Skip to comments.900 More Corruption In Panama
Posted on 04/15/2002 10:19:21 AM PDT by Marc M. Harris
Posted on Mon, Apr. 15, 2002
Panama corruption scandal reads like a mix of thrillers BY JANE BUSSEY firstname.lastname@example.org
PANAMA - Congressman Carlos Afú was indignant. His bribe wasn't anything special, he huffed. Brandishing a fistful of dollars, Afú stood before the cameras and denounced other legislators for also receiving $6,000 to approve a government contract.
Afú is a central figure in an unfolding corruption scandal that reads like a plot combination from The Untouchables and The Tailor of Panama. There is a sunken helicopter, a company with trade ties to Cuba, a prominent family torn apart by charges of avarice and fraud and an anti-corruption magistrate determined to get to the bottom of it.
Since January, Panamanians have stayed glued to their televisions and snapped up Panama City dailies that have detailed the investigation prompted by Afú's shocking performance for the cameras.
Political analysts say Panamanians have always lived with stories of corruption, but never has it erupted so openly in public, when Panamanians are disenchanted with the government of President Mireya Moscoso and discouraged by an economic descent.
Not only admitting that he had taken the money, Afú charged that a leader of his party, the Democratic Revolutionary Party, distributed envelopes of $6,000 to legislators to ratify a government contract for a group of private business executives to develop a free trade zone on the Atlantic entrance to the Panama Canal. The Multimodal, Industrial and Services Center -- CEMIS -- would expand an airport, construct a shopping mall and build warehouse and container facilities.
The scandal does not stop there. Also under investigation is the January legislative ratification of two Supreme Court justices. Afú is also accused by members of his own party of taking $1.5 million from a still unidentified source to break with the party line and vote for the two nominees.
Investigators and court documents say that again, Afú confessed in his own way. Holding his cellphone, he bragged to an employee that he had received word the bribe money had been transferred to him. Last week, the PRD voted to expel him from the political party.
The investigation has not established why the bribe was made, but like John Grisham's The Pelican Brief, some business executives in Panama suggest it is because of several upcoming Supreme Court decisions.
The federal attorney in charge of anti-corruption probes, Cecilia Raquel López, vows that the results of a series of probes led by the attorney general -- who was appointed by a previous administration -- will come out, or she will resign and return to her legal practice.
''Corruption is the mother of all evil,'' López said. 'People here are accustomed to saying: `well, it happened, nothing is going to change, it's just like that.' ''
Besides helping with the bribery investigations, López is in charge of a nearly yearlong probe into the mysterious crash and sinking of a helicopter. The aircraft was ferrying several of Moscoso's relatives and an aide when it supposedly ran out of fuel and crash landed in the water. The following day, before aeronautical authorities could investigate the mishap, the helicopter was shelled and sunk on government orders. Navy divers retrieved several bags, and found one containing several thousand dollars in cash. The alleged helicopter owner, a Colombian, disappeared. The only registered agent for the company that owned the helicopter died.
López moved in to probe whether the helicopter was a political bribe, something she stresses has not been proven. But her questions have not been answered.
''If there was nothing behind this, why don't they give me the documentation?'' López said.
She has also requested help from U.S. officials, asking them to provide through diplomatic channels the documents for the $1.8 million loan obtained from the now defunct Hamilton Bank to buy the helicopter and the names of the owners of another Hamilton account where the insurance money was said to be deposited last year.
Meanwhile, the probe of the CEMIS vote has landed a family feud on the front pages.
The head of a prominent business family, Lew Rodin, has gone on television calling his eldest son Martin, ''a hoodlum.'' Martin, whose San Lorenzo Consortium is the main developer of the CEMIS project, is accused by his father of secretly siphoning assets from a company owned jointly with his younger brother Peter and placing then in a company under his control.
The land that the government will purchase for the CEMIS project is alleged to belong to the Rodin family and not Martin separately.
The 82-year-old patriarch, a native of Ukraine who survived World War II, a Soviet work camp in Siberia and several bouts of cancer, lives across the street from his son's high rise. But the two only trade insults.
The plot line spreads to Cuba. The Rodin family for years sold Russian Lada autos to Cuba and even to Chile when it was ruled by former President Augusto Pinochet.
Following the money, investigators say they believe that cash for the alleged bribes to approve the CEMIS project were payments that the Cuban government made to Martin's Havana-based company Sunset Group International, which provides financing and equipment for the sugar harvest and other parts. The money was wired to Panama, according to Sunset's bank records reviewed by The Herald. According to investigators and depositions, employees at Martin Rodin's Panama offices cashed checks and then handed over the money to Martin Rodin and his British partner Stephen Jones.
Havana has also launched an investigation into Martin Rodin and Sunset, allegedly for having changed the ownership of the family's company into his sole control, according to investigators in Panama City. This week, the Cuban Chamber of Commerce granted a petition from Lew Rodino and revoked Sunset's registration
None of the probes is expected to wrap up quickly.
Some business leaders are understandably anxious that the allegations of rampant corruption do not worsen the current economic downturn by driving away investment.
''When the charges came out, people looked the other way,'' insisted Walter Luschinger, a Panama businessman. ``People are very busy trying to make things work.''
But López said for Panama's democracy to work, corruption must be investigated by the government, which must set the example.
''Our commitment is that here we are going to investigate as far as we have to investigate,'' she said.
I wonder if Uncle Sam is going to start pulling the visas of everyone in the entire Panamanian government.
Temporary Housing at Farfan for 6 months
Regular Housing on Fort Clayton.
I drove by his house over a month ago (Golf Heights if you remember -- maybe) and noticed it was up for sale. A few days later, the signs were down. Upon inquiry, the Noriega family decided not to sell.
As I'm writing this, does that mean he is planning to return? As I'm thinking, I'm not aware of any law prohibiting his return. I must check that out. My Gawd!!!!
The idea of him returning to Panama would be terrible.
The good news that one of Latin America's most restrictive press laws had been dismantled was tempered by a vicious defamation campaign against La Prensa, Panama's leading daily, and its associate editor Gustavo Gorriti, a Peruvian citizen who had repeatedly clashed with Pérez Balladeres.
Pérez Balladeres gave a Chinese-owned company a 25-year lease to run 2 of the 5 ports of the Canal
The former president had tried to deport Gorriti in August 1997, after La Prensa reported that a drug trafficker had helped finance the president's campaign. Pérez Balladares backed down under international and domestic pressure.
This time Gorriti's enemies tried a different strategy. In early October, a mysterious organization called the Comité por la Libertad de Expresión en Panamá put up posters of Gorriti around Panama City that read, "Get to know the assassin of press freedom in Panama." He was branded a foreign spy, and "an unreliable person predisposed to treason."
While a labor dispute at La Prensa was the catalyst for the campaign, it apparently started after La Prensa published a series of articles in early August revealing suspicious links between Panamanian attorney general José Antonio Sossa, two U.S. drug traffickers, a naturalized Panamanian named Marc Harris, and local lawyer Carlos Jones.
La Prensa reported that as part of the defamation campaign, other Panamanian journalists were offered money to write negative articles about the paper. Sossa, whose alleged corruption had frequently been covered in La Prensa, publicly accused Gorriti of waging "a campaign of loss of prestige and lies" against him. And the Independent Lawyers' Association (Frente de Abogados Independientes), which is headed by Jones, branded Gorriti persona non grata and asked him to leave the country. "Gorriti is more than a journalist," the local press quoted Jones as saying, "He's an infiltrated agent disguised as a journalist."
After La Prensa published articles detailing its investigation of Sossa, a Legislative Assembly commission summoned him to testify in response to the paper's allegations. Having heard Sossa's testimony, the commission referred the investigation to the Supreme Court and urged that Sossa be dismissed as attorney general.
Despite the partial repeal of the gag laws, Panamanian journalists continued to face legal harassment in response to their work. While the defamation campaign died down toward the end of the year, La Prensa was still fighting a flurry of lawsuits brought by Pérez Balladares, Harris, Jones, and Sossa.
by Matt Blackman
It started quite suddenly, like storms are prone to do in the Caribbean. On March 31, offshore journalist and publisher of Offshore Alert, David Marchant announced that he had evidence that The Firm of Marc M. Harris Inc. was running a multimillion-dollar Ponzi scheme that was defrauding clients out of millions. Since then the storm has gathered strength, fed by an unrelenting flow of editorial information from Marchant in his newsletter articles. Others have caught the scent and the storm reached a new level of intensity with a story in Business Week magazine.
The Harris Organisation is a high-profile offshore services company with a number of web sites. Their home page is located at www.marc-harris.com and they promote themselves as "the largest independent provider of quality international financial services in Latin America and the Caribbean." They also maintain www.escapeartist.com, which provides background information on a number of services and attracts clients from North America and Europe. Their web sites have been "very successful" in bringing them enough new clients to keep a growing number of sales people busy full time.
I first became aware of Marc Harris in 1994 when I was given a package from The Harris Organisation. It contained information on various strategies for saving taxes, estate planning and doing business offshore, discussing such esoteric topics as the Dutch Sandwich, captive insurance and offshore funds. Since that time I have followed the Harris newsletters and watched their marc-harris.com web site grow. Two friends from Costa Rica eventually went to work for Harris.
The Offshore Alert article took me by surprise. It declared that the company, with head office in Panama, was "hopelessly insolvent having net liabilities of at least $25 million US according to sources." It also accused Marc Harris of stripping client's funds out of the company in the way of "massive salaries and bonuses, immoral commissions and high expenses." There was evidence of potential laundering the proceeds of crime, said the article, including drug trafficking.
Marchant was confident of the accuracy of his information and dared Harris to sue him. He even went so far as to confidently claim that his story would likely cut off the supply of funds, put Harris out of business and initiate a full investigation in several countries.
Marchant, himself, is no stranger to controversy. As a journalist, who worked in Bermuda between 1990 and 1996, he was kicked out of that haven for reporting on corruption. He moved to Florida to start his publishing business in 1996 and continued his exposés of scandals, scams and corruption in the islands of the Bahamas, Turks and Caicos, Caymans and Bermuda.
On April 6, The Harris Organisation launched a $30 million a lawsuit in Miami claiming that Marchant falsely stated that the company was an insolvent Ponzi scheme and that clients were unable to withdraw funds. The plaintiffs are seeking $5 million compensatory damages and $25 million punitive damages, claiming that Marchant and his company OBNR "recklessly and negligently" published statements that were "erroneous" and that these statements "adversely reflect on business of the plaintiffs." The firm claims that a disgruntled ex-employee, who had been fired and had stolen money from the firm, had supplied the information for the article.
Marc Harris has been described as brilliant and carries impressive credentials. He graduated from North Carolina Wesleyan College with a perfect 4.0 grade point average in 1984 at age 18. He is believed to be the youngest ever to pass the Certified Public Accountant (CPA) examination the same year, according to his bio. He graduated from Columbia business school at age 19. He left Florida in 1989 to start his firm in Panama. The following year did not turn out to be a very good one for Harris professionally.
According to Offshore Alert, two banks Harris had set up for clients in Montserrat, with the help of a well-known offshore author and bank promoter, were closed by regulators in 1990 as part of a clean-up of that island's banking industry that led to more than 300 bank closures. Harris's CPA license was suspended in Florida after he failed to disclose that he was he was an officer and director of the MMH Equity Fund he's established. He put that behind him and worked to build a large thriving company in Panama with offices in Jamaica, the Dominican Republic, the British Virgin Islands and Chile where Harris lives. By 1996 the firm had grown to more than 150 employees offering offshore services, trust, foundations, their own funds, offshore books and a myriad of related services.
Undaunted by the lawsuit, Marchant continued his assault on "The Firm." The April 30 edition of Offshore Alert claimed that Banco de Brazil had closed bank accounts in Panama it operated for The Harris Organisation. Marchant linked Harris and the bank promoter to more banks that had been established by the pair in Montserrat and subsequently closed by regulators.
Panama's La Prensa newspaper also ran several articles, after the first story broke in Offshore Alert, stating that a number of officers had either left or were leaving the Harris firm.
The May 31 Offshore Alert linked well known offshore authors Adam Starchild and William Hill to The Harris Organisation, claiming they were promoters for the company. There are Internet links from marc-harris.com to other sites including offshore information sites Cyberhaven, Escape Artist and Expat World. Havana Holdings offers capital investment opportunities in Cuba although it is illegal for American individuals or companies to invest in Cuba, International Gaming which offers access to gaming and entertainment opportunities, Panaclear, a Western Hemisphere transaction clearing service and PT Shamrock, another offshore information and book retail site. Some of the sites offer the books of Starchild and Hill. Starchild recommends the services of Marc Harris in a number of his books on offshore investing.
June 1, Business Week magazine ran an article entitled, Tax-Haven Whiz or Rogue Banker with a photo of Marc Harris, looking younger than his 33 years, beside a computer in his well appointed Panama office. In a three-hour interview, a lawyer, security chief and spokesman accompanied Harris, while he was asked questions about his businesses, funds, and the on-going campaign between him and various members of the media. He claimed he was the target of a "massive smear campaign" by his enemies and past employees. Charges of insolvency were absolutely untrue, he said. Clients have suffered delays in receiving funds only due to the "illiquid nature" of their investments. Harris's newly hired U.S. attorney, A.C. Strip, was quoted as saying, "I am at this point relatively comfortable that (Harris) is not insolvent on the in-house financial statements. I am awaiting audited statements."
Harris claimed in Business Week, that 80% of his clients are either American or Canadian and the firm has $35 million in capital and $1 billion under management in trusts and investments. The firm has actively promoted trusts and foundations to enable investors to protect themselves from the lawsuit free-for-all that exists in the U.S. Harris declined to answer specific questions on the performance of various funds he offers. However, a Harris brochure outlining funds the firm offers discussed "annual goals" of 9% for the Conservative Strategy Fund consisting of bonds, equities and cash, 10-14% for the Model Portfolio consisting of mutual funds, and 18-20% for the Maximum Growth Strategy consisting of international equities, bonds and cash. No further details were given regarding the specific companies making up the equities or nationality of bonds.
Business Week corroborated Marchant's claim about the Montserrat banks opened by Harris with the offshore author/bank promoter's help, stating that the bank promoter helped set up as many as 200 banks, according to two U.S. regulators. One U.S. regulator was quoted as saying "We thought Harris was effectively operating as a re-seller for the well-known offshore author and bank promoter, who would start up the banks and then hand them over to Harris for se-sale." The banks collected deposits from Americans without dispensing promised loans. "Many of the victims were retired Americans or other people on low incomes Because of regulatory loopholes and the reluctance of victims to come forward, Harris and the bank promoter were not charged with wrongdoing," according to regulators. The bank promoter, now operating in Canada, blatantly sells his services in a variety of books on the subject of offshore investing, and reportedly charges $500 an hour for a "personal interview."
The Firm of Marc M. Harris Inc. and its affiliates have certainly found a niche, catering to a growing number of alienated North Americans and others who feel they can no longer trust their governments with their hard earned assets. The firm treads a fine line offering investments often unavailable in the U.S. or Canada due to strict securities regulations. The secrecy that exists in Panama and other low-tax jurisdictions allow offshore advisors like Harris to offer a number of options to the reluctant high-tax resident wanting to keep assets away from the prying eyes and eager fingers of governments. However, if the trusted advisor turns out to be unscrupulous, investors may find themselves jumping from the government frying pan into the fraudulent fire, saving the taxes but losing their principle.
The one interesting and obvious fact in this whole affair is the absence of investors crying foul play. Embarrassed or not, unless they have committed serious crimes, once investors realize that they have been defrauded, there will be a cacophony of cries for help, even if their motivation in using Harris was to save taxes. Once the money is gone, most investors have nothing to lose by speaking out, since there is no undeclared gain to concern income tax officials. So far, Marchant has been unable to find one investor willing to discuss Harris investments, even anonymously. If there are any defrauded investors who have lost money, it is only a matter of time before they start to make some noise.
One has to wonder why David Marchant would mount such a brazen attack against Marc Harris. What has he to gain by initiating such an attack except to gain some notoriety, unless he is one of those rare individuals who is doing what he feels is right? His critics could argue that he is getting clandestine support from the U.S. government who views Harris as a threat to the sovereignty of the U.S. Treasury and the IRS. Certainly there would be no tears shed in Washington if Marc Harris were to disappear in a tidal wave of litigation and have his credibility completely shattered. If Marchant is wrong, he could face more than $30 million in costs. Even if he is right, who is helping him pay his court costs?
There is one other possibility. If Marchant of OBNR is absolutely certain of his facts, if he believes that his information is 100% reliable, he's betting that this matter never goes to court. For both sides, this is one high stakes game of poker!
If Mr. Harris conducts a legitimate business and these claims against him turn out to be untrue, this tropical typhoon will blow itself out in a matter of months. The courts should eventually rule in his favor and Marchant will have to eat crow and pay the piper. If, on the other hand, there is proof that Harris has been defrauding American and Canadian citizens, it will give those governments the tax haven target they have been looking for and this could be just the beginning of many uncomfortable months in the tax haven hot seat for both Panama and Mr. Marc M. Harris.
My best stories. Every middle class family had a problem when their daughter turned 18 and finished school. She would need a job. So they would call Uncle Juan who worked for the government and he would arrange for a job. My best experience with this was the car tag place...when I stepped into the office area, here were 2 older women (in 40s) and 15 younger women(all 18-19 years old). I was told that the tag office was authorized only 8 workers, some Uncle Juan had arranged for a huge overage and nobody in the government recognized what was going on. The interesting thing was that almost none of the 15 younger women could type. It took me 2 hours to get a simple form prepared and signed, in order to get a tag. All of these women were dressed to kill and I could tell the two older women were extremely stressed out with all of the idiots they had to work with. The whole office was a flirt zone.
Another good story....my Panamanian friend told me this one. A Uncle Juan-type arranged for a niece to get a job downtown with the government. As with most government jobs, it paid barely $400 a month, which is great for most Panamanians, but its dogfood for a 18 year old girl who want independence. So this girl talked to a boyfriend who arranged for her to have employment at a insurance company in town....but again at similar salary of $400 a month. She kept both jobs, showing up at 8AM at the government job, and disappearing by 11AM. She went down the street and went to the second job by noon and worked till 6PM. They both paid her for full-time jobs and neither noticed what she was doing.
Another good story. The same type problems carried on inside the Canal area as well. There was an engineer who worked for the canal, since the late 50s. He was an absolute alcoholic, driving up to the American shoppette each morning and filling up his ice cooler with three six-packs of beer and ice. He would drive around all day pretending to inspect the locks. He was married to a Zonie (Panamanian pretending to be an American), who was actually bi and had a girlfriend on the side, and she worked up at the Canal headquarters. The wife was a alocholic as well. Between the two of them, they produced a daughter who went off to Miami and got an engineering degree...and then dad arranged for her to get a job at the canal too. The daughter moved back into the grand house that they had. Between the three of them, and this was in 85...they were pulling in almost $200k in salary from the Canal Commission. The daughter was totally into cocaine and by the age of 28 was really starting to screw up in life. Yet the Canal never fired her.
I left Panam in 86 and I must admit I miss it. Everyday was an adventure and you could not believe how a little country like this could ever survive. Everybody was on the take. You could be the biggest idiot around and find a dozen beautiful women willing to become your wife today. What a place.
More like everybody YOU met was on the take.
If you go BEYOND the subculture of the car tag bureaucrat place, the Zonie affirmative action haven (kind of going to D.C. to "get to know America", and the usual places in Panama City and Colon where trailer-park trash hangs out, you will find Panamanians like Miguel Antonio Bernal that risk their skin on a regular basis to denounce and fight corruption.
Franklin Brewster. Read about the murder of drug detective in Panama http://franklinbrewster.weebly.com/