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Panama's former president Ricardo Martinelli on October 30 posted this photo on Twitter of him with Brazil's fomer president Luiz Inácio Lula da Silva. (Photo: Ricardo Martinelli Twitter).
Thursday, November 17, 2022

Panama: Will Trial Stop Martinelli Comeback?

Former presidents Martinelli and Varela to stand trial over Odebrecht corruption.

Inter-American Dialogue

A court in Panama ordered former presidents Juan Carlos Varela and Ricardo Martinelli to stand trial on money laundering charges related to a sprawling graft case involving Brazilian construction giant Odebrecht, Reuters reported Nov. 8, citing a court document. Varela and Martinelli, who deny wrongdoing, are to go on trial in August of next year, alongside 34 other people, including five former government ministers. What political impact will the case have on Panama? How well is current President Laurentino Cortizo’s government fighting corruption?

Joaquín Jácome-Diez, former Panamanian minister of trade and industry, and a senior partner at Jácome & Jácome: Odebrecht’s trial has enormous implications for Panama for two main reasons. First, it will test a judicial branch that has been highly criticized for being corrupt and inefficient. Second, because former President Martinelli currently holds a lead in most polls for the May 2024 presidential elections. Martinelli’s main obstacle to recreate Lula da Silva’s path in Panama are the ongoing trails of Odebrecht and the “New Business” money laundering scheme, in which he is involved. Article 180 of the Panamanian Constitution establishes that no citizen may be elected President or Vice President of the Republic if they have been convicted of an intentional criminal offense carrying a prison sentence of 5 years or more by an enforceable judgment issued by a court of law.

A guilty verdict in any of these criminal proceedings could result in Martinelli’s inability to run for office. However, the Constitution requires that the judgment be enforceable, which may prove to be legally impossible due to the timing of both trials. The flurry of appeals that would probably follow a guilty verdict could prevent the judgment from being enforceable, thus allowing Martinelli to run for President. One of the current administration’s weakest aspects is transparency.

President Cortizo, who had vast experience in the public sector prior to being elected president, has been a great disappointment in the fight against corruption. There has been a series of cases in different branches of government during and after the pandemic that have drawn questions from the public but remain without any explanation or investigation. According to the Transparency International Index, Panama is graded below average in the region.

Michelle Watts, assistant department chair in the School of Security and Global Studies at the American Public University System: On the surface, Panama appears to be moving forward in addressing international concerns about corruption and money laundering. The prosecution of former presidents is unprecedented in Panama, where powerful families and politicians rarely face the consequences of their actions, and the prosecution of Martinelli and Varela will likely at the very least give politicians pause. The long-term impact is likely to be small yet significant, perhaps forcing those in power to stick to smaller-scale corruption.

However, it is important to be realistic about the extent that real change in Panama’s culture of impunity for the well-connected will take place. A law passed in 2020 to create a Beneficial Owner Registry to reveal the true ownership of companies appears to be toothless. The Registry may have been an unsuccessful effort to deflect criticism and stay off the Financial Action Task Force’s (FATF) ‘grey list’ of countries involved in money laundering. A string of corruption allegations during President Cortizo’s administration, as well as policies that arguably violated civil rights during the pandemic, does not speak well of his efforts. Adding to President Cortizo’s difficulties, the National Assembly has not supported his efforts at reform. It remains to be seen if Cortizo’s actions, including the recent creation of a citizen commission on corruption, will have enduring effects. Despite the many allegations again Martinelli, he is still eligible to run for president again in 2024. If\ he is successful in his bid, the future of such anti-corruption efforts is nebulous at best.

Jaime A. Jácome de la Guardia, local partner at Diaz Reus in Panama: After evaluating an investigation carried out over more than seven years, the Panamanian Judicial Court has ordered the trial of former presidents Ricardo Martinelli and Juan Carlos Varela, in addition to eight high-ranking officials from both administrations and twenty-six other individuals, among them Panamanians and foreigners. The accusation against the defendants is money laundering, given that the crimes of corruption of public officials and illicit enrichment were declared time-barred due to compliance with the deadlines established by law for it. The trial has been scheduled for August 2023, although it is expected that the defendants will try various procedural means to delay these dates. Two relevant circumstances must be considered. The first is that the process is in the first procedural instance, which allows for two more, an appeal and a cassation before the Supreme Court of Justice, which in view of the judicial practice of the country, means that it will take several years before a final judgment. The second element is the argument that the crime of money laundering, in Panamanian legislation and jurisprudence, is not an autonomous crime but must be preceded by a previous crime that produced the resources that are laundered. In this case, having prescribed the crimes of corruption of public officials and illicit enrichment, the defense will argue that since there is no prior offense, it cannot proceed. However, many lawyers consider that this allegation does not seem valid, since within this same process other defendants confessed to committing the crime and reached sentencing agreements.

Similarly, two of the defendants, the sons of former President Martinelli, Ricardo and Luis Enrique Martinelli Linares, were convicted in a New York court of conspiring to receive bribes from the Brazilian construction company Odebrecht. The truth is that Panamanian justice faces an enormous credibility challenge, when in previous cases involving former President Martinelli and other officials and individuals, favorable decisions have been issued for the accused that have been strongly questioned by society and the legal community, in Panama and abroad.

Republished with permission from the Inter-American Dialogue's daily Latin America Advisor




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