



Figali Convention Center

-----------------------

19. (C) The Moscoso administration awarded a development

permit to Jean Figali under terms that critics called overly

generous. The result was the Figali Convention Center on the

Amador causeway outside of Panama City and within the

"reverted areas" under the jurisdiction of the Interoceanic

Region Administration (ARI). An Embassy contact told EmbOff

that in return for a "favor" Spadafora had done for him at

ARI, Figali had paid part of the costs of Spadafora's luxury

apartment. Figali by 2005 was in arrears to the tune of $2.1

million in back taxes owed to ARI. Spadafora's Court

decision suspended Figali's payments.



Pana Habanos

------------

20. (C) Pana Habanos collected $2.3 million in export

subsidies based on what the Comptroller General claimed were

inflated cigar export figures. The amount of subsidy due to

the firm based on what the Comptroller determined to be the

firm's actual level of exports should have been $472,000.

Thus the firm owed the state something over $1.8 million,

exclusive of damages and a criminal fraud prosecution. But

in the world of Panama's Supreme Court the ordinary laws of

physics don't always apply. Spadafora's Court decision

reversed logic and found that the state had falsely accused

Pana Habanos and owed it an unspecified amount of damages.



Why Proclamation 7750 applies

-----------------------------

21. (C) Through sustained action that represents serious

adverse effects on the national interests of the United

States and severely undermines the democratic institutions of

Panama, Winston Spadafora knowingly chose to abuse his

position in Panama's highest court for his own personal

enrichment. Spadafora represents much of what is wrong with

Panamanian politics and exemplifies the overwhelming

difficulty the GOP faces in enacting meaningful judicial

reform. If corruption is rampant and unpunished at the

highest levels of the its judicial system, Panama has little

hope of success in confronting entrenched corruption

elsewhere in government and the business community.



Current Visa/Travel Plans

-------------------------

22. (SBU) Spadafora has not been informed that he may be

covered by Presidential Proclamation 7750, under section

212(f) of the INA. Spadafora currently has a valid B1/B2

visa that will expire on 18-DEC-2005. Embassy is not aware

of any specific or immediate travel plans.



Embassy Recommendation

----------------------

23. (C) Based on the facts of the case, Embassy recommends

that Spadafora's visa be revoked, that he not/not be

permitted to travel to the U.S., and that no waiver be

granted should he apply for one.



24. (SBU) If Department authorizes visa revocation, Embassy

plans to confirm the statutory grounds for revocation and the

fact that it occurred if consulted by the press.



WATT