Wednesday, October 1, 2014


Juan Carlos Varela, the new reformist President of the Republic of Panama, has openly and publicly asked the former Chief Justice of the Supreme Court of Panama, Magistrate Judge Alejandro Moncada Luna, to explain the Source of Funds for his purchase of two high-end apartments, for which he paid over $2m in cash.

There were two transactions:

(1) The first purchase reportedly involved a cash purchase, for $1.7m, of a luxury condominium at a project known as Coco del Mar,  which was purchased through a corporation called Corporacion Alpil S.A., which Judge Moncada Luna is said to own.

(2) the second, reportedly purchased using another Moncada-controlled corporation, Corporacion Celestial, was located in the Ocean Sky residential tower. Four hundred thousand dollars, in cash, was allegedly paid over at closing, and the $500,000 purchase money mortgage was satisfied in full shortly thereafter. The judge and his wife presently live in that unit.

Where did all this cash come from ? The court system, including especially the Supreme Court of Panama, is rife with corruption. Litigants have complained for years that they could not move their cases along to trial without paying bribes; conversely defendants have successfully delayed major cases indefinitely, through the alleged payment of bribes, directly to the judges and justices. The rampant corruption in the legal system is one of the reasons for Panama's elevated Country Risk assessment.  Moncada Luna was appointed by former President Martinelli, who also has been linked to corruption, in Panama and in Italy.

An additional question to be answered: how did the Banco Nacional de Panama grant a poorly paid civil servant, whose salary and assets could not possibly justify either the cash down payment, or make the mortgage payments ? The bank should be investigated by the Superintendent of Banking, though it is doubtful whether this will ever occur, as Panamanian regulators studiously ignore its banks' sins and regulatory violations.

Most Panama watchers feel that, notwithstanding the demands for answers, verbalized by President Varela, Moncada Luna will be neither investigated nor charged with corruption, but the lack of a court system where the Rule of Law, and not the payment of the dollar, can be counted on to occur, will continue to deter a large number of foreign investors and multinational companies. When you cannot count on the legal system for redress of grievances, many do not want to risk their investment capital there.  

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