Varela backs off — just a little — from his Odebrecht impunity law

December 28, 2016

Rob Roy — Minister of Canal Affairs Roberto Roy, who is also secretary of the Metro. In those posts he oversees some large public works contracts, including some with Odebrecht. The contract for Metro Line 2 was steered to Odebrecht, which was not the low bidder, on his watch. A Chinese-led consortium with much experience and a good reputation lost on the basis of a questionable and arbitrary set of technical points formulated by a committee that included a former Odebrecht consultant. There are no allegations that Roy was bribed and even if he was, the way that this is usually done is that a lower level person or outside party takes the bribe from the company and redistributes it. Unless the one or more bag people can be persuaded to turn state’s evidence such bribery becomes difficult to prove. But it’s much easier to say, when you have an admission by the party that paid the bribe, that the person in charge of the institution whose decision was affected by corruption has been disgraced by it having happened on his or her watch regardless of personal guilt or innocence in the crime itself. Photo by the Presidencia.

Odebrecht kicked out of Metro Line 3 and fourth canal bridge bidding after US corruption admissions

Varela edges away from his Odebrecht impunity law

by Eric Jackson

On the evening of December 27 the Varela administration, at a press conference that President Varela himself did not attend, issued a communique about Odebrecht, the large and notoriously corrupt Brazilian-based multinational conglomerate that centers around a construction company. The seven points of the statement include a lot of conditional things that will probably amount to no net change, a demand for compensation for the $59 million in bribes which Odebrecht admitted to the US Department of Justice that it had paid to politically connected Panamanians and a few noteworthy items.

Both the serious measures and the fluff, however, represent a retreat from the “Odebrecht Law” proposed and signed by the president and passed by the National Assembly earlier this year. That law bars the government from making contracts by companies convicted of bribery by the Panamanian courts, while refusing to recognize judgments by foreign legal systems in public works bidding here. The corrupt and dysfunctional Panamanian courts largely run on bribery and rarely convict anybody of engaging in it. The non-recogntion of foreign judgments was necessary for Odbrecht’s purposes because that group of companies has been at the center of many Brazilian bribery scandals going back many years and ongoing today, and has picked up a number of convictions along the way.

The administration’s statement was made at a press conference at the Ministry of the Presidency at which a number of lower-level officials whose departments deal with Odebrecht were on the dais. The statement includes a point that the government will “Adopt the necessary measures so that the Odebrecht Goup desists from the prequalification process for the bidding for the design and consrtuction of the 4th bridge over the Panama Canal and Line 3 of the Metro.” Perhaps this would not require repeal or amendment of the recent law designed for politicians to look tough on corruption in government contracting while in reality designing the system to bar penalties for such crimes.

The statement also expresses support for Public Ministry investigations of the bribes detailed by the US Justice Department and demands that Odebrecht compensate Panama for its losses, cooperate with prosecutors and admit its guilt. An admission might trigger the government contracting law passed earlier this year, were it in the form of a guilty plea applicable to the entirety of Odebrecht rather than just a subsidiary or one of the conglomerate’s executives.

The communique’s conditional language comes into play again when it bars future government contracts for Odebrecht UNTIL it shows that it has cooperated with prosecutors and compensated Panama. No measures are specified to judge those things, and compensation may matter a great deal to the Panamanian treasury. Did Odebrecht win a contract because it bribed somebody to rig the bidding process? Paying an amount equal to the bribe would not cover the costs of defending or settling a lawsuit by the companies that lost the contract due to the corrupted process. Nor would it cover the government’s legal expenses when it goes after Martinelli apparatchiki or relatives and faces phalanxes of lawyers interposing frivolous motions to delay and dismiss.

The administration also said that it would move to end the partnership agreement with Odebrecht to run the Chan 2 hydroelectric dam project in Bocas del Toro. The administration says that it expects and demands proper performance on the many public works contracts with Odebrecht on which construction is already underway. The most noteworthy of these are Line 2 of the Metro, which will take the commuter rail system out to Tocumen and the Colon City renovation project. Panama City also has some large municipal contracts with Odebrecht, about which Mayor Blandón is being pestered with questions and critiques.