If Panama's Anti-Corruption Hunt Continues, Miami Should Watch Out
This past summer I wrote an article about Panama’s ultra-corrupt judicial system. It looked at the case of a dead man whose will had left tens of millions of dollars to poor children – and how the Panamanian Supreme Court made the highly suspicious decision to nullify that will and hand the money instead to rich adults.
After reading the piece, one Miami business leader tweeted: "This is why Panama will NEVER supplant Miami."
Meaning: As long as Panama’s government insists on wearing a three-ton millstone of sleaze around its neck – out of 142 countries, the World Economic Forum ranks Panama’s courts 133rd on the integrity scale – it’s not a real threat to depose Miami as the commercial nexus of the Americas.
The Panama Canal may be expanding and the country may be enjoying an extraordinary economic boom. But institutional trust and rule of law, the tweet suggested, spell the difference between doing business confidently on the Florida peninsula and investing warily on the Central American isthmus. (To those appalled by Sunshine State corruption, I can only say: Yeah, that’s how comparatively bad things are in Panama.)
I think that Miami businessman was right.
Which is why the news out of Panama this week could be an uh-oh moment for South Florida: Panama, it seems, might finally be ready to clean up its Pirates of the Caribbean act.
On Monday, Panama’s Congress suspended Supreme Court Justice Alejandro Moncada Luna and had him placed under house arrest while he’s investigated for a menu of corruption charges including money-laundering and illegal enrichment. Moncada denies the allegations, but the bewildered look on his face this week indicated that busting an official of his elite level is a stunning break with Panamanian protocol.
It’s such a departure from cynical business as usual, in fact, that Panamanians seem as spellbound by the televised congressional hearings as Americans were by Watergate a generation ago.
The Moncada hearings are a stunning break with cynical business as usual in Panama.
Moncada is accused of parlaying his cronyist ties to former President Ricardo Martinelli into a fortune that doesn’t square with a judge’s salary. The evidence includes multi-million-dollar luxury apartments.
The justice doesn’t deny owning them. Or at least he doesn’t now, after investigators jogged his memory. You see, for some doggone reason Moncada forgot to include properties like that on the personal assets list he’s supposed to present as a member of the nation’s highest court.
But in Moncada’s defense, if he has one, he probably just thought he was carrying on a proud tradition of the Panamanian bench. The United States has long been exasperated with Panama’s notoriously crooked political and judicial systems. In 2005 it even canceled the U.S. visa of then Panamanian Supreme Court justice Winston Spadafora.
According to U.S. diplomatic cables released via WikiLeaks, Spadafora profited from “an established system of bribery” involving cases before the high court.
And he was hardly the only justice in on it. Spadafora, the 2005 cable goes on to say, simply “epitomizes” a Supreme Court whose “unbridled venality and…culture of entitlement to ill-gotten riches continue to reach new depths.”
Spadafora has denied the accusations. But the diplos then and now believe a litany of Supreme Court cases have been perverted by all that alleged under-the-table cash.
They include disputes over contracts for major Panamanian infrastructure projects, which are key to Panama’s bid to become the “Hong Kong of the Americas” – the sort of financial and maritime hub that hopes to supplant Miami (see the afore-mentioned tweet) as the hemisphere’s gateway.
That's a lot less likely to happen as long as foreign investors can't rely on Panamanian institutions to apply the law, honor agreements and otherwise practice the kind of transparency that makes developed countries developed.
Even the Panama Canal expansion, the crown jewel of Panama’s 21st-century ambitions, has been marred by an astonishing $1.6 billion in cost overruns. Not coincidentally, the dispute over who’s responsible is being arbitrated partly in the more trustworthy legal confines of Miami.
But under Martinelli’s successor, President Juan Carlos Varela – who won the presidency this year on an anti-corruption platform – Panama may be waking up to the reality of what being the Hong Kong of anything entails.
It means – as in Hong Kong’s case – having one of the world’s most respected judicial systems. It means Supreme Court justices don’t get bought. Or when they do get bought they get brought – to trial, the sort of impeachment Moncada is facing.
His case is of course just a start. But if it becomes a trend, Miami, watch out. A Panama whose leaders follow probity instead of piracy might be a force to reckon with.
It might even return all that money to poor children.
Tim Padgett is WLRN's Americas editor. You can read more of his coverage here.