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Called Cash Launderers, Panamanians Hit Back

Country passes laws to foster clean banking

SOME say the piles of money laundered through Panama City are as tall as the apartment buildings in Paitilla, a posh residential district here.

Others say these skyscrapers are ventures of major money launderers. To the US government, Panama's illegal washing machine is a threat to the health of American society.

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Yet many in Panama's international banking sector say the issue is being blown up by Americans to boost US economic interests, particularly Miami bankers, in their quest for Latin American clients.

Whatever is true, trying to find how much is laundered through this fair republic is a bit like trying to find the iceberg that sank the Titanic. (No one from Colombia's Cali drug cartel was available to clarify the matter.)

New policing efforts

In recent weeks, however, events have shed some light on the murky world of money-laundering: Some people have been arrested; the chief of the PTJ (Technical Judicial Police) has resigned; a special money-laundering prosecution office has been established; and the government has passed an anti-laundering law.

''We cannot permit this activity to infiltrate [our country] ... like in Colombia,'' Victoria Figge, director of the Colon Free Trade Zone, told reporters last month after the arrest of two men in connection with $500 million laundered through businesses in the Free Zone.

The men were arrested in early November, after a sting operation by the Royal Canadian Mounted Police. The operation, involving a fake currency shop, revealed that Israel Mardock, an Israeli citizen, his brother Salim Mardock, and nationalized Panamanian Alberto ''Berti'' Laila had allegedly been involved in an international money-laundering operation. According to Gabriel Castro, the then-chief of the PTJ, the operation encompassed the businesses of the Mardock Group through its offices in New York, Panama, Venezuela, and Italy in a giant facade.

Italian police are said to be investigating possible links between Mardock and Gustavo Upequi Delogado, the alleged cashier of the Cali drug cartel.

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''The Free Zone [in Panama] washes $6 million a day,'' claims Leopoldo Benedetti, an opposition legislator. Mr. Castro reckons the figure to be $100 million annually. No one can truly guess what the total figure is for both the Free Zone and Panama City, with its 140 international banks.

Millions or billions?

''We don't even know if it's millions or billions,'' admits a US diplomatic source. He adds that the United States is trying to combat money-laundering as a way of battling the Cali cartel.

But many Panamanian business professionals with respectable reputations hold that allegations stemming from the US government are blown out of proportion, damaging Panama's image as a banking center. ''Panama's image as a money-laundering center is nothing more than a gringo plot against Panama,'' says Marc Harris, a US citizen, who is a resident in Panama and runs a large offshore financial-services company.

He criticizes the US Drug Enforcement Administration (DEA) and the US government's attitude toward Panama and says in actuality the US is not that interested in money-laundering; rather it is concerned with government revenue losses as individuals or companies invest money here as a way of dodging US tax collectors. Other money may be avoiding confiscation after unfavorable court decisions.

Mr. Harris adds that Panama's status as a tax-free offshore banking center with tough bank-secrecy laws attracts many investors, not only from the US but from all over the world.

US more lax than Panama?

It is easier to open a bank account in the US than in Panama, says Robin Bailey, who runs Trust Services SA, a company that manages offshore corporations. The DEA frequently criticizes the offshore sector as being a shield for money-laundering. ''Through a brokering house in the US, you can often open an account over the telephone,'' he says. ''In general, they are not choosy about whom they deal with, as often they work on commission.''

In contrast, Mr. Bailey says, Panama has some of the world's most stringent regulations regarding the opening of accounts.

''Panama does not have a single 'nameplate bank.' All the banks here are required by law to have an office and employ staff. This also makes laundering a bit more difficult,'' Bailey adds.

He concedes that there is money-laundering in Panama, but not, he says, on the scale of New York, Miami, or other world financial centers.

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