VZCZCXYZ0006
OO RUEHWEB

DE RUEHZP #1479/01 2472019
ZNR UUUUU ZZH
O 042019Z SEP 07
FM AMEMBASSY PANAMA
TO RUEHRC/DEPT OF AGRICULTURE WASHDC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 1103

UNCLAS PANAMA 001479 
 
SIPDIS 
 
SIPDIS 
 
USDA FOR APHIS/IS - CLIFFORD GRAHAM 
STATE FOR OIG - KRONGARD AND MALLOY 
ALSO FOR WHA/CEN - TELLO 
 
E.O. 12958: N/A 
TAGS: ASIG EAGR KCOR PM
SUBJECT: GOP INVESTIGATES USDA'S SCREWWORM PARTNER FOR 
POSSIBLE CORRUPTION 
 
This message is Sensitive But Unclassified.  Please handle 
accordingly. 
 
¶1.  (SBU) Summary: Post has discovered apparent financial 
irregularities by the Panamanian section of the U.S.-Panama 
Commission for the Eradication of Screwworm (Spanish acronym: 
"COPEG").  These include the use of a Panama COPEG-only 
account for reimbursements based on falsified travel vouchers 
and "double-dipping" into different accounts for the same 
activity.  Based on the Embassy's evidence of apparent 
wrongdoing, GOP officials suspended the prime suspects and 
launched an investigation by Comptroller General auditors. 
Despite early GOP hesitation that may have unwittingly aided 
apparent cover-up efforts, GOP auditors have since worked 
well with USDA-APHIS staff to pursue the case.  End summary. 
 
Initial Review Reveals Financial Irregularities 
--------------------------------------------- -- 
 
¶2.  (SBU) In July 2007, USDA-APHIS officials conducted a 
review of COPEG's financial transactions and found a pattern 
of potential abuses by the Panamanian section of the 
Commission.  The Panamanian COPEG section had established two 
sub-accounts to COPEG's main bank account.  Although 
USDA-APHIS officials maintain open access to the main 
account, they did not have any access to either of the 
Panamanian sub-accounts.  Moreover, one of the two 
sub-accounts did not have any oversight by Panama's 
Comptroller General.  The July 2007 review revealed that top 
Panamanian COPEG officials apparently used the latter account 
to obtain reimbursements for travel vouchers submitted 
fraudulently to the Panamanian agriculture ministry ("MIDA"). 
   This included falsified vouchers submitted ostensibly on 
behalf of various USDA officials (including high-level USDA 
officials based in Washington, DC) for trips they either did 
not take or for trips that were subject to USDA 
reimbursement.  The review also found apparent double-dipping 
by Panamanian COPEG officials, in which they obtained per 
diem for separate trips taken at the same time and/or 
obtaining money from two separate accounts for the same 
activity. 
 
GOP Suspends Likely Suspects, Launches Investigation 
--------------------------------------------- ------- 
 
¶3.  (SBU) On August 20, APHIS Country Director and Econ Chief 
provided Agriculture Minister Guillermo Salazar with a letter 
outlining the apparent financial irregularities, as well as 
supporting documentation, such as copies of falsified 
vouchers and cancelled checks.  Emboffs urged immediate GOP 
action to pursue a more detailed audit of Panama COPEG's 
financial records and to follow the trail wherever it may 
lead.  They also discussed the advisability of suspending the 
three main Panama COPEG suspects pending completion of an 
investigation.  Recognizing the gravity of the issue, Salazar 
said he would act immediately and welcomed Emboff's efforts 
to also raise the matter with Panama's Comptroller General 
Carlos Vallarino.  APHIS Country Director and Econ Chief 
presented Vallarino with the same information in an August 21 
meeting.  Vallarino said he would contact Salazar immediately 
to urge the suspension of the COPEG suspects and that he 
would summon his chief auditor right away to organize their 
investigatio 
n.  Econ Chief told both Salazar and Vallarino that, as the 
case may eventually become public knowledge, the Embassy and 
the GOP should be seen as working together to root out 
corruption, rather than at odds over the issue. 
 
¶4.  (C) At approximately 7:20 a.m. on August 22, Minister 
Salazar paid a surprise visit to the COPEG plant in Pacora, 
where he spent approximately three hours in a closed-door 
meeting with the prime suspect.  Later that same morning two 
Comptroller auditors appeared at the Pacora plant.  Salazar 
and the suspect departed the plant without comment.  About an 
hour later, the suspect re-appeared, met with his Panama 
COPEG staff, and began passing instructions to Panama COPEG 
staff located in their Curundu headquarters office (located 
at the Agriculture Ministry's compound in Panama City). 
 
¶5.  (C) Based on eyewitness accounts, Econoff contacted 
Salazar directly to (1) confirm the suspect's suspension, 
and, (2) advise that the prime suspect and at least two 
confederates were possibly engaged in an effort to alter, 
destroy, or remove records from the COPEG Curundu office. 
Eyewitnesses later reported to USDA-APHIS staff that the 
suspects continued to work until after 9:00 p.m. that evening 
without interruption or intervention by MIDA or Comptroller 
authorities. On August 23, Salazar faxed a letter to U.S. 
 
COPEG officials advising that he had suspended the three main 
suspects from their duties.  COPEG officials then barred 
their unsupervised entry to any COPEG facilities. 
 
¶6.  (SBU) On August 24, absent further apparent action by 
Comptroller auditors, Econ Chief contacted Vallarino to urge 
more aggressive follow-up.  On Tuesday, August 28, 
Comptroller auditors re-appeared at the COPEG Pacora plant. 
They spent the remainder of the week working closely and 
collegially with COPEG staff to wade through financial 
records, databases, and other materials.  USDA-APHIS staff 
expects this effort will continue at least into September. 
 
Comment: Despite Initial Fumble, GOP Auditors on Track 
--------------------------------------------- --------- 
 
¶7.  (C) It remains to be seen whether further investigation 
will yield more far-reaching levels of corruption and/or 
sufficient evidence leading to the termination and 
prosecution of the Panama COPEG suspects.  Despite the GOP's 
initial tardiness in blocking apparent cover-up attempts, 
Salazar and Vallarino deserve credit for their largely 
constructive response and their good cooperation with 
USDA-APHIS staff.  Post will continue to pursue the case 
closely with GOP auditors and will advise regarding any major 
advances or findings.  End comment. 
EATON