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 Msg  : #3311 [200]                                                             
 From : catalyst-remailer                   1:2613/335      Thu 21 Apr 94 21:55 
 To   : All                                                                     
 Subj : 50 Story Skyscrapers via Drug $.                                        
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From: catalyst-remailer@netcom.com

         PANAMA CITY (Reuter) - You can literally see money
laundering of illegal drug profits going on these days in Panama
City, say those who live here.
         Scores of skyscrapers going up in the city's financial
district, some as tall as 50 stories, are partly the result of
cash payments from neighboring Colombia's cocaine cartels, say
Panamanians.
         Some bankers report the rate of construction far outstrips
the figures for building loans, meaning much of the construction
is paid for in cash.
         No one knows how much drug money is tied up in Panama's
construction boom, or how much flows through the $2 billion-a-
year cash business of the duty-free zone in the port of Colon,
but nearly everyone here agrees on one thing: Panama is rife
with money laundering.
         ``The legitimate economic and financial activities in our
country are overshadowed by money laundering,'' President
Guillermo Endara said in a recent speech.
         More than four years after a U.S. invasion toppled Manuel
Noriega, the military dictator currently serving a 40-year
sentence on drug charges in Miami, Panama remains the largest
center for money laundering outside the United States in the
Western Hemisphere, according to the State Department.
         In its recent annual report on the worldwide narcotics
trade, the State Department said Panama's government ``showed a
disappointing lack of political will'' in slowing money
laundering.
         U.S. officials see Panama's haven for drug money as a major
obstacle in a multibillion-dollar effort to slow the flow of
drugs from South America to the United States. Drug traffickers
often ``clean'' their illegal money by transferring it into
legitimate bank accounts or businesses.
         The U.S. report pointed out that no one has ever been
arrested in Panama on money laundering charges and that tougher
new laws on money laundering had floundered in the legislature.
         It gave credit to Panama, however, for recently passing new
currency controls for cash imports of more than $10,000.
         Another embarrassing incident for Panama was the February
arrest in a U.S. money laundering sting operation of a senior
vice president of the Panama branch of Merrill Lynch.
         The arrest sent shock waves through Panama's large financial
industry, which recently passed tougher internal regulations to
slow money laundering.
         Panamanian officials insist the flow of drugs and illegal
money is no longer an official activity as it was under Noriega,
but that post-invasion Panama simply lacks the funds to crack
down on sophisticated methods of money laundering.
         ``If the United States cannot control money laundering, they
must understand how hard it is for Panama,'' a senior Panamanian
banker told Reuters.
         Others believe Panama's drug-tainted reputation will stick
no matter who is in power.
         Panama's liberal banking sector and duty-free trading zone,
the engines behind the country's bustling economic growth, serve
as an ideal spot to legitimize illegal drug profits, analysts
say.
         ``Panama's economy is to a large extent built around
activities that allow money laundering to take place,'' Roberto
Eisenmann, publisher of the Panamian newspaper La Prensa, told
Reuters.
         Eisenmann added he did not believe Panama was a more active
money laundering center now than under Noriega.
         Endara's political opponents are now trying to capitalize on
the idea that his government has committed the same sins as
Noriega. And national elections slated for May 8 are providing a
perfect forum.
         ``The U.S. accusations hurt, but they are correct,'' said
Ernesto Perez Balladares, the front-running presidential
contender for the Revolutionary Democratic Party, which
supported Noriega's regime.
         Balladares has called for tougher regulations on Panama's
pervasive business secrecy laws, which are often used to
disguise or siphon cocaine profits.
         But pre-electoral promises may soon bend to political
reality.
         Powerful Colon free-zone businessmen howled at the recent
move to limit cash imports as a brake on their cash business,
most lladares, is unlikely to pass
restrictions making Colon unattractive to regional traders,
analysts say.

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