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