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). -------------- SUMMARY -------------- ¶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. -------------- 1998: The Panama Connection Begins -------------- ¶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. -------------- Delaying Tactics -------------- ¶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. -------------- Jury Still Out - on GOP -------------- ¶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