The Number of Those Charged with Embezzlement Rises to 99: Parallel Decentralization

The number of individuals formally charged in Panama for embezzlement linked to the “parallel decentralization” (descentralización paralela) scandal has reached 99. The anti-corruption prosecution added the latest defendants during hearings in the province of Chiriquí, probing the misuse of millions in public funds distributed through the National Decentralization Authority’s Social Interest Program (PDIS) between 2021 and 2024.

Case Background & Details

• The Scheme: The PDIS channeled substantial state resources to local community boards and municipal authorities outside standard transparency controls, heavily active during the administration of former President Laurentino Cortizo (2019–2024).

• The Accused: Defendants include former and current local representatives (representantes de corregimiento), treasurers, and private individuals who failed to justify the allocation or use of public checks

• Audit Findings: The Anti-Corruption Prosecutor’s Office has reviewed dozens of audit reports from the Comptroller General, discovering critical inconsistencies, phantom projects, and missing documentation for funds assigned ostensibly for community aid.

The Anti-Corruption Prosecutor’s Office is analyzing 72 audit reports related to irregularities in the handling of funds from the so-called parallel decentralization program, and has found inconsistencies in 50 of them. To date, these investigations have led to charges being filed against 99 people, the last two on Friday, August 7.  Following the indictment, the judge ordered the provisional detention of Montenegro, while granting Torres a periodic reporting measure.

Parallel Decentralization

“Parallel decentralization” (descentralización paralela) in Panama refers to a controversial political funding mechanism where millions of public dollars were channeled directly from central government entities—primarily the Ministry of Economy and Finanaces (MEF) and the National Decentralization Authority (AND)—to specific local communes (juntas comunales) and municipalities, bypassing regular transparent oversight procedures.

Origins and Mechanism

• The Pandemic Context: Large-scale implementation expanded significantly around 2020 under the guise of emergency social relief and local stimulus via programs like the Development and Social Interest Program (PDIS).

• Discretionary Flow: Funds were distributed heavily to local representatives aligned with the ruling political party rather than through equitable, formulas-based municipal frameworks.

• Bypassing Controls: Projects were frequently split into smaller amounts (fraccionamiento) to dodge auditing thresholds and standard reviews by the Office of the Comptroller General.

Scandals and Investigations

• Unaccounted Millions: Audits revealed over $300 million was distributed, with tens of millions lacking basic invoices, receipts, or proof of project completion.

• Phantom Projects: Investigations by anti-corruption prosecutors uncovered unfinished public works, ghost jobs under professional services contracts, and direct fund transfers to local politicians or their relatives.

• Legal Fallout: Dozens of administrative audits have confirmed substantial patrimonial damage to the state, leading to active criminal investigations, asset seizures, and the arrest of multiple local officials.

Current Status

• Political Rejection: The administration of President José Raúl Mulino has publicly disavowed the practice, declaring that such parallel fund transfers are barred and subject to tighter, centralized MEF direct-payment controls where money stays in treasury accounts until project execution is verified.

Ongoing Probes

The Public Ministry and anti-corruption fiscal offices continue processing dozens of comprehensive audit files handed down from the Comptroller’s office regarding misuse of public monies from the 2019–2024 legislative cycle. As of August 2026, the ongoing corruption investigations into Panama’s “descentralización paralela” (parallel decentralization) have resulted in 99 individuals—mostly former local representatives and treasurers—facing formal charges for alleged embezzlement (peculado). The Anticorruption Fiscalía has handled over 300 total complaints and judicialized dozens of cases, though specific media images or mugshots of the arrested figures are generally limited to local news broadcast coverages and courtroom arrivals via outlets like La Prensa Panamá.

Investigation Status & Details

• Total Imputations: 99 people officially charged with misuse of public funds.

• Complaints Filed: Over 320 legal complaints processed by the Public Ministry (Ministerio Público).

Core Allegations: Unauthorized, politically driven millions transferred to community boards (juntas comunales) between 2019 and 2024 without technical justification or proper oversight.