US Government inquiry seen pressuring Panamanian PM

The US government yesterday announced that it had launched a “criminal investigation” into the Panama Papers scandal, putting the two founding partners of law firm Mossack Fonseca, Jurgen Mossack and Ramon Fonseca Mora, in its line of fire.

The US government announcement marks a sharp contrast with the delay shown by the Panamanian Public Ministry (PM), which waited over 10 days before ordering a raid of the beleaguered law firm’s Panama City offices. Additionally, the Panamanian PM has allegedly acted in such a manner as to incur in various procedural errors that have opened the door to the possibility that all evidence it has so far collected may be considered inadmissible by a court of law. The ham-fisted handling of the affair has been seen by many as yet another attempt by the PM to help out Mr. Fonseca Mora, who is a close political ally and personal friend of President Juan Carlos Varela.

President Varela himself was more than supportive of his former ministerial advisor as well as of his law firm, both of whom he publicly and emphatically defended as the global scandal broke out. Many have seen the President’s ill-judged professions of support for Mr. Fonseca Mora as a clear sign of executive meddling in the work of the PM.

Nevertheless, “the announcement that the US government has launched a criminal investigation is a game changer”, according to Neftali Jaen, a local lawyer. “We can expect a fair investigation because in the US the judiciary is truly independent of the executive branch of government”, he went on to add. Mr. Jaen expects that the US investigation will de-politicise the affair, even to the point of by-passing Kenia Porcell, the Panamanian Attorney General, who has been seen as acting less than impartially, by dealing directly with the investigating magistrate in charge, Javier Caraballo. “The US will make sure that Messrs. Mossack and Fonseca Mora face up to their responsibilities and declare as part of the investigation: if does not happen in Panama, it will surely happen internationally”, he warned.  

Quite aside from the inevitable consequences faced by the two fouding members of the disgraced law firm, now in the firing line of the most powerful judiciary on the planet, many believe that the repercussions of the scandal on the country are immesurable. According to constitutional lawyer Miguel Antionio Bernal, “yesterday’s announcement leaves the ineffectiveness of the Panamanian justice system in plain sight for all to see. It is regrettable that other countries should have to intervene in order to investigate what we should be investigating locally. This is hugely damaging to the credibility of Panama as a country”. Mr Bernal went on to criticize the handling of the scandal by the Varela government, blaming it for the “immesurable moral damage it has caused to the whole country by effectively failing to tackle alleged criminal wrong-going perpetrated on Panamanian soil.” Carlos Carrillo, also a lawyer, added his voice to those lamenting the “irreparable damage caused to the image of Panama”. While recognizing the importance of the investigation by the US government into the leaked Mossack Fonseca files, Mr Carillo nevertheless advocated that any resulting agreement on bilateral exchange of information should “respect the laws of Panama”. At this stage, however, the latter seems rather wishful thinking. According to Sidney Sitton, another local lawyer, as more government officials become embroiled in this affait as the scandal unfolds, as is likely to happen, the bargaining position of the government in any bilateral negotiations will weaken further.

Varela, in the firing line

“I am fully convinced that many well-heeld Panamanians will have to provide detailed accounts to the US government for their own actions, many of which have transcended national frontiers” Mr. Sitton went on to say. “Let us not forget that past US investigations have had direct repercussions for certain Panamanian citizens, with the case of former dictactor Manuel Antonio Noriega being the most notorious”. “To this day”, argued Sitton, “many Panamanians who enjoy double nationality are in theory obliged to declare their global income to the US IRS”, highlighting the fact that the US government is set to investigate both fiscal and criminal wrong-doing. “The Mossack Fonseca documents provide plenty of evidence of funds linked with illicit activies ranging from arms smuggling to people trafficking, from money laundering to drung trafficking”, he added. The Panamanian lawyer went on to warn that “the US government is alarmed by the high degree of corruption” surrounding   high-level officials in the Varela government: “it is clear that they [the US government] have their sight on President Varela himself, for the donations he has received from his former ministerial advisor, Ramon Fonseca Mora”.

Federal Investigation

The launch of a criminal investigation by the US government into the Mossack Fonseca scandal was announced yesterday in a letter by the Disctrict Attorney for NewYork, Preet Bharara, publidhed on the US site of British daily The Guardian.

In his letter to the International Consortium of Investigative Journalist (ICIJ) – the Washington-based organization in part responsible for the Panama Papers leak – District Attorney Bharara let it be known that a “criminal investigation” on “relevant matters” related to the Panama Papers scandal had been launched. In his letter, Mr. Bharara requested a meeting on the matter with respresentatives of the ICIJ “as soon as possible”.