NORIEGA OPENS BANK, PERHAPS FOR LAUNDERING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05C01629R000300610004-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: September 26, 2011
• Sequence Number: 4
• Publication Date: January 27, 1989
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2011/09/26: CIA-RDP05CO1629R000300610004-4
STAT
K,ASI I I \( , I ON I>OS'I' _/
.\III% YOU TIMES
U, S1 E :,I ,l
i%A,S1 I I \G'IO.\ '1' I'Il:S
iS.\ T(AI)AY
Noriega Opens
Bank, Perhaps
For Laundering
By William Branigin
Washington Post Foreign Service
PANAMA CITY, Jan. 26-Gen.
Manuel Antonio Noriega, the Pan-
amanian strongman indicted in the
United States last year on drug-
trafficking charges, has opened his
own bank here in what U.S. and
Panamanian sources see as a move
to expand military control over the
economy and, possibly, corner a re-
vived drug-money laundering busi-
ness.
The new Banco Institucional Pa-
tria opened to the public Jan. 16 as
a general-license bank offering a va-
riety of services. An official an-
nouncement of the bank's opening
listed Noriega as "president of the
board of directors," with a senior
member of his general staff, Col.
Marcos Justine Fernandez, as vice
president. Justine is known as the
financial manager of the Panama
Defense Forces, which Noriega
commands.
The announcement, dated Jan.
12, described the bank as a "private
entity" belonging to the Defense
Forces Benevolent Society and as a
successor to the Panamanian mil-
itary credit union. The letter, which
was circulated to Panamanian finan-
cial institutions, said the new bank's
services would include savings and
current accounts, Christmas sav-
ings accounts, certificates of depos-
it, letters of credit, mortgages, na-
tional and international transfers
and loans for small and medium-
sized businesses.
"It's a full-service bank for mon-
ey-laundering activities," said a
knowledgeable U.S. official. "The
See PANAMA, A16, Col. 1
idea is to cut out the middleman." He as-
serted that the military is "trying to corner
the market on money-laundering," which he
said is "flourishing right now."
Other U.S. officials and Panamanian
banking sources said they believed the new
bank was Noriega's response to a U.S. sting
operation last year against an international
bank that he used to launder millions of dol-
lars in drug cash, the Luxembourg-based
Bank of Credit and Commerce Internation-
al. The sting resulted in money-laundering
indictments in Tampa, Fla., in October
against 84 persons, including several asso-
ciates of Colombia's Medellin drug cartel
and nine senior officials of the Luxembourg
bank, including Amjad Awan, its former
Panama branch officer who served as No-
riega's personal banker, handling a $20 mil-
lion Defense Forces account at the bank.
"This way, he (Noriega( can control who
knows what.... He doesn't have to deal
with outsiders anymore," said one highly
placed American banking source familiar
with the new Noriega bank. "Somebody
used the phrase 'made in heaven' .... He
can do wonders with this."
Another view, however, is that the main
aim of the new bank will be to consolidate
greater control over the Panamanian econ-
omy in the hands of Noriega and his military
backers, freezing out opponents who have
long been prominent in business and bank-
ing. According to Panamanian banking
sources, signs already have emerged that
the new bank intends to monopolize loans to
the agricultural sector, which would give
Noriega and his supporters increased con-
trol over the Panamanian interior.
In any case, U.S. and Panamanian
sources said, the opening of the Banco In-
stitucional Patria coincides with a revival of
drug-money laundering here in -recent
months following a period last year in which
billions of dollars in offshore holdings fled
the country, banks closed for nine weeks to
prevent a massive run and U.S. economic
sanctions starved the government of cash.
Now, although the dollar-based economy
generally is still depressed and U.S. sanc-
tions are still in place, banks are flush with
cash, and the Noriega government's ability
to do business appears to be growing, the
sources said. Ironically, Panamanian bank-
ers said, the sanctions appear to have
helped loosen restraints on the laundering
of drug money in Panama, long a center of
operations for narcotics financiers.
"One of the things the sanctions have
done is to make it much easier to launder
money in Panama," said a top Panamanian
banker with connections to the anti-Noriega
opposition. "All the banks are flooded with
money now. Who controls where this cash
is coming from? Nobody cares anymore."
"Noriega is getting money in here in var-
ious ways," said a well-informed U.S. official.
"Panama is still exporting agricultural pro-
duction, and he has access to a great deal of
drug-related money that he's using to keep
things going. He has arranged for a fairly
steady flow of funds from the drug lords in
Colombia to meet his urgent needs."
"If it's a bank controlled by the military,
nobody's going to dare to look at their
books," said a prominent local businessman.
"They can do anything they want."
According to a well-placed U.S. source,
the amount of cash in Panama City has bal-
looned to between $3 billion and $4 bilhun
in recent months, as much as 10 times the
U.S. government's official estimates of
$300 million to $400 million.
The new bank's announcement letter, a
copy of which was provided to The Wash-
ington Post, was signed by its "general man-
ager," Simon Vega, whom banking sources
described as a longtime associate and finan-
cial adviser to Noriega. Vega worked for
about eight years for the Panama branch of
the First National Bank of Chicago in the
late 1970s and early 1980s, then became
the director of Panama's internal revenue
service, a former associate said.
His older brother, Guillermo Vega, is the
Panamanian ambassador in London and is
reputed to handle Noriega's financial inter-
ests in Europe, where the general maintains
property and bank accounts in several coun-
tries, informed sources said.
While Simon Vega worked for First Na-
tional of Chicago, he dealt mostly with off-
shore banking, a banker said. "One of his
strengths is international business," the
source said.
However, this source said he doubted
Noriega would bank his personal wealth in
the new institution. If he did so, "he would
he a coup away from losing his money," the
banker said. He also said it would be "very
obvious" if the new bank began large-scale
money-laundering operations.
In large part, this source said, the forma-
tion of the new bank "follows a tendency of
the military to take over a lot of important
things in Panama. Most of the things they
do are for control purposes."
Possible indications of where the bank may
be headed came in a series of decrees in the
government's official gazette in November
and December. The decrees authorized two
government agricultural institutions to seek
credit lines totaling $50 million from the then
unopened bank without competitive bidding.
Where the bank itself would obtain those
funds is not made clear. The announcement
of the bank's opening listed its total assets
as $15.8 million, believed to represent the
assets of the former military credit union,
and start-up capital of $5.2 million.
Another government decree, published
Dec. 12, authorized the planning and edu-
cation ministries to negotiate financing with
the new bank-again without competitive
bids-for the construction of two new min-
istry buildings worth about $34.5 million.
Panama's construction industry has long
been known as a major vehicle for money
laundering.
Staff writer Michael Isikoff contributed to
this report in Washington.
Sanitized Copy Approved for Release 2011/09/26: CIA-RDP05CO1629R000300610004-4