In less than a week, the government has gone from threatening language involving supposed retaliatory measures against France in relation to the scandal linked to law firm Mossack & Fonseca; to announcing a more conciliatory approach via international diplomacy with the Gallic country as well as the OECD.
In his latest declarations, President Juan Carlos Varela stated that “a direct confrontation between the two countries because of a fiscal spat is not the correct approach: we would rather to go down the diplomatic route, trying to solve our differences through dialogue and cooperation first and foremost, until all possibilities have been exhausted”.
Unfortunately, however, diplomacy has so far yielded precious little results for Panama.Last Friday morning, President Juan Carlos Varela held a telephone conversation with French President Francois Hollande, during which the latter informed him officially that France had, once again, included Panama in its own list of non-compliant tax havens. In addition, the French executive has formally urged the OECD to take similar measures against Panama.
In the face of such damaging news, President Varela’s only response to his French counterpart was a meagre, feeble statement that such measures were “misguided and unnecessary”.
The Panamanian executive has announced that on Tuesday this week that Dulcidio De La Guardia, Economics and Finance Minister, will hold a meeting with his counterpart, Michel Sapin, in Paris, France. For her part, Isabel de Saint Malo, Panama’s Vice-President and Foreign Minister, has been charged with following up with the OECD’s own Global Forum for Transparency and Exchange of Information for Tax Purposes, to reiterate her government’s readiness to find solutions to the current situation.
In addition, the Panamanian executive has announced that it will convene a committee of national and international experts to assess existing fiscal practices, although no further details have been disclosed on either its composition or timeline.
In the middle of this diplomatic storm, precious little has been heard about the role played by Pilar Arosemena de Alemán, the current Panamanian ambassador to France and sister-in-law of Álvaro Alemán, Minister of the Presidency. Her designation to the high-profile diplomatic post was severely criticized at the time of its announcement, and not even for alleged nepotism. According to international relations expert, Euclides Tapia, “every government of the day will argue that candidates for diplomatic posts are chosen on merit, though ultimately their appointment boils down to a presidential decision, at least from a constitutional point of view”. Arturo Vallarino, former ambassador at the Organization of American States (OAS), goes as far as to argue that, given the gravity of the current debacle, one cannot expect much of any single ambassador. “Their job is that of mere messengers”: once a conflict arises, it is down to ministers themselves to tackle it.
Certainly, the Panamanian diplomatic service and most of their key figures have been notable for their absence from the public arena so far. Indeed, only Deputy Foreign Minister, Luis Miguel Hincapié seems to have taken a leading role in dealing with this crisis, along with Gian Castillero, economic advisor to the Presidency, and Dulcidio De La Guardia, Economics and Finance Minister.
Concerns linger, however, over the government handling of this whole affair. Beyond the diplomatic efforts that have been publically announced, there are fears that the executive is in fact trying to avoid tackling the issue head-on. According to political scientist Richard Morales, the government has first and foremost to determine what irregularities, if any, took place at Mossack & Fonseca, drawing a clear line between the interests of an individual law firm and those of the country as a
whole. “Panama should have been seen to condemn without reservation this web of corruption and should have acted emphatically against the slightest hint of criminal activities relating to money laundering”, he argued. He went to add that the problem here seems to be that the government’s main players have personal and economic links with Mossack & Fonseca as well as other law firms specializing in the very business activities that are today under international scrutiny. As a result of this blatant conflict of interests, “far from helping restore the reputation of the country, government officials are in fact contributing to sinking the image of Panama to lower and lower depths by the day”.
In an article published earlier in the week, Panamá América revealed the extent of this problem: Messrs. Hincapié y De La Guardia sail from Panama’s largest law firm, Morgan & Morgan; Mr. Castillero has links with Arias Fábrega & Fábrega and Mr. Aleman with Icaza, González-Ruiz &Alemán. Not unlike Mossack & Fonseca, all the above-mentioned firms specialize in the business of incorporating offshore companies.
Former ambassador Arturo Vallarino also voiced his unease in relation to the apparent lack of an in-depth investigation about what precisely went on at Mossack & Fonseca: “it is imperative that we understand the actual extent of the problem at this law firm, regardless of whether irregularities took place in Panama or overseas. Without having a clear grasp of the facts through a thorough investigation, we cannot expect much in the way of tangible results from the trip that our Economics and Finance Minister will take to Paris this coming week.”
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