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RHMFISS/CDR USSOUTHCOM MIAMI FL//J5/J2/POLAD//

C O N F I D E N T I A L PANAMA 000040 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR WHA/CEN 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 01/06/2016 
TAGS: PGOV PREL BEXP PM
SUBJECT: PANAMANIAN COMPTROLLER DANI KUZNIECKY ALERT TO 
POSSIBLE CORRUPT PRACTICES BUT CLAIMS TORRIJOS SEES HIM AS 
A "PEST" 
 
 
Classified By: DEPUTY CHIEF OF MISSION LUIS ARREAGA FOR REASONS 1.4 (B) 
 AND (D) 
 
SUMMARY 
------- 
¶1.  (C) Comptroller General Dani Kuzniecky recently met with 
Emboff to discuss questionable public bidding cases that had 
attracted his negative attention.  They included the Tocumen 
airport duty free zone (which involved an American company), 
the unrelated Pacific "mega-port" project involving a 
different American company, and the Panama City Mayor's plan 
to acquire an expensive older building for a new City Hall. 
Kuzniecky claims that although he and President Torrijos have 
a "love-hate" relationship, Torrijos has asked him to stay 
on, although he does give him consistent support.  End 
Summary. 
 
Bidding Documents "Tailor-Made"? 
-------------------------------- 
¶2.  (C) Meeting Emboff for coffee late last year, Comptroller 
Kuzniecky acknowledged that he had acted to cancel the first 
bidding process for the Tocumen duty-free zone, due to 
credible complaints from two Panamanian business groups (the 
Mottas and the Wakeds), that the bidding documents had been 
custom-made for FALIC (sic -- supposedly a U.S. company). 
(Comment: Several people familiar with the specs commented to 
Emboffs that only one firm in the world -- FALIC - would have 
qualified.  End Comment.)  Kuzniecky added that after calling 
in Tocumen Airport General Manager Carlos Garcia, Garcia 
denied that the bidding specifications favored FALIC and 
denied that he was involved with FALIC in any way.  But, 
Kuzniecky added, "Garcia does not know that I have an 
informant in his office."   (Comment: Other sources told 
Emboff that close Torrijos associate Felix "Pille8 ("P-J") 
Gonzalez and notorious lawyer Hector Infante, a close Perez 
Balladares associate, are involved with FALIC.  End Comment.) 
 
 
Asks For Garcia's Dismissal 
--------------------------- 
¶3.  (C) Kuzniecky said, in his opinion, several bid 
specifications favored FALIC, adding that he pushed Minister 
of the Presidency Ubaldino Real and President Torrijos to 
delay the bid opening, telling them that he would not approve 
the bid documents.  Torrijos was supportive but Uba (Real) 
hesitated.  Kuzniecky said he went further, demanding General 
Manager Garcia's dismissal, but added that Garcia "is well 
protected in the PRD.8  (Comment: Garcia has a shady 
reputation as former Customs Director under President Perez 
Balladares and as National Assembly Administrative Director. 
End Comment.) 
 
Who Works For Free? 
------------------- 
¶4.  (C) Emboff explained Kuzniecky that FALIC had recently 
sought USG advocacy through the Department of Commerce in 
Washington, D.C. and that it had certified its adherence to 
the Foreign Corrupt Practices Act. 
Emboff added that the Embassy was not lobbying in favor of 
any company.  (Note: Subsequently and at Commerce's request, 
the Embassy sent a letter to the GOP raising our concern 
about possible last-minute changes in the bidding specs that 
could have been prejudicial to a U.S. firm.  That prompted a 
flurry of meetings and discussions with GOP officials that 
ultimately led to a decision by the Airport Authority to 
extend the bidding process to enable it to relaunch the 
bidding process in a more open, transparent manner.  Although 
FALIC's local competitors raised various allegations about 
the firm, their evidence was circumstantial.  End Note.) 
Kuzniecky would only say that he has no evidence on "Pille" 
and Garcia but finds it hard to believe that they are acting 
as intermediaries and boosting FALIC for free.  Kuzniecky 
added that he would not sign a document "if there is 
something fishy,8 even for an American company.  (Comment: 
The U.S.-educated Kuzniecky is openly pro-American.  End 
Comment.) 
 
Another "Wrong Signal"? 
 
 
----------------------- 
¶5.  (C) Kuzniecky claimed that another case involving an 
American company &has already sent a wrong signal.8 
According to Kuzniecky, President Torrijos invited him 
several weeks ago to attend a meeting at the Palace.  When he 
arrived, Torrijos's cousin Hugo Torrijos (former Maritime 
Administration chief) and two American businessmen were 
there.  The topic under discussion was the upcoming bidding 
for the Pacific "mega" port.  Kuzniecky claimed that one of 
the Americans then claimed that his company would 
"pre-qualify8 in the January 2006 bidding process.  At that 
point, Kuzniecky said he interrupted him and bluntly asked 
how he knew that his company would &pre-qualify8 when the 
bidding documents were not even ready.  There was an awkward 
silence in the room, Kuzniecky said.  Finally, Hugo Torrijos 
offered a "lame" explanation.  Kuzniecky would not volunteer 
the name of the company. 
 
"Illegal" ARI Deal 
------------------ 
¶6.  (C) Kuzniecky also commented on a recent controversy 
concerning the proposed sale of 30 hectares by (the 
now-defunct) ARI.  Kuzniecky labeled the deal "another case 
of corruption."  ARI cannot sell that piece of land, 
Kuzniecky stated, which was bought for minerals in the 
sub-soil.  By law, the GOP can only lease it through a 
concession contract but never sell it.  Kuzniecky said that 
he has not been able to find out the name of the buyer, 
adding that he found out about the case only because the 
Contraloria has a representative who attends the ARI board 
meetings. 
 
New City Hall 
------------- 
¶7.  (C) Another case that Kuzniecky discussed involves Panama 
City Mayor (and 2009 presidential hopeful) Juan Carlos 
Navarro.  Again admitting that he has no evidence, still, 
Kuzniecky said, "things don,t make sense."  Kuzniecky is 
incredulous that Navarro wants to buy a 40-year old building 
(just a few blocks from our Embassy) for $15 million to use 
as a new City hall.  "Why in the world would he pay $15 
million for such an old building when he could build a new 
one for less money?" Kuzniecky asked.  Kuzniecky said he has 
the power not to approve the contract but he admitted that he 
needs to do more legal research. 
 
"Love-Hate" With Torrijos 
------------------------- 
¶8.  (C) Later, in a one-on-one meeting with President 
Torrijos, Kuzniecky claims that he told Torrijos that he is 
willing to resign if he asks him to.  Kuzniecky says that 
Torrijos and he have a love-hate relationship.  &We like 
each other but I have become a pest," he explains, adding 
that Torrijos gets 10 calls a day from legislators, 
ministers, and local representatives to complain about him. 
Kuzniecky said that Torrijos asked him not to go, that he 
wants Kuzniecky to keep him informed about who is doing what. 
 "But what," Kuzniecky asked rhetorically, "is the point if I 
tell him and he doesn,t do anything?" 
 
EATON