Panama is the financial and commercial center of Central America, but also, historically, it is where drug traffickers launder money. Real estate, businesses and even greeting cards are used by the traffickers to confuse authorities. How do they manage to get away with it? The story sounds like a gangster film.
QPanama – A half hour later — half an hour of lies, really — the visitor paused and smiled at him.
“You already noticed that I don’t know anything about banks, right?” he said.
Cautiously, the boss nodded.
“I wanted to meet you because I know it was you,” said the visitor.
The boss was stunned. The steak filet that he was eating grew cold on his plate and became stiff, just like his arms — stiff like rods of steel.
“What?” he asked. “What did I do? What are you talking about?”
“The $600,000 that you took. That money was mine,” the visitor said passively.
The boss understood.
“We had been following those people for a long time,” the boss says now, years after the encounter, while sitting in the same shopping center in Panama City where the meeting took place. “We had intelligence reports saying that they were moving money and drugs. They were Colombians. When we finally took them down, I had to leave. We caught them with everything: $600,000 in one room.”
The money was being stored while the organization erased the traces of drug trafficking; lawyers, financiers and bankers would have been in charge of integrating it into legal markets and closing the drug trafficking ring.
*This article originally ran in Domingo El Universal and was translated and reprinted with permission from the authors. Read the original here.
They sat staring at each other for a long time. The boss does not remember how long, but in any case they were the longest seconds of his life.
“If you’re going to kill me,” he said, “those two over there are going to take care of you.”
He was talking about his bodyguards, who stood a couple meters from them.
“No, no, if that were the case, I wouldn’t be sitting here,” said the visitor. “I really just came to admit that in this case there was no corruption. I know that. That’s part of the game: sometimes you win, sometimes you lose.”
*****
About all he remembers about that night is that it was late. He and his bodyguard had come to have dinner at a shopping center near the canal when the visitor, a middle-aged Colombian man, had approached them in the hallway. The boss says he was in shock at the time and to this day he cannot drum up a portrait of what the man looked like.
“Did he have long or short hair? Light or dark? Thick eyebrows, big hands?”
The boss only remembers the visitor’s composure, and the details he gave him about the boss’ personal life.
“He had done a full investigation into my life. He knew my brand of car, where I lived, where I ate … I didn’t know when he was going to pull a gun on me.”
The incident happened just a few meters from where our interview was taking place. The boss was driving towards the old Financial Analysis Unit (UAF) of the Panamanian government, an entity in charge of investigating money laundering cases. He asked to remain anonymous. Under his command, UAF agents brought down a lot operations and structures tied to organized crime, and he does not want anyone to be able to identify him.
“That day I suddenly realized I was vulnerable,” he says.
As the moments passed, and the boss realized that no one was shooting at him, he relaxed a bit. Although the visitor was subtle, the boss noticed that he wanted to put him on his payroll.
“He had come to bribe me. He wanted me to stay right where I was (among the leadership of the unit) and pass him information. He talked about himself; that’s how I know he was one of the big ones — he didn’t speak in third person, like a messenger, he talked about himself.”
The boss did not understand why the man was there, why he had not sent an emissary, and he said as much.
“Why are you taking such a big risk?” he remembered asking him.
The visitor laughed.
When the visitor made his last bribe offer, the boss made a decision.
“Look, I’m pissing myself with fear, but since you’ve spoken so sincerely, I will too.”
And he told him no.
The drug lord left and the boss was left to stew. His work was delicate, and he knew that. He investigated money laundering cases involving tens of millions of dollars each year in Panama, an important territory for organized crime. He knew, as he explained later, that, “while the government is getting dressed, the criminals are already ready.”
This is what had happened months earlier in the city. The antinarcotics unit of the Attorney General’s Office and the now-extinct Technical Judicial Police (PTJ) had dismantled a group made up of Colombians, Panamanians and Mexicans that moved cocaine from South America to Central America. The authorities seized three tons of cocaine and put 11 members of the organization in jail. But the operation ended badly — one of the heads of the PTJ died of poisoning and the antinarcotics prosecutor, Patricio Candanedo, resigned months later.
Then the boss had found the operations room of a group of Colombians and had confiscated the $600,000. Although he still does not know why, the only bad thing that happened that day was that his dinner got cold.
*****
Rosendo Miranda received us in his office, on the umpteenth floor of the umpteenth skyscraper in one of the city’s wealthy neighborhoods. Miranda, who was the antinarcotics prosecutor between 1995 and 2005, pursued, like the current head of the UAF, drug trafficking funds in Panama and the financial structures that laundered this money. The lawyer understands that the biggest problem for the authorities here is the volume of financial and commercial activity happening in the country, a facade used by drug traffickers to cover up their real business.
Elegant and concise, Miranda has a certain logic.
“Drug traffickers see it as a business,” he said. “Forget for a minute that cocaine or marijuana are illicit substances; pretend that they are legal. From a marketing point of view, what countries would you choose so that your product would most quickly reach your consumer market? Are you going to go to Nicaragua, which has no infrastructure? Are you going to go to Guatemala? No…Of course not!”
The same thing happens with the money. The Panamanian economy grew more than 10 percent last year, the highest rate of growth in Latin America. The Colon Free Trade Zone — the second largest tax free trade area in the world after Hong Kong — moved $30 billion in that same period of time and provided jobs for 30,000 people. The famous Panama Canal connects two oceans in just an hour and a half. Such commercial movement creates good opportunities for legal commerce, but also for illegal commerce.
“It’s always been this way,” Miranda explained. “Historically, there were the famous Portobello ferries in the colonial period; all of the gold that came out of South America passed through here and was sent to Spain. Panama is an attractive country, both for legal and illegal reasons.”
Miranda recalled a case that occurred during his years working for the Attorney General’s Office, an investigation that began in Canada, moved to Panama, and ended at a chain of household appliance stores in Colombia.
“The Canadian authorities had been monitoring a group that distributed drugs in Toronto, called the ‘Angels of Death’ or something like that,” he said. “The guys ran into problems when they went to change their Canadian dollars for American money and in this way send the money back to the distributor. What did Canada do? They opened a money exchange run by police. They gave them facilities in which to change their dollars and opened an account for them in New York. So the guys arrived with their Canadian dollars and the police changed them for New York bank checks.”
The criminal structure ran a cover operation registered in the name of a frontman in the Colon Free Trade Zone and another in Maicao, Colombia. The checks came to the Panamanian business, which then gave loans to the Colombian business. Since the checks were backed by a New York bank, nobody suspected anything.
“Using this strategy, the police were able to see that the criminals sent $36 million through Panama,” Miranda said. “The investigations later carried out in Colombia showed, moreover, that Pacho Herrera’s group — a Cali Cartel leader — set up a chain of household appliance stores, and that the other structure was involved in that as well. It was a very sophisticated case.”
*****
In the La Joyita prison, on the outskirts of the capital, Jose Nelson Urrego is serving time for buying an island with drug trafficking money. In 2007, Urrego was sentenced to seven years for money laundering and buying properties with illicit money, among them the Chapera Island, located in the Pearl Islands in the Panamanian Pacific. The judicial report from the Judicial Investigation Unit states that he at one time managed over $25 million in ill-gotten proceeds.
Urrego walked from his cell slowly, dressed in shorts and a yellow t-shirt. He approached the visiting area, a small section with plastic chairs, and sat down next to one of his lawyers, who, after dozens of meetings in prison, had essentially become his partner. He has a wide nose, big ears that stick out, and a soft voice. His eyes were tired and sad. A medical report from the prison says Urrego suffers from depression.
Local press reported that Urrego was a member of the Norte del Valle Cartel, and was involved in drug trafficking since the 1980s. In a book titled Colombia: The Cocaine Cowboys, Colombian journalist Fabio Castillo names Urrego on a couple of occasions as the coordinator of cocaine flights to the United States, and as the owner of hotel used as cover in the San Andres Island in the Colombian Caribbean. The first time he was arrested, authorities believed it to be “the capture of the last great capo, the biggest money launderer and one of the richest men in the world.” That was in 1998 and he was in prison for three years. He was sentenced for illicit enrichment, but the drug trafficking charges were dismissed for lack of evidence.
“My fortune comes from a ranch that I inherited in the 1980s. I’ve always told the truth. I was persecuted,” Urrego told us in his broken, cracked voice. He says he did know major drug traffickers; FARC guerrillas who walked through his family’s properties when he was a kid, and corrupt generals. The latter, he says, sat in the VIP area of a nightclub that he ran, where they closed deals with drug lords. According to Urrego, he was arrested because they wanted to silence him.
After he was set free, Urrego wanted a change of scenery and in 2001 went to Panama. The country was undergoing a serious economic crisis. He thought that it was a good opportunity to buy properties at a low price and do some business. He began to take in revenue from the Chapera Island, a paradise with lush vegetation and white sandy beaches, which he had purchased for just under $1.5 million. The producers of the famous television program Survivor decided to film some episodes there. For the rights to film on his beaches, Urrego got around $60,000 per month. The business broke down in 2007, when they arrested him.
“It was a conspiracy,” he reiterated, more forcefully. “Lewis Navarro [the former vice-president of Panama] met with me two times to tell me that he wanted to buy the island, that he had a special affection for it because he used to go there when he was young, and I refused.”
Navarro has always denied that these encounters occurred or that he personally knew Urrego.
“Who are they going to believe?” the Colombian said, tears falling down his face. “But I am going to fight to get my island back.”
For the moment, instead of reality show contestants, members of the Panamanian Air Force, which opened its first Pacific base in 2009, walk along the island’s beaches. Their objective is to guard the Pearl Islands, which they say is used by US-bound drug traffickers.
*****
In El Renacer, another prison on the outskirts of the capital, Manuel Antonio Noriega, the dictator who governed Panama from 1983 until 1989, when the United States invaded the country and arrested him, is held prisoner. The former general has spent the past 24 years in prison, first in the United States, where he was sentenced for drug trafficking, then in France for money laundering, and finally, for the past year and a half, in his own country, for multiple homicides during his reign. Noriega, now a sickly 80-year-old man who spends his days between his cell and the hospital, is in great part responsible for the fame Panama gained as a money laundering hotspot. The French authorities discovered that he had received millions of dollars from Colombia’s Medellin Cartel, which in the 1980s operated on Panamanian territory with total impunity. In general, all of the Colombian organizations did. Men with suitcases stuffed with cash came to the central bank and, with few questions asked, opened accounts with exorbitant amounts of money.
Now, even with the cash-hungry dictator in jail and a number of new monetary controls and regulatory measures that they have put in place since, there is a certain resignation that in Panama — a regional financial center and a jumping off point for international commerce — money laundering will always exist.
“There is no country that is free of money laundering, and much less so a country like ours, which has geographical and commercial characteristics that make the country fertile terrain. These factors predispose us, or make us more vulnerable to these activities,” explained Javier Caraballo, a Panamanian antinarcotics prosecutor with a broad complexion, round face and shaved head.
Caraballo said the bank’s security standards have improved lately, but that drug traffickers have become more sophisticated. If anyone wants to open an important account in any Panamanian bank, the first thing the bank will do is open an investigation to verify that the future client does not have a criminal record. In the case of Urrego, the prosecutor said, a banker contracted by the Colombian managed to scrub all but a 75-day sentence from his criminal record. The bank did not find any other juridical impediments to opening the account.
“In drug trafficking there is a great specialization of roles,” the prosecutor said. “It is difficult to find one singular group that dedicates itself to both drug trafficking and money laundering. Even among the money launderers, there are specializations — the group that introduces the money in cash and buys luxury items or properties is one; then there is another group dedicated to the more sophisticated part. This includes investors, lawyers, bankers…people who know the system.”
For the authorities, the critical moment is when the cash is converted into virtual money or a material good.
“The majority of our successful cases are cracked when they are still in the first phase,” the prosecutor said.
Several months before we spoke to him, the police discovered $2.6 million in cash in a luxury apartment occupied by a group of Colombians. Authorities later discovered another four luxury apartments that had been acquired with drug trafficking money by the same organization. It was a typical case of an organization that attempted to launder money through the purchase of properties.
In the later stages of the laundering process, Caraballo said, “following the money trail is extremely difficult. We have had cases in which the only limit is your imagination.”
*****
While the government gets dressed, the criminals have already left, the UAF boss recalled as he played with his cell phone. Maybe prevention works, but the criminal organizations learn from their mistakes, and the laws, and they get better.
The boss was thinking of his visitor, the Colombian drug lord, who was not complaining about losing his $600,000 but trying to rectify the situation by bribing the boss, getting him on his payroll.
“The game is the game,” the boss said stoically. “It’s true. It’s a game.”
For him, the main problem in fighting drug trafficking and money laundering is the double standards of all the actors.
“When the DEA [US Drug Enforcement Administration] hits one guy, another benefits. And then vice versa, and that’s how it always is. It is truly perverse. If the big countries really wanted to combat this, we would all be speaking the same language, but we’re not,” he said
Looking up at the highest floor of the complex, the boss prepared to leave. There were still some questions, the majority about his recent past. What did a professional like him do with his life after investigating such sophisticated criminal tactics? What did he do with all the information accumulated during all those years?
Quickly, the chief whispered just before he left: “If you get out of this, you get out. If you want to stay in it, you have to be on the other side. Look at the fact that a lot of DEA agents, when they retire, open consultancy firms. Who do you think their clients are?”
*This article originally ran in Domingo El Universal
and was translated and reprinted
