Martinelli companies’ lawyer busted for money laundering

by Eric Jackson

Attorney Evelyn Ivette Vargas Reynaga was, as these words were written, being held in the DIJ jail awaiting a decision on whether she might get bail on money laundering charges. Ms. Vargas is the in-house lawyer for Ricardo Martinelli’s Ricamar company, which is mostly in the business of food packaging for items to be marketed at the former president’s Super 99 stores. (We might quibble about attributing ownership — said to have been transferred to other family members by the fugitive ex-president, Super 99 and other businesses were arguably the objects of fraudulent transfers to avoid justice and can arguably be set aside. It is a statement about the nature and motives of Panama’s executive and judicial branches of government that no serious move has yet been made to seize these assets.) On a Swiss complaint that Panama’s Public Ministry has embraced, Evelyn Vargas is accused of setting up transactions by which at least $22 million in bribes from the Brazilian construction-based conglomerate Odebrecht passed into the possession of the former president’s two sons, Ricardo Alberto Martinelli Linares and Luis Enrique Martinelli Linares.

It is said to have been a complex yet banal financial shell game. Constructora Internacional del Sur, a Panamanian subsidiary of Odebrecht, allegedly transferred money through another Odebrecht-owned company, Bakley Assets, into Swiss bank accounts in the names of two British Virgin Islands shell companies, Kadair Investment Ltd and Aragon Finance Corp, and a Bahamian shell, Fordel International Ltd. The recipient companies are said to be owned by the two Martinelli sons. Some of the transfers were said to be in US dollars and others in euros between 2009 and 2012. At current exchange rates they would be worth more than $23 million but that value has fluctuated over time. If they were actually conduits for the ex-president himself, any investigation into that would be outside of the jurisdiction of the courts and prosecutors handling this case, as the Supreme Court is the exclusive venue for any case involving the elder Martinelli.

Vargas is accused of setting up the Martinellis’ shells and signing some of the papers involved in the transactions. But she says that she was just an in-house lawyer for the Martinellis’ businesses — on the Ricamar payroll but also doing work for the former ruling family’s real estate company, Promotora Los Andes. She was arrested in Mexico on February 22 and without objection sent back to Panama to face legal proceedings. She had an INTERPOL “red note” arrest warrant out for her but she went to Mexico not to escape prosecution but to be at the side of her father, who was dying of cancer, and then making final arrangements after his death. Published reports, based on statements that lawyers for Vargas and the Martinellis have made to various media, have it that her defense is that her job was being given papers to sign by her bosses, which she signed but really had nothing to do. It’s a corporate lawyer’s version of the “I was only following orders” Nuremberg defense. Her defense lawyer also asserts that whether or not she set up companies, she played no role in actual money transfers.

During the course of three days of interrogation, police and prosecutors raided the offices of Ricamar and Promotora Los Andes. Documents taken in those raids are being compared with Vargas’s testimony and documents obtained from other jurisdictions before the prosecutors will make a decision about bail or preventive detention.

This case is one of at least six Odebrecht matters that the prosecutors of the Public Ministry are pursuing. In the event that they find evidence suggesting criminal activity by former President Ricardo Martinelli, they will have to hand that over to the Supreme Court and desist from any line of inquiry about his conduct. The cases against Vargas and the Martinelli sons, Attorney General Kenia Porcell has noted, relies in part from information obtained from authorities in Switzerland, Brazil and the United States. But legislator and PRD leader Pedro Miguel González says that the Odebrecht bribery inquiries with respect to Panama also involve information from Hong Kong, Andorra and Liechtenstein.

Following upon the recent money laundering arrests of attorneys Jürgen Mossack and Ramón Fonseca Mora, the Vargas case is part of a relatively new phenomenon of Panamanian lawyers being accused of complicity in financial crimes for which they set up the structures. It’s leading some legal professionals and many more of their clients to question to scope and value of attorney-client privilege in Panama. The norm in most countries is that the privilege ends when the attorney becomes an active participant in the crime, but that’s not always an easy distinction to make. Here lawyers have historically been unaccountable for most of what they do, whether for malpractice or for being accomplices in crimes. Even those caught, convicted and jailed for stealing from their clients generally do not get disbarred.

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