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Thursday, November 15 2018 @ 10:37 AM UTC

Financial Pacific Files A Complaint Against The Superintendent of Market Securities

CorruptionA fifth criminal file was opened this week by the Public Ministry in connection with alleged irregularities in the operations of Financial Pacific.

However, this time the complainants are the managers of the brokerage firm and the defendant is the Superintendent of Securities, Alejandro Alfaro Abood, who opened administrative investigations against Financial Pacific in March 2012.

West Valdés, the legal representative and one of the executives of FP, filed this January 9th a criminal complaint against Alfaro Abood for allegedly committing crimes of abuse of authority and violation of the duties of the public servant.

According to sources in the Public Ministry, the action attacks Abood Alfaro for having issued resolutions 350-12 and 351-12 of October 15, 2012, in which he ordered to begin an administrative investigation into Financial Pacific for allegedly having committed violations of the laws regulating market securities in Panama.

The legal representative of Financial Pacific also considered as an act of abuse of authority of the Superintendency of Securities (VPS) a third decision issued on October 16, 2012, in which Alfaro Abood notified them of the internal investigation and a reorganization process of the company. Removal -

This new criminal complaint is in the office of the newly appointed Attorney General Ana Belfon, because Abood Alfaro is an officer with national level authority and jurisdiction, as established by Law 67 of 2011, which regulates the stock market.

The process must be submitted to the plenum of the Supreme Court for a final decision, because that is the body empowered to remove or dismiss Abood Alfaro, if the case warrants it.

Asked about the complaint against him, Abood Alfaro declined to comment.

However, Roberto Brenes, manager of the Panama Stock Exchange, warned that the organizations related to the financial sector are "extremely concerned" about the shift that the Financial Pacific case is taking.

In his view, it is clear that behind the charges against Alejandro Abood, the highest authority of the Securities, there is an interest in discrediting the institution and those who lead it.

"They want to remove Abood from the Superintendency. If this happens, it would be a really bad precedent for the system, its independence and power of action," said Brenes. Other Actions -

Financial Pacific's lawyers also filed against the decisions of the SMN an action under constitutional guarantees before the plenary of the Supreme Court of Justice on October 19, 2012, which was filed in the office of chief justice of that body of law, Alejandro Moncada.

The appeal was admitted by Moncada on 6 November, and that same day he ordered the suspension of the SMV orders to investigate and reorganize Financial Pacific internally, leaving the brokerage back in the hands of its managers.

Their appeal has been in Moncada's office for two months, and it has not been decided.

As in the criminal complaint filed this week, the Financial Pacific appeal questions the procedure followed by the SMV to notify them of the investigation, and the administrative reorganization of the company.

"Without a doubt, the procedure adopted certainly catches the eye, because the day our representative was notified of the decision of the administrative body to initiate an investigation against them for alleged violations of the Securities Exchange Act, the sanction decision was also issued, one that determines the need to force the reorganization of the Financial Pacific brokerage house, which was also reported on the same date, which shows clearly the lack of procedure stipulated in the law itself," says the appeal.

Similarly, FP held in this legal action that the person designated to manage the reorganization, Maruquel Pabón de Ramírez, is a "publicly stated enemy" of the managers of the brokerage firm.

They explain that in the reorganization effected by the SMV, Pabón was designated as the legal representative of the brokerage firm, "a power that the law does not allow the Superintendency of Securities."

Files - Besides the record that opened this January 9 in the Public Ministry, there are four other summaries related to Financial Pacific.

In July 2012, the directors of Financial Pacific, West Valdés and Iván Clare, presented a criminal complaint before the Public Ministry based on the alleged theft of $11.5 million dollars owned by several of its customers.

In this case there are 11 accused persons, of which 10 are in custody.

This file is in the office of the Thirteenth Circuit Prosecutor, and the case is being managed by Julio Cesar Laffaurie.

Then, on 20 November, Alfaro Abood filed a criminal complaint against Financial Pacific for allegedly committing crimes against the public trust (falsification of documents), against economic wealth (fraud) and against the economy (money laundering).

In that same case, the lawyers for the SMV presented on 3 January 2013 an expanded complaint with new evidence.

This process is in the office of the Third Circuit Prosecutor. So far there are no accused and no one has been arrested in this case.

Meanwhile, the comptroller of the Savings and Credit Cooperative of the Employees of the Social Security Fund, Martha Luna, filed on 27 November 2012 a criminal complaint against the former manager of the cooperative, the members of the board, the board of Directors, the Supervisory Council, and all administrative personnel associated with money management, for allegations of financial crimes perpetrated against the assets of the entity, an action in which Financial Pacific is also mentioned. This file is in the office of the Fourteenth Circuit Prosecutor, and no one has been arrested in this case.

Finally, the Auxiliary Prosecutor of the Republic opened an investigation on 17 November 2012 into the disappearance of the auditor of the SMV, Vernon Ramos Lopez, who was working on a report about Financial Pacific when he disappeared.

Upon completion on 28 December, this special report was the basis for expanding the complaint in the office of the Third Prosecutor.

Prosecutor Asks Moncada For a Report About The Appeal - The Third Circuit Prosecutor, Digna Castillo, asked the General Secretariat of the Supreme Court about the status of constitutional guarantees (appeal) admitted on 6 November 2012, by the President of the Supreme Court Alejandro Moncada, against by the Superintendency of Market Securities for having ordered the reorganization of Financial Pacific, due to alleged irregularities in the management of this fund brokerage, said sources linked to the investigation.

The offical's request was dated 8 January 2012 and was addressed to the secretary of the judiciary, Carlos Cuestas, and forms part of the investigation being conducted by the prosecution after the criminal complaint filed by the Superintendent of Market Securities Alejandro Abood Alfaro on 20 November 2012 and expanded on 3 January 2013, against the managers of Financial Pacific, for alleged offenses of forgery, fraud and money laundering.

In addition to admitting the motion filed by attorneys for Financial Pacific, Moncada notified the SMV that their resolution of 16 October 2012 was suspended, which ordered the administrative investigation and reorganization of that brokerage house.

According to Article 2615 of the Judicial Code, concerning collateral injunctions, the judge has 48 hours to decide the case, but sources in the judiciary confirmed yesterday that so far there is no decision being circulated among the other judges of the Supreme Court on this case.

The prosecutor Castillo also asked the Superintendency of Banks to send to them as quickly as possible certifications on all of the information they have about Cayebank, supposedly headquartered in Belize, and that according to the allegations in this case, is one of those who has been most affected by the supposed irregular use of Financial Pacific's funds, sources said.

The executives of Cayebank have said they have on deposit more than $7 million in the accounts of Financial Pacific.

The prosecutor also asked to be informed if that bank has a license to operate in Panama.

Another of the judicial actions the prosecutor Castillo is prepared to conduct is to cite the four SMV inspectors who prepared the special audit report, which served as the basis of the amplification of the complaint that was filed on 3 January 2013 by that entity against the management of Financial Pacific.

They have been summoned to appear on 17 and 18 January 2013 - the inspectors with the last names of Gordón, Rodríguez, Carrasco and Chávez.

Meanwhile, the prosecutor suspended the taking of a sworn statement that had been programmed for yesterday with Sergio Barrios Martínez, a Financial Pacific employee, as part of this process, because their lawyers filed a certificate of incapacity.

Today Friday Mirna Serrano, another Financial Pacific employee, must appear before the prosecutor.

Meanwhile, one person with the last name of Castrellón was arrested yesterday, as part of the investigation being conducted by the Thirteenth prosecutor, as part of the complaint filed by the directors of Financial Pacific. (Prensa)

Editor's Comment: My only prediction in this case so far as that we would be hearing a lot more about it - rather than less. I don't know enough about Abood's political leanings yet to make a determination with regards to any possibilities that the actions taken by the Superintendency of Market Securities might have been politically motivated. Thus far it seems on the surface that he only acted in good faith, in an attempt to protect investors and to prevent them from losing their money - and that's his job. In any case there are now at least five different complaints being investigated, and it remains to be seen where all of this will land in the long haul.

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