For decades, many countries in Latin America struggled with corruption, and Panama is no exception. Corruption has become more prevalent in the country’s psyche, however, as more Panamanian officials, including former president Ricardo Martinelli, were indicted recently for a series of alleged corrupt activities.

A New Leaf

Though many Panamanians grew accustomed to official impunity during the decades of military rule before the transition to democracy in 1989, the Panamanian public has since actively responded to more recent events by repeatedly demanding accountability and an end to impunity of government officials. Protesters in the streets of Panama City have staged numerous demonstrations in support of the efforts to crack down on corruption. President Juan Carlos Varela put his pledge to clean up politics in the centre of his presidential campaign and renewed his promise to return credibility to Panama’s democracy and institutions upon taking office. During his swearing-in ceremony in 2014, Varela declared the greatest legacy for future generations to be “a functional democracy where the state’s resources are used only for the people”.

Transparency International’s “Corruption Perceptions Index” ranked Panama 94th out of 175 countries in 2014, with a score of 37 out of a possible 100. The index ranks countries according to their perceived levels of public sector corruption from 0 (highly corrupt) to 100 (very clean). Though Panama improved since 2013 when it received a score of 35 and finished 102nd, its position suggests that much remains to be done.

Clamping Down

As part of recent efforts to follow through on commitment to stamp out corruption, several former officials from the Martinelli administration are under investigation, including Martinelli. The Supreme Court voted unanimously in favour of appointing a special prosecutor to investigate allegations against the former president. The former magistrate of Panama’s Supreme Court, Alejandro Moncada Luna, was convicted for illicit enrichment and falsifying documents. Appointed by Martinelli in 2010, Moncada was due to serve until 2020, but the decision by the National Assembly to suspend him was another move by the current administration to clamp down on official corruption. His unprecedented conviction demonstrates that even the most senior officials are under scrutiny.

Supreme Court judges are appointed by the National Assembly following a proposal from the president, politicising the judicial system. Varela has promised to amend the constitution in order to strengthen the independence of the Supreme Court, the comptroller-general and other government organs. The constitution has not been updated since former dictator Manuel Noriega was overthrown in 1989.

Further efforts are under way to strengthen transparency over financing of electoral campaigns, after concerns regarding the irregular use of public funds during recent elections led the electoral court ( Tribunal Electoral, TE) to annul 11 legislative results and hold new contests in affected areas. The National Electoral Reform Commission has been tasked with helping the TE draft reforms to the electoral code to resolve these issues before the next general elections in 2019.

Greater Transparency

Not limited to politics, the lack of transparency has also affected the financial services industry. Panama is non-compliant on several of the inter-governmental Financial Action Task Force (FATF) recommendations against money laundering, terrorist financing and suspicious transaction reporting. Though the new administration has taken steps to improve the country’s standing, Panama remains on the FATF’s list of jurisdictions that are not making sufficient progress. Varela appointed former president of the local chapter of Transparency International Angélica Maytín as director of Panama’s anti-corruption agency to begin to address these issues.

While allegations of official corruption are not novel in the region, the swift action against the most recent scandals represents a positive turn for the country. These steps are a reflection of the growing political will to reduce corruption and to increase transparency.