Court upholds fines on Martinelli linked brokers

PANAMA’S  Supreme Court has ruled in favor of the Superintendency of Market  Securities (SMV) over   massive personal  fines  imposed on ex-directors  of the  Financial Pacific (FP) brokerage, center of  Panama’s biggest financial scandal in decades.

The first sanctions, imposed on  December 3, 2014, were  $380,000 on West Valdes, $330,000 on  Ivan Clare and lower fines on  four other executives of the company for a total of $ 861,000.
The sanctioning was  because the company made massive offerings of  the American company Facebook, something it  could not do because the securities were not registered in Panama,  said SMV director, Marelissa Quintero.

The  second penalties totaled $1.1 million, $500,000 to Valdes, Clare $300,000 and Oscar Enrique Rodriguez, $300,000

In this case the process originated because company executives did not create provision to cover a shortfall of $12 million in spite of demands from the regulator, plus breaches in the presentation of financial statements.

The representatives of the brokerage filed lawsuits asking the Supreme Court to declare the sanction illegal.

But in two judgments the Third Chamber of the Court upheld the legality of the sanctions.

The fines are on  the ex-directors are in their  personal capacity, not on the company, which is undergoing  liquidation. A penalty on the brokerage could have gone against the interests of investors, who have not recovered their stakes.

The SMV has no capacity for coercive collection, although collection efforts are made through calls to people fined. Normally, once the sanction is imposed, violators voluntarily come in and pay the SMV said Quintero. If this does not happen, the case is passed to the Directorate General of Revenue, and the fine becomes a debt to the state.

The Pacific Financial brokerage starred in the biggest scandal in the financial sector in many  years, beginning with   the $12 million, shortfall  which was blamed on Mayte Pellegrini, a trusted former employee of the firm.

Pellegrini, currently under house arrest, linked former President Ricardo Martinelli with the High Spirit account, opened “to manipulate the stock market with shares of Petaquilla”.

Among the signatories and beneficiaries of the account was Aaron Rony Mizrachi, Martinelli’s brother-in-law and currently a fugitive, who fled the country on Martinelli’s private jet.

SMV investigations led to  a complaint to the Attorney General’s Office for alleged irregularities in the account, including the management of funds of unknown origin.

After two operations and a research process, hampered by decisions of the Supreme Court when it was headed by Alejandro Moncada Luna ,currently serving time in El Renacer prison, the SMV ordered the liquidation of the brokerage firm, a ,process that has not yet been completed reports La Prensa.