GOP INVESTIGATES USDA'S SCREWWORM PARTNER FOR

UNCLAS PANAMA 001479 SIPDIS SIPDIS USDA FOR APHIS/IS - CLIFFORD GRAHAM STATE FOR OIG - KRONGARD AND MALLOY ALSO FOR WHA/CEN - TELLO E.O. 12958: N/A TAGS: ASIG EAGR KCOR PM SUBJECT: GOP INVESTIGATES USDA'S SCREWWORM PARTNER FOR POSSIBLE CORRUPTION This message is Sensitive But Unclassified. Please handle accordingly. ¶1. (SBU) Summary: Post has discovered apparent financial irregularities by the Panamanian section of the U.S.-Panama Commission for the Eradication of Screwworm (Spanish acronym: "COPEG"). These include the use of a Panama COPEG-only account for reimbursements based on falsified travel vouchers and "double-dipping" into different accounts for the same activity. Based on the Embassy's evidence of apparent wrongdoing, GOP officials suspended the prime suspects and launched an investigation by Comptroller General auditors. Despite early GOP hesitation that may have unwittingly aided apparent cover-up efforts, GOP auditors have since worked well with USDA-APHIS staff to pursue the case. End summary. Initial Review Reveals Financial Irregularities -------------- -- ¶2. (SBU) In July 2007, USDA-APHIS officials conducted a review of COPEG's financial transactions and found a pattern of potential abuses by the Panamanian section of the Commission. The Panamanian COPEG section had established two sub-accounts to COPEG's main bank account. Although USDA-APHIS officials maintain open access to the main account, they did not have any access to either of the Panamanian sub-accounts. Moreover, one of the two sub-accounts did not have any oversight by Panama's Comptroller General. The July 2007 review revealed that top Panamanian COPEG officials apparently used the latter account to obtain reimbursements for travel vouchers submitted fraudulently to the Panamanian agriculture ministry ("MIDA"). This included falsified vouchers submitted ostensibly on behalf of various USDA officials (including high-level USDA officials based in Washington, DC) for trips they either did not take or for trips that were subject to USDA reimbursement. The review also found apparent double-dipping by Panamanian COPEG officials, in which they obtained per diem for separate trips taken at the same time and/or obtaining money from two separate accounts for the same activity. GOP Suspends Likely Suspects, Launches Investigation -------------- -------------- ¶3. (SBU) On August 20, APHIS Country Director and Econ Chief provided Agriculture Minister Guillermo Salazar with a letter outlining the apparent financial irregularities, as well as supporting documentation, such as copies of falsified vouchers and cancelled checks. Emboffs urged immediate GOP action to pursue a more detailed audit of Panama COPEG's financial records and to follow the trail wherever it may lead. They also discussed the advisability of suspending the three main Panama COPEG suspects pending completion of an investigation. Recognizing the gravity of the issue, Salazar said he would act immediately and welcomed Emboff's efforts to also raise the matter with Panama's Comptroller General Carlos Vallarino. APHIS Country Director and Econ Chief presented Vallarino with the same information in an August 21 meeting. Vallarino said he would contact Salazar immediately to urge the suspension of the COPEG suspects and that he would summon his chief auditor right away to organize their investigatio n. Econ Chief told both Salazar and Vallarino that, as the case may eventually become public knowledge, the Embassy and the GOP should be seen as working together to root out corruption, rather than at odds over the issue. ¶4. (C) At approximately 7:20 a.m. on August 22, Minister Salazar paid a surprise visit to the COPEG plant in Pacora, where he spent approximately three hours in a closed-door meeting with the prime suspect. Later that same morning two Comptroller auditors appeared at the Pacora plant. Salazar and the suspect departed the plant without comment. About an hour later, the suspect re-appeared, met with his Panama COPEG staff, and began passing instructions to Panama COPEG staff located in their Curundu headquarters office (located at the Agriculture Ministry's compound in Panama City). ¶5. (C) Based on eyewitness accounts, Econoff contacted Salazar directly to (1) confirm the suspect's suspension, and, (2) advise that the prime suspect and at least two confederates were possibly engaged in an effort to alter, destroy, or remove records from the COPEG Curundu office. Eyewitnesses later reported to USDA-APHIS staff that the suspects continued to work until after 9:00 p.m. that evening without interruption or intervention by MIDA or Comptroller authorities. On August 23, Salazar faxed a letter to U.S. COPEG officials advising that he had suspended the three main suspects from their duties. COPEG officials then barred their unsupervised entry to any COPEG facilities. ¶6. (SBU) On August 24, absent further apparent action by Comptroller auditors, Econ Chief contacted Vallarino to urge more aggressive follow-up. On Tuesday, August 28, Comptroller auditors re-appeared at the COPEG Pacora plant. They spent the remainder of the week working closely and collegially with COPEG staff to wade through financial records, databases, and other materials. USDA-APHIS staff expects this effort will continue at least into September. Comment: Despite Initial Fumble, GOP Auditors on Track -------------- -------------- ¶7. (C) It remains to be seen whether further investigation will yield more far-reaching levels of corruption and/or sufficient evidence leading to the termination and prosecution of the Panama COPEG suspects. Despite the GOP's initial tardiness in blocking apparent cover-up attempts, Salazar and Vallarino deserve credit for their largely constructive response and their good cooperation with USDA-APHIS staff. Post will continue to pursue the case closely with GOP auditors and will advise regarding any major advances or findings. End comment. EATON