PANAMANIAN COMPTROLLER DANI KUZNIECKY ALERT TO

C O N F I D E N T I A L PANAMA 000040

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 01/06/2016
TAGS: PGOV PREL BEXP PM
SUBJECT: PANAMANIAN COMPTROLLER DANI KUZNIECKY ALERT TO
POSSIBLE CORRUPT PRACTICES BUT CLAIMS TORRIJOS SEES HIM AS
A "PEST"


Classified By: DEPUTY CHIEF OF MISSION LUIS ARREAGA FOR REASONS 1.4 (B)
AND (D)

SUMMARY
--------------

1. (C) Comptroller General Dani Kuzniecky recently met with
Emboff to discuss questionable public bidding cases that had
attracted his negative attention. They included the Tocumen
airport duty free zone (which involved an American company),
the unrelated Pacific "mega-port" project involving a
different American company, and the Panama City Mayor's plan
to acquire an expensive older building for a new City Hall.
Kuzniecky claims that although he and President Torrijos have
a "love-hate" relationship, Torrijos has asked him to stay
on, although he does give him consistent support. End
Summary.

Bidding Documents "Tailor-Made"?
--------------

2. (C) Meeting Emboff for coffee late last year, Comptroller
Kuzniecky acknowledged that he had acted to cancel the first
bidding process for the Tocumen duty-free zone, due to
credible complaints from two Panamanian business groups (the
Mottas and the Wakeds),that the bidding documents had been
custom-made for FALIC (sic -- supposedly a U.S. company).
(Comment: Several people familiar with the specs commented to
Emboffs that only one firm in the world -- FALIC - would have
qualified. End Comment.) Kuzniecky added that after calling
in Tocumen Airport General Manager Carlos Garcia, Garcia
denied that the bidding specifications favored FALIC and
denied that he was involved with FALIC in any way. But,
Kuzniecky added, "Garcia does not know that I have an
informant in his office." (Comment: Other sources told
Emboff that close Torrijos associate Felix "Pille8 ("P-J")
Gonzalez and notorious lawyer Hector Infante, a close Perez
Balladares associate, are involved with FALIC. End Comment.)


Asks For Garcia's Dismissal
--------------

3. (C) Kuzniecky said, in his opinion, several bid
specifications favored FALIC, adding that he pushed Minister
of the Presidency Ubaldino Real and President Torrijos to
delay the bid opening, telling them that he would not approve
the bid documents. Torrijos was supportive but Uba (Real)
hesitated. Kuzniecky said he went further, demanding General
Manager Garcia's dismissal, but added that Garcia "is well
protected in the PRD.8 (Comment: Garcia has a shady
reputation as former Customs Director under President Perez
Balladares and as National Assembly Administrative Director.
End Comment.)

Who Works For Free?
--------------

4. (C) Emboff explained Kuzniecky that FALIC had recently
sought USG advocacy through the Department of Commerce in
Washington, D.C. and that it had certified its adherence to
the Foreign Corrupt Practices Act.
Emboff added that the Embassy was not lobbying in favor of
any company. (Note: Subsequently and at Commerce's request,
the Embassy sent a letter to the GOP raising our concern
about possible last-minute changes in the bidding specs that
could have been prejudicial to a U.S. firm. That prompted a
flurry of meetings and discussions with GOP officials that
ultimately led to a decision by the Airport Authority to
extend the bidding process to enable it to relaunch the
bidding process in a more open, transparent manner. Although
FALIC's local competitors raised various allegations about
the firm, their evidence was circumstantial. End Note.)
Kuzniecky would only say that he has no evidence on "Pille"
and Garcia but finds it hard to believe that they are acting
as intermediaries and boosting FALIC for free. Kuzniecky
added that he would not sign a document "if there is
something fishy,8 even for an American company. (Comment:
The U.S.-educated Kuzniecky is openly pro-American. End
Comment.)

Another "Wrong Signal"?


--------------

5. (C) Kuzniecky claimed that another case involving an
American company &has already sent a wrong signal.8
According to Kuzniecky, President Torrijos invited him
several weeks ago to attend a meeting at the Palace. When he
arrived, Torrijos's cousin Hugo Torrijos (former Maritime
Administration chief) and two American businessmen were
there. The topic under discussion was the upcoming bidding
for the Pacific "mega" port. Kuzniecky claimed that one of
the Americans then claimed that his company would
"pre-qualify8 in the January 2006 bidding process. At that
point, Kuzniecky said he interrupted him and bluntly asked
how he knew that his company would &pre-qualify8 when the
bidding documents were not even ready. There was an awkward
silence in the room, Kuzniecky said. Finally, Hugo Torrijos
offered a "lame" explanation. Kuzniecky would not volunteer
the name of the company.

"Illegal" ARI Deal
--------------

6. (C) Kuzniecky also commented on a recent controversy
concerning the proposed sale of 30 hectares by (the
now-defunct) ARI. Kuzniecky labeled the deal "another case
of corruption." ARI cannot sell that piece of land,
Kuzniecky stated, which was bought for minerals in the
sub-soil. By law, the GOP can only lease it through a
concession contract but never sell it. Kuzniecky said that
he has not been able to find out the name of the buyer,
adding that he found out about the case only because the
Contraloria has a representative who attends the ARI board
meetings.

New City Hall
--------------

7. (C) Another case that Kuzniecky discussed involves Panama
City Mayor (and 2009 presidential hopeful) Juan Carlos
Navarro. Again admitting that he has no evidence, still,
Kuzniecky said, "things don,t make sense." Kuzniecky is
incredulous that Navarro wants to buy a 40-year old building
(just a few blocks from our Embassy) for $15 million to use
as a new City hall. "Why in the world would he pay $15
million for such an old building when he could build a new
one for less money?" Kuzniecky asked. Kuzniecky said he has
the power not to approve the contract but he admitted that he
needs to do more legal research.

"Love-Hate" With Torrijos
--------------

8. (C) Later, in a one-on-one meeting with President
Torrijos, Kuzniecky claims that he told Torrijos that he is
willing to resign if he asks him to. Kuzniecky says that
Torrijos and he have a love-hate relationship. &We like
each other but I have become a pest," he explains, adding
that Torrijos gets 10 calls a day from legislators,
ministers, and local representatives to complain about him.
Kuzniecky said that Torrijos asked him not to go, that he
wants Kuzniecky to keep him informed about who is doing what.
"But what," Kuzniecky asked rhetorically, "is the point if I
tell him and he doesn,t do anything?"

EATON