Sunday, October 25, 2015


Construction in Panama
Visitors to Panama City in recent years have been astounded by the frantic pace of growth of new condominiums and office buildings; the only place where I have seen more cranes and derricks, in one place, was Dubai at the height of its construction boom, a couple of years ago. It is the story behind all those gleaming new high-rise buildings that is of relevant interest to compliance officers.

As we all know, North American consumers continue to throw their disposable cash at street-level drug dealers, which results in a multi-billion dollar industry for Colombian traffickers. Though money launderers working for the cartels can easily deposit their clients' narco-profits in many of Panama's banks, particularly those owned or controlled by the country's largest organized crime syndicate, a good laundryman wants his customers' funds cleaned, not just deposited in dodgy banks.

Therefore, their attention was drawn to the rapidly expanding Panama City construction boom, and the dozen or so builders who were actively operating there. Construction costs in Panama ( i.e. labor, materials, building permits, necessary bribes and kickbacks, and even the purchase of vacant land) are traditionally paid in cash, and receipts are rarely, if ever, tendered. The laundrymen had found their niche.

The method was quite simple:

(1) The laundrymen delivered sacks of US Dollars, generally many millions, to the builders.
(2) The builders used the cash to pay for the land, to pay their employees, on payday, twice a month, and to pay for materials, as well as necessary "grease" payments, to facilitate licenses and permits.
(3) After the building was completed, the builder would convey an agreed number of office and residential condominium units to Panama corporations (yes, with bearer shares, of course).
(4) Representatives of the traffickers would later sell the units to legitimate purchasers, especially North American and European expats moving to Panama, the sales proceeds, which came from the buyers, having effectively cleaned the traffickers' drug profits.

US law enforcement agencies are well aware of the identities of those builders; in fact, there is, reportedly, a comprehensive list of those builders, and their companies, maintained by the US Drug Enforcement Administration (DEA). Unfortunately, prior governments in the Republic of Panama have declined to be of assistance in American narcotics investigations of these builders, and even interfered with efforts to acquire sufficient evidence to bring indictments in the USA. For that reason, the United States seems to have ruefully settled for merely monitoring the individuals involved; whether it will ever step up, considering the probable diplomatic consequences, is doubtful.

Gary Lundgren
A large number of money launderers, Colombian and Venezuelan, have been engaged in this dark activity. Many of them are well known, including one we recently profiled, the American expat/money launderer, Gary Lundgren, whose huge real estate empire was accumulated, in large part, by his active participation in the scheme. The former President of Panama, Ricardo Martinelli, who laundered drug profits being smuggled in by the pyramid scheme "superstar," David Murcia Guzmán, also played a major role.

It all boils down to one fact: there's nobody indicting Panama's approximately fifty known, active money launderers, who have been engaged in the cash-for-condo scheme I have detailed here, and unless they are arrested, they will continue to fund major construction projects in Panama. Perhaps law enforcement agencies from the United States can start by charging Martinelli and Lundgren.

Ricardo Martinelli




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