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Panamá

US companies sign onto energy deal in Panama with questionable businessmen

Global leaders in energy production negotiated a controversial project in Panama with two businessmen whose companies have been linked to corruption and drug trafficking scandals.
Por:: Gerardo ReyesyJulia Frankel,
14 Sep 2021 – 01:18 PM EDT
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José Dapelo (i) and Alfredo Mello Alemán.
Crédito: Courtesy: daily La Prensa.

Last June, the President of Panama, Laurentino Cortizo Cohen, announced a new plan for the development of the country’s energy sector. The plan included the construction of a gas plant in collaboration with leading energy firms from the United States and Latin America.

In his address, the president explained that Panama would not contribute a cent of the $1 billion invested in the project by two major energy companies: InterEnergy Group and AES Panama, a subsidiary of AES Corp, a S&P 500 public trade energy firm.

But amid the celebratory presidential announcement, various criticisms of the project have surfaced. A Univision Investiga review of the contracting process between the government and the energy firms — InterEnergy Group and AES Panama — has revealed that the firms decided to partake in a multimillion-dollar energy deal with a company whose main shareholders are two businessmen with murky pasts.

At the center of the questions around the deal and its associates stands the Panamanian construction mogul Mayor Alfredo Alemán and the Ecuadorian-Italian Panamanian resident José Dapelo Benites. Both are owners of Panama NG Power. The company conceded to the firms an energy project that has remained paralyzed for eight years and that was approved by the Panamanian government amid accusations of fraud.

AES and Interenergy green-lighted the contract with Panama NG Power despite the fact that it is public knowledge that a company owned by Dapelo was investigated for unjustified payments to the parents of the chief of staff to the Panamanian president. Both InterEnergy and AES were also aware that Alemán does not have a visa to enter the United States. Aleman, who in the mid-1990s was removed from the board of directors of the central bank of Panama at the demand of the US government, is one of the businessmen closest to president Cortizo.

Univision Investiga confirmed with four sources that the embassy revoked Alemán’s visa over a year ago. The State Department declined to provide details, claiming visa information is confidential. Alemán did not confirm nor deny the removal of his visa.

InterEnergy and AES responded to Univision that they had performed an extensive due diligence into the project before accepting the deal, known as “Generadora Gatun,” and on the people involved in negotiations.

In an email response from AES headquarters in the United States, the firm claimed it had applied “strict compliance standards and extensive due diligence to fully assess the Gatún natural gas project to ensure we are compliant with US and local laws and satisfy all reporting requirements.”

InterEnergy echoed this statement. But neither of the companies responded to specific questions from Univision about their analysis of the businessmen with whom they were dealing or questions about how the government of Panama originally awarded the contract to Panama NG Power.

Univision learned that some minority shareholders of AES expressed uneasiness regarding the company’s lack of transparency in handling the Gatún project. The minority shareholders said to the AES subsidiary in Panama that joining the negotiation could pose a reputational risk to AES, according to a source close to the shareholders.

In their most recent quarterly report to the Securities and Exchange Commission (SEC), AES finally released information about the Gatún project. But the report did not mention Panama NG Power, the amount AES contributed, nor the exact date they signed onto the project.

Two sources familiar with the negotiation said that the sale from Panama NG Power to AES was in the vicinity of $300 million.

“Essentially, what NG Power was selling were concession papers because the project never materialized, there was no infrastructure whatsoever,” explained Moisés Joel Bartlett Quiel, a lawyer who has filed complaints before SEC in US and Panamanian authorities on behalf of Panamanian citizens, according to his filings.

The Andorra connection

In a questionnaire sent in July 2021, Univision asked AES and InterEnergy Group if their due diligence investigations into the reputations of the businessmen had reviewed the fact that a corporation owned by Dapelo had been implicated in a 2018 corruption scandal in Andorra, a tax haven in Europe.

According to documents obtained by Univision and published originally in February of 2018 by the Spanish newspaper, the Finance Intelligence Agency of Andorra found that Monteverde NG Power, of which Dapelo is an associate, made suspicious transfers to the parents of Demetrio Jimmy Papadimitriu when he was chief of staff to the president of Panama (2009-2012).

The investigators intervened on suspicion that Banca Privada D’Andorra had been used by the construction multinational Odebrecht to route bribes to public officials in Latin America. The Andorran judge, Canolich Mingorance, traced suspicious transfers adding up to more than $200 million.

Univision Investiga gained access to Volume XIX of the documents Andorran investigators used as evidence in their legal case. One of the reports show five transfers from Dapelo's company to “Malena Investments S.S,” whose associates include Diamantis Papadimitriu and Maria Bagatelles Papadimitriu, the chief of staff’s parents.

The transfers from Monteverde NG Power to Malena Investments added up to $630,000. When the couple opened their account with Banca Privada, the pair explained to the bank that they would deposit just “accumulated savings, Bagatelles’s family inheritance, and income from work.” As for the motive for opening the account, they said it would be to “diversify the country’s risk.” The document warned that “the son of the Papadimitrius holds a high political office in Panama.” Diamantis Papadimitriu died. His wife was charged.

The pair also received million-dollar sums from other businesses and people acting as intermediaries for Odebrecht, according to the investigation. Odebrecht was accused in various parts of the world, including the United States, of paying millions in bribes to high-ranking officials, including presidents and ministers. Papadimitriu was detained in September of 2017 on charges of corruption and was later released on parole.

Magda Maxwell, spokesperson for the Panamanian Attorney general, told Univision that Dapelo’s company payments to the former minister’s parents are under investigation, although they have not pressed charges against the businessman or his business. Papadimitriu was detained in April on charges of money laundering and corruption in the public sector, along with 50 others and Odebrecht.

The revelations published by El Pais shook the political ground in Latin America, and Panamanian media echoed the Spanish daily. The newspaper La Prensa explained that the “great finding” of the Andorran papers “is that the accounts [of Papadimitriu’s parents] were recipients of money from a company belonging to Jose Dapelo, president of Panama NG Power, a company that in 2013 was favored in a contract awarding process for which it was the only bidder.”

In 2018, knowing Andorran anti-corruption authorities were investigating him, Dapelo explained in a statement that the transfers from his company to the parents of Papadimitriu were intended for the construction of a fuel tank in Vacamonte, in western Panama. But Dapelo did not attach evidence of that transaction, according to one of the journalists who received the statement.

Dapelo did not respond to messages or phone calls from Univision. Papadimitriu’s lawyer, Nicolas Brea, first asked Univision for time to obtain authorization from his client in order to answer the questions related to the payments from Dapelo's firm, but Brea never contacted Univision again. The Andorran investigation continues.

A month before the transfers made by Dapelo’s company were revealed, the Panamanian media reported that the government of Panama had banned Dapelo’s entry into the country. A source close to the Panamanian government told Univision that Dapelo, a foreign citizen, had been denied entrance because he was financing a campaign to smear Panamanian president Juan Carlos Varela.

Univision did not receive a response from the companies to the question of whether its managers considered the withdrawal of Alemán’s US visa relevant. In an email to Univision, Alemán did not deny that his visa has been revoked and declined to state the reasons he believes the United States did it. He only invited Univision to confirm the information with the US Embassy.

“There is a former Panamanian ambassador who, according to Varelaleaks, has a lot of power, who publicly boasts of revoking and rescinding US visas,” said Aleman. The Varelaleaks are interceptions of telephone conversations from then-President Juan Carlos Varela.

An official from the State Department responded to Univision that visa-related documents are confidential under US law. “We do not discuss the details of individual cases,” added the official.

Trouble in the United States

Univision was able to confirm that the energy companies knew of yet another stain on Alemán’s past before participating in the energy project.

In 1994, Trans Latin Airways (TLA) a cargo company of which Alemán was a shareholder was accused in Illinois federal court of drug trafficking. The federal prosecutor charged TLA, in conjunction with other Colombian airlines, of selling and distributing narcotics in violation of interstate commerce laws. But in January of 1997, the federal prosecutor dropped several outstanding charges against Trans Latin Airways. Alemán was not named in the indictment.

The anti-narcotics operation did not go unnoticed by US media. The New York Times referred to it in an article published in mid-1996, accessible by a simple Google search. The article featured a bleak picture of how the government of president Ernesto Perez Balladares (1994-1999) was surroended by drug trafficking scandals and money laundering. The paper cited Alemán’s case in Chicago, identifying him as one of the owners of Trans Latin Air.

Alemán explained to Univision that the accusation in federal court was not against him. He said there is a memorandum from his lawyers “where strong evidence is presented that I was never the subject of this investigation or any other.” In the same response, he added, “you can also confirm that accusations against the airline were dismissed by the same prosecutor.”

According to the memo, Alemán added, the prosecutor in the case established that the company was not directly involved in the scheme. “The prosecutor found that the company was ‘remote’ from the object of the investigation,” said Alemán.

Documentation obtained by Univision does indeed provide evidence that Alemán’s lawyer submitted a memorandum for the case, but its contents do not appear in the PACER database. Alemán did not provide Univision with a copy of the document. According to PACER, the prosecution dismissed four charges against TLA in January of 1997, among them the sale and distribution of narcotics.

A “masquerading” bank

The trafficking network implicated in the Illinois case was led by Luis Carlos Herrera Lizcano, a Colombian pilot who pleaded guilty to a cocaine import charge in Chicago federal court. He was sentenced to eight years in prison. Herrera was released before his sentence was up. During a press conference in Panama, he announced a civil lawsuit against Alemán for the alleged disappearance of $1.6 million that Herrera’s company had deposited in Banaico, the Agroindustrial bank of Panama. At the time, Alemán was vice president of Banaico.

The lawsuit, obtained by Univision, alleges that Alemán “maintained a longstanding commercial and personal relationship with Luis Carlos Herrera Liscano (sic) and Juan Manuel Posada, who was imprisoned in Europe for money laundering.”

Alemán responded to Univision that he had not done business with Herrera.

Herrera did not respond to calls or messages from Univision Investiga. His former lawyer, Sidney Sitton, who represented him in a criminal case for money laundering in Panama, told Univision that Herrera dropped the civil lawsuit because he was not able to pay the legal costs. Herrera was eventually cleared of the money laundering charges by the Panamanian justice system.

A fraudulent bankruptcy at Banaico was investigated by financial authorities in Panama amid growing evidence that the bank was linked to the Cali Cartel. Some of its directors were accused of fraud, conspiracy, and forging documents. Alemán did not appear in these accusations. An article in The Washington Post from August 1996 cited a federal source saying that “Banaico was a money-laundering operation masquerading as a bank.” Other official sources told the newspaper that the bank had been tied to the Cali cartel for years.

Following the collapse of Banaico and the TLA indictment in Chicago, the State Department asked then-president Perez Balladares to remove Alemán as president of the board of directors for Banco Nacional, the central Panamanian bank, according to The Miami Herald. “State Department officials were warning their counterparts in Panama Foreign Ministry that Aleman presence in the government was unacceptable to Washington,” read the article by correspondent Glenn Garvin.

According to the Herald after a trip to Washington in February 1995, Panamanian Foreign Minister Gabriel Lewis told his staff that “State Department officials had threatened to refuse certification of Panama's anti-drug efforts if Aleman wasn't removed from ‘the official family.’ The refusal would have ended U.S. aid to Panama.’’

Alemán left office in February 1995 but told the Miami Herald that he did so “because he didn’t want the reputation of the Banco Nacional to be questioned’’. He denied that there was any pressure “that I know of’’ from Washington.

An “unimpeachable result”

Alemán told Univision that both energy firms participating in the Gatún Project had conducted background checks on him.

“It’s clear that the result of these due diligence processes is unimpeachable,” he said.

But others who followed the negotiation process disagree. In a complaint filed last July with the SEC on behalf of Panamanian citizens, Bartlett, the attorney, warned that the decisions of AES in Panama could constitute “breaches of ethical standards as well as potential illegal actions perpetrated by AES.’’

“It is of high importance to note that the original sponsors of this particular project include businessmen whose ventures have historically been mired in allegations of dubious dealings and whose travel Visa to the US has been revoked, as documented in the local press,’’ the complaint read.

Bartlett also cited in his complaint the Andorran investigation into the payments made by Dapelo’s company, noting that the Panamanian energy secretary, an entity managed by the chief of staff’s office, was the agency responsible for the controversial tender that favored Panama NG Power.

The SEC received the complaint July 13, 2021, Univision learned.

A Panamanian source familiar with the operation, who asked for anonymity to avoid harm to his businesses, shared with Univision an email sent to the senior management of AES in the US. In the message, the source expressed extreme surprise at AES’s decision to acquire an energy project that was “born rigged” and mentioned that Alemán’s American visa had been revoked. According to the source, AES never responded.

Dapelo filed a criminal complaint against Bartlett on September 2 for launching “legal actions” and a media smear campaign against Panama NG Power, its image, and its executives “in a suspicious way, and without any justification."

Bartlett told Univision that the lawsuit “has the direct intention of intimidating me to stop exercising my rights as a citizen. Even worse, it uses information pertaining to my family’s privacy.”

A scandalous contracting process

The tender that would eventually become the Gatún project was originally awarded to Panama NG Power in a process heavily criticized for its lack of transparency. Panama NG Power was favored by the Panamanian government in January of 2014 with a contract for the supply of natural gas-based energy (670 megawatts). This project, located in Colon, was the most significant energy concession in the country’s recent history.

The decision to award the contract to Panama NG Power sparked a national scandal after the Panamanian media and business associations revealed that the National Public Service Authority (ASEP), had ultimately changed the bidder requirements toward the end of the bidding process. ASEP demanded that each company must hold a definitive or temporary license, according to a criminal fraud complaint filed by attorney Juan Antonio Tejada, of Tejada Abogados in Panama.

This switch of licensing requirements two weeks before the awarding date forced the exit of some twenty companies who were interested in participating in the tender, according to legal documents and the Panamanian press. In the end, Panama NG power was left the only bidder with adequate licensing. Among the companies that were left out from the process was AES — the firn now sharing the contract with InterEnergy.

At the time, president of AES, Miguel Bolinaga, publicly criticized the contract. If the plant that Panama NG Power intended to build with the contract was indeed built, Bolinaga said in El Capital Financiero, “the country would face a situation that, to date, has not been seen in the market, where there would be more energy contracted than is needed by the distribution companies to meet consumer demand.”

Bolinaga made this statement in mid-2018, after the Supreme Court of Panama released a decision in favor of Panama NG Power. Bolinaga participated, as president of AES Panama, in the acquisition of the project he had criticized two years before.

AES senior management in the United States did not respond to Univision’s question about this change of posture towards Panama NG Power.

Alemán responded to Univision that the questions surrounding the transparency of the tender awarding process are baseless. According to him, “there was no criticism at any point since the offer was presented with the lowest price in the history of Panama’s energy market.” In his view, “no companies withdrew, because there was no other company that submitted a proposal.”

Alemán blamed the government of President Varela for the difficulties of putting the project into operation. Varela's government, he said, “illegally sought to prevent the start of NG Power operations, causing enormous damage to the company and the country.” He sent Univision transcripts from clandestine interceptions of Varela’s private telephone conversations. The documents, revealed in Panama in 2019 through a portal of “citizens committed to democracy and against corruption,” contained negative references to Alemán.

Former president Varela told Univision that he will not respond to Alemán’s attacks.

Questions swirling around how Panama NG power was able to win the tender — combined with Panama NG Power’s long history of non-compliance with the contract — are currently the basis of several legal disputes in Panama.

In a memorandum, lawyer Barlett Quiel said that the Panamanian government has refused to publicize documentation of the extensions it granted Panama NG Power, a refusal that has “affected the transparency” of the process.

"A questionable tender"

Of the three entities participating the Gatún project announced by the president of Panama, InterEnergy is the majority partner, with 51%, and the Panamanian government and AES have 25% and 24%, respectively. InterEnergy is a private company registered in the Cayman Islands with investments in the Dominican Republic, Chile, Jamaica, and Uruguay. Its president is Roland González-Bunster, an Argentinian who attended university with former US president Bill Clinton and now serves as a director for the Clinton Foundation. In February 2019, Clinton attended the opening of a solar energy project run by InterEnergy in Panama.

“As we do with all of our investments, we conducted extensive due diligence and have and will continue to apply the highest compliance standard to our ownership of this project,” the company wrote in a statement to Univision.

AES is one of the leading global energy firms, with revenues of more than $10,000 million annually. The company has a presence in 14 countries and has been operating in Panama for more than 20 years. It prides itself on having been designated by the Ethisphere Institute in 2014 as one of the most ethical companies in the world. Its president is Andrés Gluski, from Venezuela.

After the Panamanian president announced the formation of the consortium, the Chamber of Commerce, Industry and Agriculture in Panama expressed concern that the Panama NG Power contract has been transferred to the Gatún project. In a statement, the agency wrote that this contract had been the result “of a questionable tender...under unfavorable conditions when it comes to market pricing and natural gas pricing.”

The Panamanian Chamber of Hydroelectric Generators also protested that “eight years have passed since the contract was awarded, without the contracted company having, to date, done any significant work, clearly violating the terms set out in the contract.”

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