PANAMANIAN COMPTROLLER GENERAL DANI KUZNIECKY

C O N F I D E N T I A L SECTION 01 OF 03 PANAMA 001613

SIPDIS

DEPARTMENT FOR WHA/CEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 08/02/2015
TAGS: PREL PGOV EFIN PM POL CHIEF
SUBJECT: PANAMANIAN COMPTROLLER GENERAL DANI KUZNIECKY
DISENCHANTED WITH TORRIJOS, MULLS CALLING IT QUITS

REF: PANAMA 1553

Classified By: CDA JDANILOWICZ FOR REASONS 1.4 (B) AND (D).

SUMMARY
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1. (C) Disturbed by an administration he sees as rudderless
and by President Torrijos's lack of attention to his reform
agenda, especially anti-corruption, Comptroller Dani
Kuzniecky is considering throwing in the towel. Kuzniecky's
defection would deprive Torrijos of one of his most able
reform activists, although his loyalty to Torrijos and his
ambitious plans for the Contraloria probably make a sudden
departure unlikely. Nonetheless, Kuzniecky's frustration was
plain in recent talks with Ambassador Watt, POL Counselor,
and POL Specialist. Kuzniecky wants Torrijos to devote much
more attention to the Contraloria to help Kuzniecky stem the
theft of public funds, which he says continues unabated at
all levels of government. In private, Kuzniecky often has
accused Torrijos of failing to lead and having no plan for
governing. While Kuzniecky sharply criticized Torrijos and
several ministers, he praised others, including Government
and Justice Minister Hector Aleman and Foreign Minister
Samuel Lewis. Kuzniecky's awkward position illustrates the
GOP's contradiction, between the technocrats who nominally
are in power and the Democratic Revolutionary Party's
political realties, which the president is doing little to
change. End Summary.

An Aloof President
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2. (C) In a July 22 conversation with POL Specialist, an
obviously depressed Kuzniecky made no bones about his
disappointment with Torrijos and with the GOP in general.
Kuzniecky said that Torrijos pays scant attention to him. As
he briefs the president on his plans, Kuzniecky complained,
Torrijos stares at the ceiling, takes phone calls, gives me
the thumbs up and says "good job, good plan, let's discuss
this next week," but the time for that discussion never
comes. Kuzniecky pointed out that the Comptroller General
must approve every expenditure in the country. A close
relationship with the president is vital for the Comptroller
to do his job, he believes, yet he and Torrijos hadn't spoken
in three weeks. "How can that be?" he asked sarcastically.

"So That's It?"
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3. (C) Kuzniecky particularly would like to get rid of his
Deputy Comptroller General, PRD stalwart Luis Amado, whom he
suspects of demanding "commissions." Amado can be removed
only with Torrijos's OK. Contraloria officials have gotten
used to demanding commissions or kickbacks from vendors in
return for making legitimate payments, Kuzniecky explained.
Kuzniecky can prevent Amado from stealing if he watches him
but, he added, he cannot watch him all the time. For
example, Kuzniecky recently signed a $9 million check for the
Nikos Cafe restaurant chain, which has a contract to provide
meals for Panamanian police officers. A few days later,
Kuzniecky got a phone call from Nikos' owner, saying "So
that's it? You mean, you don't want a commission?"

We Need To Put People In Jail
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4. (C) The people's level of frustration level with
corruption and impunity is very high, Kuzniecky told
Ambassador Watt in late July. That frustration is
exacerbated due to recent problematic Supreme Court rulings
(see Reftel) and scandals involving legislators accused of
selling their right to import tax-free vehicles to car
dealerships. People in Panama cheat everywhere, Kuzniecky
said, from the Court's "ridiculous rulings" to the lowest
level of the government. Scratch and you'll find something,"
he said. "We need to send people to jail soon."

5. (C) Kuzniecky is reluctant to leave Torrijos in the
middle of the CSS reform crisis but vows that unless he
starts paying more attention, he won't put up with this.
Kuzniecky planted a story in a local daily that he might be
quitting soon, he confided to POL Specialist. When he ran
into Minister of the Presidency Ubaldino Real on July 22, he
asked Real "have you guys found a new Comptroller General?"
Real allegedly laughed and said "I am sure that you are
kidding." "I'm not kidding," Kuzniecky said he replied.

It's Not Happening
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6. (C) In separate conversations with POL Counselor,
Kuzniecky said that the GOP was doing a lousy job
communicating its "story" and its priorities. The government
constantly fails to get ahead of the news with its version of
events. The government has no real plan, Kuzniecky said, no
vision of how it wants to accomplish its objectives.
Torrijos could help himself if he gave more speeches and
began to outline his vision for the country, Kuzniecky said,
but he has not done so, perhaps because he has no plan.
Kuzniecky often reminds Torrijos that he has a unique
opportunity, perhaps not to be repeated, to accomplish great
things in Panama and to really put the country on a new
footing. The trouble is, Kuzniecky implied, it's just not
happening.

Comments on the Cabinet
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7. (C) Kuzniecky had the following to say about the cabinet:

--Government and Justice Minister Hector Aleman, Minister of
Housing Balbina Herrera, and Minister of Public Works Carlos
Vallarino -- They are the ones who are really working. Not
only are they doing their "political" work, but they are
actually executing plans and programs.

--Social Development (formerly MINJUMFA) Minister Leonor
Calderon -- She is feeling down and has been very quiet and
uninterested lately. She feels that Torrijos ignores her
portfolio and keeps referring her to the First Lady's office.

--Tourism Minister Ruben Blades -- He has done nothing ("The
Moscoso government did much better in tourism that we are
doing") and he tries the ministers' patience by mentioning
his artistic career at every Cabinet meeting. The ministers
criticize him behind his back for sloppy presentations. His
ego was badly affected with last week's poll, which doesn't
reflect good on him and he has been rude to some recently."

--Vice President/Foreign Minister Samuel Lewis Navarro --
Lewis doesn't like him and Kuzniecky is not fond of Lewis but
he added "I have to admit that he does a good job. He would
be a better president than Torrijos. No doubt."

--Trade Minister Alejandro Ferrer -- "a smart guy." Once he
was approachable, Kuzniecky said, but his ego is growing.
Kuzniecky keeps sending documents back to Ferrer's office for
corrections before he approves them but Ferrer doesn't like
it, he said.

--Agriculture Minister Laurentino Cortizo -- "A total fake."

--Presidency Minister Ubaldino Real -- "Another true
disappointment," Kuzniecky said, adding that he and Uba are
friends and spent much time together during the campaign.
"He is reviewing everything and doing nothing." Given his
close relationship with Torrijos, Uba "should be the guy with
the whip" making sure that everyone does what they're
supposed to do, as he knows Martin would support him, but he
doesn't do it. "Uba knows that things are not going well and
he is not doing anything to help."

--Banco Nacional de Panama General Manager Juan De Dianous --
Kuzniecky praised De Dianous, pointing out that so far in
2005 the bank already has made $70-80 million in profits.

Most Unpopular Award
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8. (C) Kuzniecky said that he and Finance Minister Ricaurte
Vasquez, another straight-shooter, are the least liked people
in the GOP. Kuzniecky said PRD majority leader Freddi Torres
had asked him, "Are you Panama's new Mother Theresa?" for
Kuzniecky's insistence on transparency.

Comment
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9. (C) Unlike most of the cabinet, which took office on
September 1, 2004, Kuzniecky has been at his job as
Comptroller General barely seven months. A principal
technocratic appointee and one of Torrijos's childhood school
chums, Kuzniecky does not need his government job and could
return to his law practice at any time. But we doubt he will
do so, at least for now, despite his dissatisfaction.
Kuzniecky is an idealist and extremely able; government
service intrigues him precisely because it allows him to
"make a difference." His discomfort stems from the clash
between his idealism and the president's failure thus far to
change Panama's kleptocratic political culture or to show
much interest in Kuzniecky's work. Kuzniecky's degree of
dissatisfaction at his job is an indicator of the extent to
which Torrijos is succeeding in bringing change to Panama.
Given present trends, we would not be surprised if Kuzniecky
does not finish out his five-year term.

DANILOWICZ