VZCZCXYZ0001
PP RUEHWEB

DE RUEHZP #1532/01 2201630
ZNY CCCCC ZZH
P 081630Z AUG 06
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 8695
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 2384
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASH DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L PANAMA 001532

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/08/2016
TAGS: EFIN ECON PGOV SNAR PM
SUBJECT: TORRIJOS PICKS EX-CHASE MANHATTAN GM AS NEW BANK
SUPERINTENDENT; STILL TAKES HEAT FOR UNTIMELY CHANGE

REF: PANAMA 1477 AND PREVIOUS

Classified By: DCM Luis Arreaga - Reasons 1.5 (b and d)

 ¶1.  (C) Summary.  On August 7, President Torrijos appointed
Olegario "Gary" Barrelier as Panama's new Bank
Superintendent.  Barrelier is a well-respected, albeit
elderly, banker.  He replaces Delia Cardenas, whom Torrijos
had forced to resign two years before her second (and final)
term was due to expire (reftel).  Widely voiced concerns
about the Superintendency's independence (triggered by the
Ambassador's July 28 comments), apparently thwarted designs
that Torrijos may have had to name a political loyalist to
the job.  Despite their praise for Barrelier, business
leaders and political opponents harshly criticized Torrijos'
ouster of Cardenas.  Post will watch closely to see whether
Barrelier follows Cardenas' model of independence and/or
whether he ends up being only a temporary placeholder.  End
summary.

Barrelier: The "Best Pick Possible" or an Old Re-Tread?
--------------------------------------------- ----------

¶2.  (C) Cardenas' deputy, Amauri Castillo, told Econ Chief
Aug. 7 that Torrijos' pick of Barrelier came as a relief to
Cardenas and other Superintendency staff.  They had feared
Torrijos would choose a PRD loyalist or some other politico
that would weaken the institution's independence.  Castillo
said that Torrijos likely avoided a more "political" nominee
as a result of widespread concerns triggered by the
Ambassador's July 28 comments about Cardenas' solid
reputation and the importance of independent regulators.
(Note: In the week following the Ambassador's widely
publicized comments, a number of banking and business leaders
voiced similar concerns, as did various political opponents,
including former President Guillermo Endara, who said that
forcing Cardenas' resignation was "Torrijos' worst error"
since taking office.  End note.)

¶3.  (C) Banco General patriarch Federico Humbert told Econ
Chief Aug. 7 that Barrelier is an "excellent, honorable
person" and that he was the "best pick possible" among the
various names that had surfaced in recent press speculation.
Former Comptroller General and a former Chase Manhattan
executive, Ruben "Chinchorro" Carles, offered similar praise
for Barrelier in a conversation with Pol Assistant, adding
that the Ambassador had done the right thing in making it
difficult for Torrijos to put a political crony in the job.
Conversely, local ScotiaBank chief Terry McCoy complained to
the DCM on Aug. 7 that Torrijos' pick of Barrelier is merely
aggravates his bad move to dump Cardenas, given Barrelier's
age (70-something) and the fact that he's been largely out of
the banking industry for several years.

Cardenas Contradicts Torrijos; Endara Calls Him a "Liar"
--------------------------------------------- -----------

¶4.  (SBU) In confirming her resignation publicly on Aug. 7,
Cardenas said that she was pleased to be replaced by
Barrelier, as he is "very honest and knows the banking
sector."  But she also maintained her independence to the
end, as she also contradicted Torrijos' earlier claim that he
was merely accepting her "voluntary" resignation because she
wanted to return to the private sector.  She made clear that
her resignation came under duress and that Torrijos had
approached her last May to seek her resignation ostensibly
because he wanted to "reorganize" supervision of Panama's
financial sector.  This prompted Endara to call Torrijos a
"first class liar" who should be "ashamed" for his ouster of
Cardenas.  Several business leaders leavened their praise for
Barrelier with continued criticism of Torrijos' effort to
push Cardenas aside.

Comment: Torrijos Salvages Cardenas' Untimely Ouster
--------------------------------------------- -------

¶5.  (C) Apparently thwarted from naming a political loyalist
to the job, Torrijos at least named a well-regarded, albeit
elderly, technocrat to oversee the region's most significant
banking center.  We nonetheless remain troubled by the fact
that he pushed out Cardenas for little apparent cause, as
well as the move's poor timing (i.e., just as the Rayo
Montano drug case might implicate powerful banking
interests).  Cardenas' independence and even-handed bank
supervision was key to getting Panama removed from various
"blacklists" as a fiscal paradise.  Post will watch closely
to see whether Barrelier follows her model of robust
oversight and/or whether, given his age, he ends up being
only a temporary placeholder.  End comment.

Bio Sketch - Olegario "Gary" Barrelier Chiari
---------------------------------------------

¶6.  (U)  Gary Barrelier is believed to be in his mid-70s.  A
Texas A&M grad in Agricultural Engineering, Barrelier also
earned a Master's in Irrigation Engineering.  In April 2001,
the Bank Superintendent chose Barrelier to oversee the
intervention and liquidation of Banco Disa, S.A.  He
previously served as General Manager of Chase Manhattan Bank
in Panama (1989-2000), as President of the Private Sector
Council for Educational Assistance (1999-2000), Advisor for
the National Policy Against Money Laundering (1996-98), and
Advisor to the National Security Council for the Creation of
the Financial Analysis Unit (1996).  He served during the
1990s on the Presidential Commission for the drafting of
Panama's new Banking Law and as a Principal Member of
National Banking Commission and the National Housing
Commission.  He has also held prior executive positions in
banking and paper manufacturing.  As President of the
Panamanian Banking Association (1994) and officer with the
Panama-U.S. Business Council (1993), Barr
elier was a regular at Embassy functions.
EATON