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
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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
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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
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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