VZCZCXYZ0004
RR RUEHWEB

DE RUEHZP #1187/01 1672229
ZNR UUUUU ZZH
R 162229Z JUN 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 8359
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHBO/AMEMBASSY BOGOTA 2339
RUEHCV/AMEMBASSY CARACAS 1043
RUEHQT/AMEMBASSY QUITO 0904
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL//J5/J2/POLAD//

UNCLAS PANAMA 001187 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT ALSO FOR WHA/CEN, INL AND INR/B 
SOUTHCOM FOR POLAD 
 
E.O. 12958:N/A 
TAGS: PGOV PREL PINR PM
SUBJECT: Money Laundering Panamanian Style 
 
SUMMARY 
------- 
¶1. (SBU) Acting jointly, DEA and several Latin American 
authorities knocked out a sophisticated multi-national drug 
cartel that smuggled tons of cocaine on a monthly to the 
U.S.  Drug lord Pablo Rayo Montano was arrested on May 16 
in Brazil. Authorities have seized millions of dollars in 
assets and cash and arrested over 100 of his collaborators. 
In Panama, a long list of cartel assets is now under Public 
Ministry control.  Using his real name, Rayo Montano became 
a legal resident in Panama.  What he could get away with 
and how local authorities continually turned a blind eye to 
his suspicious activities is a cautionary take for law 
enforcement in Panama.  End summary. 
 
Background 
---------- 
¶2. (SBU) On Tuesday, May 16 DEA announced the results of 
Operation Twin Oceans, a multi-jurisdictional investigation 
that targeted and effectively dismantled the Pablo RAYO- 
Montano drug trafficking organization.  Rayo Montano, a 
Colombian citizen, ran a cocaine ring that smuggled more 
that 15 tons of cocaine per month from Colombia to the U.S. 
and Europe.  The Brazilian Federal Police, Panamanian 
Judicial Police, Colombian National Police, and DEA 
spearheaded an international coalition responsible for 
putting the cartel out of business.  Rayo-Montano was 
apprehended in Sao Paulo, Brazil on May 16.  The 
investigation took three years and resulted in over 100 
arrests in Panama, Colombia, Venezuela, Costa Rica, the 
U.S. and Ecuador.  Fifteen people were arrested in Panama: 
eleven Colombians and four Panamanians. Overall, 
authorities seized almost 52 tons of cocaine and nearly 
US$70 million in assets in six countries. 
 
Pablo Joaquin Rayo Montano 
-------------------------- 
¶3. (SBU) Rayo Montano is a 46-year old Afro-Colombian who 
first arrived in Panama in 1996, but according to 
immigration records settled in Panama in 1999.  Rayo 
Montano always used his real name in Panama.  After 2002 
and 2003 hits against his operations in Panama by local 
authorities and DEA, Rayo Montano moved to Brazil.  In 
1999, Panamanian immigration authorities issued Rayo 
Montano a "technician" visa.  Immigration records show that 
in 2000, Rayo Montano got an "investor's visa", and in 2002 
Rayo Montano received his Panamanian "cedula" (i.d. card) 
giving him the status of a legal resident of Panama. 
Despite being mandatory, Rayo Montano's cedula did not show 
his place of birth.  The cedula has now being cancelled by 
current authorities. 
 
Properties in Panama 
-------------------- 
¶4. (SBU) Through third parties in Panama, Rayo Montano owned a 
long list of assets.  Many of his properties were on the 
Atlantic coast, including three inhabited islands --Las 
Tres Marias ("The three Marys") that his group used to 
refuel boats and to hide; several hectares of beach-front 
land; three beach houses in another island; and a 
restaurant, which had been visited throughout the years by 
Embassy officers on their way to Isla Grande, a local 
tourist destination. 
 
¶5. (SBU) Rayo Montano's properties in the rest of the 
country included three apartments in the historical Casco 
Viejo area, just a few blocks away from Panama's 
presidency; a small hotel; an art gallery; a house in the 
old Canal zone  area, where he and his family lived before 
moving to Brazil, two large fishing supplies stores 
("Nautipesca"); a yacht named after his daughter Isa Pilar; 
two beach-front homes on the Pacific, and fishing stores in 
the western province of Chiriqui.  Authorities also seized 
thirty-nine bank accounts; eight boats; thirty-four 
vehicles; and over US $300,000 in cash. 
 
"A la Panamena" (Panamanian style) 
---------------------------------- 
¶6. (SBU) Despite Rayo Montano's large operations in Panama 
and the amount of wealth and property he and his people 
controlled no Panamanian ever reported any suspicion about 
Rayo Montano's activities to the authorities.  This can be 
taken as a sign of how complacent Panamanian society is and 
how easily things can be done in Panama.  It also confirms 
public corruption.  To pick just a few glaring 
discrepancies: 
 
-- Just one year after Rayo Montano is granted a 
"technician" visa, he qualifies for an "investor's" visa 
without raising suspicion.  How often does a technician 
become an investor in Panama? 
 
-- Immigration authorities granted a resident's cedula to 
Rayo Montano that did not state his place of birth which is 
mandatory.  Probably no other cedula in Panama fails to 
state place of birth. 
 
-- Current National Maritime Director Ricardo Traad lives 
in the same Casco Viejo building where Rayo Montano owned 
three apartments.  Traad publicly claimed not to know of 
Rayo Montano's properties in the building.  Considering 
that Rayo Montano paid US $200,000 for each apartment in the 
relatively small building, it is difficult to believe Traad 
was not aware of who else was investing in his building. 
Are these apartments really worth US $200,000 each in that 
neighborhood? 
 
-- Rayo Montano paid US $150,000 for a run-down restaurant 
("Los Canones") near Isla Grande on the Atlantic coast. 
Its small marina was attractive to the cartel; 
 
-- Two-term former Revolutionary Democratic Party (PRD) 
legislator Abelardo Antonio sold land in Portobello, Colon 
to Rayo Montano's group.  Then-mayor and current PRD 
legislator Nelson Jackson Palma approved the transaction. 
Following the pattern, chances are that Rayo Montano also 
overpaid.  Could these individuals, both natives of Colon 
and well-acquainted with its population, fail to be aware 
or suspicious of Rayo Montano's operations? 
 
-- How did this "unknown" group of foreigners was able to 
obtain a special government concession to control three 
islands?  Authorities are investigating who in the Ministry 
of Economy and Finance approved it. 
 
-- Why did no one question that Nautipesca, Rayo Montano's 
fishing supply store, was able to sponsor fishing 
tournaments with US $300,000 in prize money? 
 
COMMENT 
------- 
¶7. (SBU) Rayo Montano's case is one example of what drug 
and weapon smugglers, money launderers and many other 
criminals can achieve in Panama when money is no object. 
"No questions asked" seems to be the rule.  Businessmen, 
lawyers, bankers, and public servants of all levels are 
willing "to help," for the right price.  How many Rayo 
Montanos are out there? 
 
Arreaga