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Latin America

Nationalists rally as U.S. drug case threatens to close Panama's oldest newspaper

La Estrella de Panamá, the third-oldest newspaper in Latin America, is in danger of going out of business after the U.S. government listed its owner as an alleged drug money launderer.
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11 Ene 2017 – 11:48 AM EST

PANAMA CITY, Panama A legal battle over the fate of a 168-year-old newspaper has revived anti-American sentiments in a country that the U.S. military invaded just 27 years ago to remove military dictator Gen. Manuel Antonio Noriega from power.

La Estrella de Panamá and its younger sibling El Siglo announced last week they would cease publication because of drug money laundering sanctions imposed eight months ago by the U.S. Treasury Department against its principal owner, a wealthy duty free Lebanese-born, Panamanian-Colombian businessman, Abdul Waked.

The sanctions affected the newspapers' ability to do business with American companies, it said, undercutting its ability to function.

But less than 12 hours before last Friday's deadline, the Treasury Department issued the newspapers a new extension - the third since May - giving them until July to find a solution.

The prospect of its closure has sparked protests from politicians, union leaders, lawyers, and journalists. It also comes at a time when Panama is still reeling from an embarrassing international scandal last year - the leak of the so-called Panama Papers - that revealed widespread abuse of its secretive offshore business sector.


Nationalists have seized on the issue to accuse the United States of resorting to imperialist tactics to silence media critics, highlighting the left wing tradition of La Estrella and El Siglo.

“One of the goals of Yanqui imperialism is the closure of two newspapers that fight for national sovereignty,” analyst David Acosta wrote in a column.

The newspapers' troubles began in May, when several members of the Waked family, and 68 companies linked to them, were put on the Treasury Department's so-called 'Kingpin' list for allegedly being part of a massive money laundering scheme.

The Treasury Department's Office of Foreign Assets Control (OFAC) accused the family business of using fake invoices, bulk cash smuggling, and a range of companies from a luxury mall to a chain of duty-free stores to launder money.

The Wakeds have denied any wrongdoing. Despite the allegations, Abdul Waked, 66, is not charged with any crime in the United States and has offered to co-operate fully with U.S. authorities, according to court documents.

U.S. officials say the newspapers are not being targeted, but have been caught up in the drug case purely due to their ties to Waked's family business.

"Our problem is not with the newspapers, it is with the individual who owns the newspapers," the U.S. ambassador to Panama, John Feeley, told Univision.

"We have no problem with ... the fact that they publish a variety of opinion and that they published recently anti-American opinion. That's part of democracy," he added.

To be sure, Panama's relationship with the United States has been a thorny issue ever since President Theodore Roosevelt's "gunboat diplomacy" helped ensure U.S. control of the Panama Canal more than a century ago.

An effigy of the U.S. ambassador was burned in the street during a protest on Monday's anniversary of 'Martyrs' Day,' commemorating 1964 riots over sovereignty of the Panama Canal Zone in which 21 Panamanian students and four U.S. soldiers were killed.

Feeley played down the current protests. "Given Panamanian-US history, there is a class of critic here who will take any excuse to raise the flag of sovereignty and bash the gringos as a self-affirming and self-identifying expression of Panamanian nationalism," he said.

Eduardo Quirós, president of the newspaper company, GESE Group, that owns La Estrella and El Siglo, said he was relieved by the latest extension, although the future remained bleak.

“We need a definitive solution. The extension is nothing less than a death sentence that will be executed in six months,” he said.

"Kingpin List.”

The Foreign Narcotics Kingpin Designation Act, which was passed by Congress in 1999, prohibits any U.S. citizen or resident from doing business with someone on the list, even if that person has not been charged with a crime in the United States.

Its purpose is to deny foreign drug traffickers access to the U.S. financial system and prohibit any commercial activity between traffickers and persons in the United States, according to the White House. It applies to any company in which the alleged kingpin has more than 50 per cent ownership.

Lawyers for the Waked family have argued in court documents that the government has failed to explain the factual basis for the family being put on the Kingpin list.

Instead, the government's case was deliberately vague, consisting of "generalized allegations framed in the conditional tense that leave the precise conduct alleged - and whether any Plaintiff knew about, much less participated in it - a mystery," the lawyers stated in a November court motion.

The motion also highlighted that the family companies were audited by Deloitte, a respected, multi-national firm, which never revealed anything was wrong.

Government lawyers say that the Wakeds are foreigners and therefore have no constitutional right to legal due process in the United States.

U.S. officials point out that Waked's nephew, Nidal Waked, 36, is facing charges after he was arrested last year in Colombia where he is awaiting extradition to the United States. The U.S. Drug Enforcement Administration (DEA) described him as "one of the world's most significant drug money launderers and criminal facilitators."

Winding down

In 2015, the wide-ranging Waked business empire employed more than 5,000 people in Panama with revenue of $600 million, according to court documents.

By late last year 3,000 employes had been laid off and hundreds of millions of dollars of supply orders were frozen, as well as bank assets in the United States.

Although the Treasury Department's temporary license permits U.S. persons to do business with the papers, it is limited "to the wind down of operations, contracts, or other agreements involving goods or services," with Waked, according to a copy provided to Univision.

As a result of being on the 'Kingpin' list, GESE group says the newspapers have lost more than a third of their advertising since May and their employee roster has dropped by nearly 25 percent, to 242 workers.

The Kingpin designation has also scared away suppliers and banks with any exposure in the legal United States, Quirós said. Insurance companies notified GESE that they could not continue to offer coverage and the newspapers faced the prospect of being unable to buy newsprint in Canada.

All of Panama's foreign currency transactions go through U.S. banks because the country has used the U.S. dollar since 1904.

“We didn't know that now we need a permission from the United States to operate in Panama,” said Adolfo Linares, a well known Panamanian economist.

During a session of Panama's legislature last week, National Assembly President Rubén de León challenged the U.S. sanctions and urged the Panamanian government to help resolve the GESE crisis.

“Failure to do that would mean damaging freedom of expression,” de León said. Hours later, the Assembly sent a note to the U.S. Congress.

Shrinking staff


Founded in 1849, La Estrella de Panamá is the third oldest newspaper in Latin America after El Mercurio in Chile and El Comercio in Ecuador. The newspaper has covered everything from the very birth of the country in 1903 to the opening of the Panama Canal in 1914, and its expansion last year.

Izael Martínez has worked at La Estrella for 46 of her 64 years. She started out as an assistant to a press cleaner when the newspaper was located in the city's colonial district, known as 'Panamá Vieja,' (Old Panama), and now designs its sports pages.

“This cannot die,” she said, noting it was not the first crisis the paper has faced. After the U.S. invasion in 1989, when the newspaper supported the Noriega regime, it shrank to eight pages. When it was later sold later, the new owners forced out the labor union and half the workforce left.

Leila Nilipour, a 30-year-old Panamanian-Iranian-American, worked at La Estrella until just a few days ago. Her reports on culture won three prizes in 2016, but she quit for fear of being hit with a fine under the sanctions.

She described her last few months as "difficult times." The staff reduction meant "less time to develop each story. I felt more pressured,” she said.

Now unemployed, Nilipour produces an independent podcast about the newspaper's crisis and its employees. She started to record it in the press room, where 60 employees work from midnight to dawn printing the daily editions of La Estrella and El Siglo.

The newspaper has cut 40 percent of its pages, eliminated a car magazine and reduced the publication of its women' magazine from once a week to once a month. The front page that once carried four ads was down to one on Thursday, from an insurance company.

In order to resolve the crisis, U.S. officials say Waked must sell the company or reduc e his stake to less than 50 percent.

"The minute he (Waked) goes below 50 per cent of the stock the newspapers have absolutely no need for a license and American citizens can continue to do business with them," said Feeley. "At the end of the day we really only are controlling or regulating the commercial behavior of the U.S. persons," he added.

Waked has refused to sell, and people close to him argue that a forced sale would leave the newspaper, often considered the country's most independent, at the mercy of businessmen close to the government and at fire sale prices.

“This is the worst time for a change in ownership. The heart of a newspaper is its editorial line. And La Estrella de Panamá is not just some shopping mall. It is an institution that is part of the country's history,” said Quirós.

(Reported by Nicanor Alvarado in Panama and David Adams in Miami)

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