Government Moves to Distance Itself from Mossack Fonseca

Cracks are beginning to show in the panameñista government’s so-far unconditional support of Ramon Fonseca Mora, co-founder of the disgraced law firm that has been internationally accused of multiple wrong-doing, ranging from tax evasion to the financing of terrorism.

Vice President Isabel de Saint Malo de Alvarado was the latest to add her voice to the increasingly critical official commentary of the scandal that involved the law firm. In a TV interview, Ms. Saint Malo de Alvadaro, who is also Panama’s Foreign Minister, blamed law firm Mossack Fonseca for France’s decision to include Panama in her black list of tax havens. Alluding to the firm without ever explicitly mentioning its name, the Vice-President went on record stating that “it was unlikely that France would have ever included [Panama in its list of tax havens] had it not been because of the international scandal caused by a Panamanian law firm”.  Questioned on the offshore-companies scandal that has become known as the Panama Papers, Ms. De Saint Malo de Alvarado re-affirmed that the issue had to do with “a specific firm”, stubbornly refusing to name names. This, in spite of recognizing the untold damage caused by Mossack Fonseca to the country as a whole: “the name of our country has been dragged in the mud across the world, which is unfortunate considering that the issue of offshore finance extends to many jurisdictions beyond Panama itself”, she added. While failing to provide any details of the government future strategy in handling the Mossack Fonseca crisis, Ms. De Saint Malo refuted claims that Panama had been internationally isolated as a result of this affair: “we have received many expressions of support from other countries”, she assured, without nevertheless naming any of them. The Vice-President was also silent on the controversial issue of retaliatory measures against France that were first announced by President Varela: “I ask the Panamanian people for patience, for time to diplomacy to work. Should diplomacy fail, we will consider our position”, she equivocated.

Corrupt Lawyers

For his part, President Juan Carlos Varela, currently on an official if untimely trip to Japan, responded to local press inquiries on the obvious conflict of interest caused by the notorious links of Ramon Fonseca Mora with the upper echelons of his administration, by staunchly defending the principles of ethics and the rule of law in his government: “Those who violate the law have no place in my government”, he thundered belatedly. The President went to add that all public officials must follow strict rules of conduct, stating that barring corporate lawyers from government positions would not, in itself, “stop them from exerting influence”.  

First reactions

Economist Juan Jovane was one of the first voices reacting to the new tune the Panamanian President is singing. Though the new-found distance that the Varela government is attempting to create between itself and law firm Mossack Fonseca is welcome, in his view it comes too late in the day. “Panama should have cordoned-off Mossack Fonseca from day one, in an effort to protect the reputation of its financial centre: instead, the government, from the President down, spent days professing statements of support in favor of [Ramón Fonseca y Jürgen Mossack]”. Referring to an earlier IMF warning on the massive creation of opaque offshore companies in 2012, which “Panama had chosen to ignore”, Mr Jovane went on to add that “politicians should steer clear of those citizens that have been singled out for supposedly engaging in illicit activities”.

While recognizing that the change of tune in the President and Vice-President’s discourse was welcome, he lamented that “when politicians act too late, as in this case, changing the very first impressions they have given becomes an uphill struggle. Panama has been internationally damaged as a result of the government initial response”, he concluded.

A possible reason behind the change of tack on the part of the Varela government may be down to pressures emanating from other players, such as the financial sector constituency, according to Mario Rognoni, a political analyst. “I expect that President Varela will be gradually forced to change his tune and distance his government from law firm Mossack Fonseca, in an effort to limit the damage to the country’s financial system”. He went on to add that the country and the government’s image “can only benefit from distancing themselves from Ramon Fonseca Mora”.