Financial Pacific

In the murky waters of Panama’s financial sector, few entities have cast as long and as dubious a shadow as the now-defunct brokerage firm, Financial Pacific (FP). Once hailed as a beacon of investment opportunities, FP’s legacy is now marred by allegations of embezzlement, money laundering, and a concerted effort to suppress the truth. As an investigative journalist, I’ve delved deep into the labyrinthine corridors of FP’s operations, uncovering a tale that serves as a stark warning to potential investors and a clarion call for regulatory intervention.

The Rise and Fall of Financial Pacific

Founded with the promise of offering premier brokerage services, FP quickly became a darling of Panama’s financial elite. However, beneath its polished facade lurked a cesspool of financial improprieties. The firm’s downfall began in 2012 when an internal audit revealed a staggering $12 million discrepancy. This revelation led to the intervention of the Superintendence of the Securities Market (SMV) and set off a chain of events that would expose the firm’s deep-seated corruption.​

The High Spirit Account: A Vessel for Malfeasance

Central to FP’s scandal was the notorious “High Spirit” account. Allegations surfaced that this account was used to manipulate stock prices, particularly those of Petaquilla Minerals Ltd., with whispers of involvement reaching the highest echelons of power, including former President Ricardo Martinelli. The SMV’s investigation uncovered transactions ranging from $1 million to $4 million flowing through High Spirit, indicative of potential financial crimes within Panama’s stock market system. ​

A Web of Complicity

The tentacles of FP’s misconduct extended far and wide. In 2019, the Seventh Anti-Corruption Prosecutor consolidated two major cases against FP, focusing on the High Spirit account and a complaint from Belize’s Caye International Bank, which suffered losses after FP’s intervention by the SMV. Key figures, including FP’s former directors Iván Clare and West Valdés, found themselves under the prosecutorial microscope.

Further entanglements emerged with the involvement of Felipe “Pipo” Virzi and Cristóbal Salerno, both of whom played roles in funneling funds to cover FP’s financial gaps. Notably, a $7 million check from the state-owned Caja de Ahorros was traced back to these individuals, raising questions about the misuse of public funds and the extent of political collusion. ​

Silencing the Whistleblowers

In the wake of these revelations, one would expect a flurry of media coverage and public outcry. Instead, there was an eerie silence. Sources close to the matter revealed that FP engaged in aggressive tactics to suppress negative publicity. Journalists investigating the firm faced legal threats, and in some instances, were subjected to intimidation. The disappearance of Vernon Ramos, an SMV official probing FP’s activities, sent a chilling message to would-be whistleblowers. ​

Red Flags for Investors

For discerning investors, FP’s saga offers several cautionary lessons:

Opaque Operations: FP’s lack of transparency, especially concerning the High Spirit account, underscores the perils of investing in entities that operate in the shadows.

Regulatory Capture: The firm’s ability to allegedly co-opt regulatory officials, such as Ignacio Fábrega, highlights the risks posed by compromised oversight bodies. ​

Political Entanglements: FP’s connections with political figures and the misuse of state resources exemplify the dangers of intertwining business with politics.​

A Call to Action

The Financial Pacific debacle serves as a stark reminder of the vulnerabilities within financial systems and the lengths to which some will go to conceal malfeasance. Regulatory bodies must bolster their oversight mechanisms, ensuring that entities like FP cannot operate with impunity. Moreover, the press must be safeguarded against intimidation, allowing journalists to shine a light on corruption without fear of retribution.

Conclusion

Financial Pacific’s descent from a reputable brokerage to a byword for financial scandal is a tale of greed, deception, and the corrosive influence of unchecked power. For investors, it underscores the imperative of due diligence and the need to remain vigilant against entities that prioritize profit over principle. As we sift through the ashes of FP’s implosion, one can only hope that the lessons learned will fortify the financial landscape against future transgressions.