HomeNewsAnalysisTwo Former Panama Presidents Indicted for Corruption and Money Laundering
ANALYSIS

Two Former Panama Presidents Indicted for Corruption and Money Laundering

ELITES AND CRIME / 3 JUL 2020 BY ZACHARY GOODWIN EN

The indictment of two former Panama presidents may mark a watershed development for the Central American nation's fight against corruption.

On July 1, prosecutors announced corruption and money laundering charges against former presidents Ricardo Martinelli (2009-2014) and Juan Carlos Varela (2014-2019), summoning them for interrogation.

Martinelli’s indictment concerns his involvement in the “New Business” case, which centers on the alleged embezzlement of millions in public funds through the purchase of a publishing group, according to The Panama News.

SEE ALSO: Panama News and Profile

Meanwhile, Varela stands accused of accepting campaign donations as bribes from the Odebrecht construction giant when he was Martinelli’s vice president and then president himself. He has been under investigation since last summer, according to teleSUR.

Both men strongly denied the allegations on July 2.

What began in 2014 as a corruption probe in Brazil has since morphed into a massive regional corruption scandal, with the Brazilian construction conglomerate Odebrecht at its center. From Mexico to Argentina, investigators uncovered a pattern of the company bribing officials with campaign donations in exchange for infrastructure contracts across Latin America.

The investigations have ensnared dozens of high-ranking politicians and several hundred lower-level officials, lawmakers, and business tycoons.

InSight Crime Analysis

This is far from the first legal problem Martinelli has faced, but so far, he has sailed through them all. In 2017, he was arrested in the United States and extradited to Panama for a separate spying and corruption scandal. He spent two years in pre-trial detention before being found not guilty in court.

Martinelli appears confident that he will be exonerated once again in the "New Business" case. He reportedly refused to answer questions from prosecutors on July 2 but spoke to the press and claimed that he was the "greatest businessman in the country" and a victim of political persecution.

Martinelli ihas also been also embroiled in the Odebrecht scandal. According to Panamanian prosecutors, the Brazilian construction giant paid $59 million in bribes to secure public works contracts in Panama worth a total of $96 million during his presidency. Projects including road construction, the improvement of Panama City’s metro, and the expansion of the Tocumen International Airport. The preceding administration awarded just $5.5 million in contracts to the company.

However, charges were never brought against Martinelli.

SEE ALSO: InDepth Coverage of Elites and Organized Crime

Panama’s Odebrecht investigation has been at a slow boil since the end of Martinelli’s presidency in 2014. By 2018, the country’s head prosecutor for the Odebrecht case, Zuleyka Moore, had launched investigations into 76 individuals, resulting in five convictions and the recuperation of more than $255 million. The investigations have included probes into the conduct of former economy minister Frank de Lima, former public works minister Jaime Ford and two of Martinelli’s sons.

Proceedings against Martinelli and now Varela have lagged, complicated by other investigations into the administration and the technicalities of Martinelli’s extradition from the United States.

In May, Attorney General Eduardo Ulloa rotated Moore off of the Odebrecht case. The subsequent indictments against Martinelli and Varela could be attributable to Ulloa’s more aggressive decision-making.

Despite this recent push from state prosecutors, Martinelli and Varela have remained defiant and their conviction is not a foregone conclusion.

Martinelli maintains that his indictment violates the “specialty principle” of the 1904 extradition agreement between the United States and Panama. The clause states that one cannot be charged for crimes other than those which provoked the extradition -- in this case, the political spying allegations for which Martinelli was cleared in 2019.

For his part, Varela has no such extradition agreement to rely on but has denied the allegations. He maintains that the Odebrecht payments were donations, not bribes.

Varela is just the latest former Latin American president to be formally indicted or convicted in the Odebrecht scandal, following Rafael Correa of Ecuador, Ollanta Humala of Peru, Michel Temer and Luiz Inácio Lula da Silva of Brazil, and Mauricio Funes of El Salvador.

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

COCAINE / 3 FEB 2022

Central American countries seized a record amount of drugs last year, underscoring how the region has become one of the…

ELITES AND CRIME / 12 FEB 2021

US authorities at both the federal and state level provided training to members of a Mexican special operations unit with…

CARIBBEAN / 9 JUL 2021

In a familiar scheme seen across Latin America, prosecutors in the Dominican Republic have arrested a number of government officials…

About InSight Crime

THE ORGANIZATION

Escaping Barrio 18

27 JAN 2023

Last week, InSight Crime published an investigation charting the story of Desafío, a 28-year-old Barrio 18 gang member who is desperate to escape gang life. But there’s one problem: he’s…

THE ORGANIZATION

Europe Coverage Makes a Splash

20 JAN 2023

Last week, InSight Crime published an analysis of the role of Amsterdam’s Schiphol Airport as an arrival hub for cocaine and methamphetamine from Mexico.  The article was picked up by…

THE ORGANIZATION

World Looks to InSight Crime for Mexico Expertise

13 JAN 2023

Our coverage of the arrest of Chapitos’ co-founder Ovidio Guzmán López in Mexico has received worldwide attention.In the UK, outlets including The Independent and BBC…

THE ORGANIZATION

InSight Crime Shares Expertise with US State Department

16 DEC 2022

Last week, InSight Crime Co-founder Steven Dudley took part in the International Anti-Corruption Conference organized by the US State Department’s Bureau of Democracy, Human Rights, & Labor and…

THE ORGANIZATION

Immediate Response to US-Mexico Marijuana Investigation

9 DEC 2022

InSight Crime’s investigation into how the legalization of marijuana in many US states has changed Mexico’s criminal dynamics made a splash this week appearing on the front page of…