PANAMA: JUDICIAL PROCESS FINALLY BEGINS FOR

C O N F I D E N T I A L PANAMA 000610

SIPDIS

SIPDIS

DEPARTMENT FOR WHA/CEN GREG SCHIFFER
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 04/02/2016
TAGS: PGOV PM PREL
SUBJECT: PANAMA: JUDICIAL PROCESS FINALLY BEGINS FOR
EX-NICARAGUAN PRESIDENT ALEMAN

REF: PANAMA 05 002292

Classified By: DCM Luis Arreaga for reasons 1.4(b) and (d).

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SUMMARY
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1. (C) Embassy is closely following the money laundering
case of former Nicaraguan President Arnoldo Aleman. The
probable cause hearing began on March 30, 2006 following a
four-month postponement (for a defense attorney's emergency
dental work). Judge Adolfo Mejia, assigned as a replacement
justice on March 28, 2006, now has 30 days to issue a written
ruling on whether the case has merit and should enter an
exploratory phase, followed by a possible trial. Amid
concerns that Aleman's attorneys were seeking to influence
the new judge, Ambassador told Panama's Foreign Minister that
"the world is watching" the case. Two EmbOffs attended this
weeks proceedings to monitor developments and show U.S.
interest in a case that should demonstrate whether the
Government of Panama (GOP) is truly committed to
international justice and the fight against corruption in
Central America. Embassy will continue to press GOP on this
bellwether case. End summary.


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1998: The Panama Connection Begins
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2. (U) In 1998, Esteban Duque Estrada, a member of Aleman's
cabinet, opened a $10 million bank account in Panama
reportedly to fund election campaigns by the ruling Liberal
Party legislators against the Sandinistas. Additional
deposits to the account were followed by money transfers to
shell corporations in Panama. After Aleman left office in
January 2002, the new government discovered that large sums
of money were missing from the national treasury. An
investigation determined that Aleman's administration had
transferred the money to Panama. Transparency International
estimates Aleman embezzled $100 million while president of
Nicaragua. Aleman was subsequently stripped of his immunity
and indicted by the Government of Nicaragua (GON). In
December 2003, Aleman was found guilty of money laundering,
fraud and embezzlement. The court sentenced him to 20 years
in prison and fined him $10 million but due to his problems
with diabetes, heart disease and hypertension, the judge
allowed him to serve his sentence at his private ranch
outside the capital. While the GON was prosecuting Aleman,
the GOP began its own investigation and indicted Aleman for
money laundering.

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Delaying Tactics
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3. (U) On November 23, 2005, after exhausting all legal
appeals, Aleman along with his wife, father-in-law, former
tax director Byron Jerez, Jerez's wife, and others, were
scheduled for their initial hearing in Panama. The hearing
was postponed until March 30, 2006 when both of their
attorneys failed to appear due to health problems. (Aleman's
father-in-law, Jose Antonio Flores Lovo had also changed
attorneys on the eve of the November 23 hearing. See
reftel.) At the time of the postponement, the court
appointed public defenders to review the case in the event
defense attorneys failed to appear in court again. Two days
before this week's hearing, Byron Jerez hired a new attorney
and in an apparent legal maneuver the defense attorneys asked
for the removal of Judge Giniva Ladron de Guevara, citing
previous conflicts with the new member of the defense team.
Judge Silverio Rodriguez summarily ruled in favor of the
defense and ordered Mejia to replace Ladron de Guevara.
Mejia normally serves in Ladron de Guevara's place when she
is unavailable. Mejia will now have up to 30 days to
evaluate over 25,000 pages of court documents and determine
whether the case should continue.

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Jury Still Out - on GOP
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4. (C) At the March 30, 2006 hearing anti-corruption
prosecutor Mercedes de Leon made a strong presentation on the
link between the original Nicaraguan funds and their transfer
to accounts owned by Aleman and Jerez. In preparation for
this hearing, de Leon received assistance from DHS/ICE agents
and intelligence analysts who have been involved with the
case. She also cited testimony from former GON official
Esteban Duque-Estrada who is cooperating in the case against
his former boss. As Embassy has urged, De Leon also
requested that the judge issue arrest warrants to compel
Aleman and his co-accused to appear at their trial. Some
Panamanians however speculate that Judge Ladron de Guevara
was removed because the defense realized she was
"untouchable" and the defense is seeking a judge friendlier
to the case. There is also suspicion about the court and
judge who removed Ladron de Guevara from the case and on the
replacement judge Mejia. Supreme Court Justice Arjona
(please protect),widely perceived as one of the Court's few
honest judges confirmed to DCM that there are suspicions
about Mejia.


5. (C) Attorney General Ana Matilde Gomez and her team at
the Public Ministry are committed to seeing justice done in
this case. They would also like to see the U.S. move forward
with its prosecution of Aleman and cronies and have offered
to share information with U.S. investigators and prosecutors.
GOP also remains anxious to cooperate with USG in the event
Aleman is prosecuted in the U.S. for money transfers that
were routed through American banks. We have clearly put
Panama's executive branches on notice that we are watching
this case closely. Embassy will continue to push this
message at every opportunity.

EATON