Thursday, January 29, 2015


Several former Panamanian ministers, who served in the cabinet of the now-targeted corrupt ex-President, Ricardo Martinelli, are known to have hastily departed the Republic of Panama. Those who have fled are among those individuals who made illicit insider trading profits, in securities of Petaquilla Mining Ltd., through the Financial Pacific brokerage firm. The are also suspected of rampant corruption in their respective ministries.

From outside the country, some of the newly expatriate ex-ministers have declared that that they are the subject of an unlawful political persecution. by the new reformist Varela government; They have alleged that they have been marked for assassination by the new government, though no evidence have been proffered in support of these allegations. One wonders whether they will follow Martinelli to the wilds of Paraguay, into some form of exile. Most likely, they intend to evade the long arm of the law, by becoming fugitives from justice.


Francisco Illarramendi, who operated a massive Ponzi scheme at his unregistered hedge fund, and lived the high life, taking $20m of his clients' money to fund a rich lifestyle, was sentenced today to thirteen years in Federal Prison, plus three years of Supervised Release. The Court deferred the imposition of restitution until an accurate computation, after payment to victims by the Receiver, can be made. The Government had requested a sentence of at least 12 years, although technically his Guidelines is a Life Sentence, due to the huge amount of the loss sufered by the victims.

Just prior to the sentencing, the Receiver weighed in on the "facts" recited in Illarramendi's Sentencing Memorandum, in a reply, that asserted:

(1) Illarramendi's objection to the Receiver's distribution plan has already been heard and overruled.
(2) Illarramendi stole millions of dollars from his victims to fund his lavish lifestyle, and he has not provided meaningful cooperation to the Receiver.
(3) Since his guilty plea, Illarramendi has continued to violate court orders, and divert receivership assets.
(4) Any argument that there is a "zero" loss is disingenuous, and not supported by the facts, or common sense.

Remember, this is the guy whose house (which he built with stolen money) is so big that a radio signal for a Home Confinement device could not reach all its rooms; He personifies greed and avarice. I personally find the most egregious violation that the defendant committed, during his case, was to take a $600,000 Connecticut state tax refund, that should have been turned over to the Receiver, to help reimburse the victims, who are said to exceed one hundred companies, entities and individuals. A thirteen year sentence is not enough punishment, in my humble opinion; he richly deserves twenty years. Otherwise, he will still be young enough at release to commit additional financial crimes. 


Alberto Diamond, Panama's corrupt, soon to be ex-Superintendent of Banking, will do most anything to help seize the wealth of foreign nationals who bank in Panama, but the Arthur Porter case has to be the worst case of avarice in Panama's long and sordid recent history of evil acts perpetrated by local banks, in coordination with government officials on the take.

Porter, a prominent Canadian businessman who is wanted by his country for white-collar crime, in a little matter of twenty two million dollars, some of which he deposited in Panamanian banks, has been in custody in Panama for close to two years, but the government keeps finding excuses to delay deporting him, as Canada has repeatedly requested. Why, you ask ? Because the banks that are holding his money covet it, and Sr. Diamond is assisting them by placing legal roadblocks in the way of the extradition process.

The sordid reason for the delay: Porter has cancer, and should he pass away while in custody in Panama, the banks where his funds are on deposit will most likely choose to retain them. Money unaccounted for in the Murcia case, funds ordered returned to a Nicaraguan national, by a court, but never repaid by Diamond, the Banistmo case, the list goes on and on. Cooperation between corrupt government officials, Panamanian banks, and the corrupt court system, have resulted in huge losses for foreign nationals, and there is generally no avenue for redress. Diamond has become wealthy as the result of his failure to charge anyone with money laundering, or cite the banks for taking client deposits.

Porter's wife has publicly stated that, should Porter die in custody in prison there, that she intends to hold the Government of  Panama strictly liable. We hope that he survives his detention in Panama, and does ultimately get back to Canada, where facing justice, and the rule of law, is preferable to dying in a Latin American prison, so corrupt officials, and their banker supporters, can get rich.      


As of January 1, 2015, certain information of American military & law enforcement aid to the Afghan Government has been classified by the United States. This information, which was open-source unclassified for a decade, has been an important tool in the assessment of Country Risk for Afghanistan, and its abrupt and, in the opinion of several US Congressmen, unnecessary, classification means that one must seriously consider raising Country Risk.

In making an educated assessment of the possibility that Afghanistan could go the way of Iraq, meaning the use of favoritism in assigning leadership positions, and fielding an army that is unable or unwilling to defend its country, one needs to know, among other things:

(1) How many men have deserted from the Afghan Army and police forces each year ?
(2) How many have been Killed in Action (KIA) ?
(3) How many soldiers received less-than-honorable discharges ?
(4) Whether the military and police force units are up to their assigned strength.

Inasmuch as we will be in the dark on these facts, due to the US Government's opinion that such information, which is sensitive, could aid the Taliban, and place the US advisers and American contractors at risk, there is really no other choice, but to raise Country Risk. After all, any investment in Afghanistan, extension of credit, erection of brick-and-mortar bank branches, or other financial risks, could wind up as a total loss, should a resurgent Taliban defeat the Afghan Army on the field of battle. Consider the facts, and draw your own conclusions, but in my humble opinion, risk levels are now elevated.

Wednesday, January 28, 2015


Today, Panama's Supreme Court of Justice revoked the immunity of its former President, Ricardo Martinelli, paving the way for his ultimate criminal prosecution on Corruption, Abuse of Power, and Money Laundering charges, among others*. Martinelli literally ran to the Central American Parliament when he left office, to be sworn in as a delegate, and thereby receive a grant of immunity, but it exists only under the law of the recipient's jurisdiction, and Panama's highest court has the sole authority to revoke it, which occurred late this afternoon.

Where is Il Duce now ? He was spotted in Guatemala, but is rumored to be heading for Paraguay, where he reportedly intends to live, and where extradition may prove difficult. Of course, should Italy finally get around to charging him with accepting millions of dollars in kickbacks, from government-owned Italian corporations, Italian prosecutors may get first crack at him.
* Martinelli is suspected of ordering a number of murders in Panama, and he has directly threatened a number of the potential witnesses against him with death, both to them, and their families, should they testify against him, and let's not forget the Petaquilla Mining Ltd. insider trading scandal where Martinelli, and his ministers,  employed non-public information to illegally make millions of dollars. He is also deeply involved in the theft of literally billions of dollars, in cash and realty, from David Murcia Guzm├ín (DMG). 

Tuesday, January 27, 2015


Alberto Diamond R., the departing* Superintendent of Banking of the Republic of Panama, who is being turned out of office for allowing rampant money laundering and terrorist financing among the banks he was charged with regulating, has made a pathetic attempt to salvage his reputation. Sr. Diamond has belatedly sanctioned fifteen Panamanian banks that he has indicated are involved in taking money, in violation of Customer Identification Procedures, and for failing to control deposits of Politically Exposed Persons (PEPs).

The civil penalty he will be imposing, which is stated will be a monetary fine between $5000 and $1m, is said to be, in truth and in fact, no more than the $5000 minimum per bank. To say that his actions, or lack of them, have been a direct insult to the international financial community, is a gross understatement. Diamond has allowed money laundering to become the norm, rather than the exception, at virtually all of Panama's domestic and international banks, and he is said to have directly benefited from his inaction as a regulator.

Panama which was rated as "high risk" for money laundering on the 2014 Basel Anti-Money Laundering List, did not charge, let alone convict, any financial institution of money laundering, during Diamond's  tenancy at the banking agency. Will Diamond be charged with official misconduct ? Did he accept bribes from Panama's banks to ignore their money laundering activities, as has been alleged ? We trust that the new government will investigate every aspect of this individual's actions while in office.
* Alberto Diamond was due to depart his position on December 31, 2014, but remains in office, since his successor has not yet been appointed. This neglect, on the part of the new reformist Varela government, has no excuse.


If the winter snowstorm has captured your attention, you may have missed the FBI announcement regarding the fact that its agents broke up an operational Russian spy ring, working out of Manhattan. The cover of the leader of that group was his position as a banker for a Russian financial institution.

The primary mission of the spy ring was to gather financial intelligence, including information about which Russian companies and entities were slated to be next on the OFAC sanctions list. The ring was attempting to recruit undergraduates at a university in New York to assist them. The ringleader was charged with failure to register as an agent of a foreign state, which can result in a Federal prison term of ten years.

The next time a banker, from a country that you know to be an adversary of your country's foreign policy, asks you some detailed questions that are irrelevant to the business that you are conducting with him, stop and think before divulging non-public financial intelligence. You may be talking to an intelligence agent looking for information he cannot get elsewhere. The old adage from the Second World War may be appropriate; Loose lips sink ships.