Property, money laundering, Panama Papers – The case of Venezuela
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On Avenida Balboa, Panama City’s premier seafront avenue, the 50 story tower blocks form a near continuous wall of glass to the Pacific Ocean. At night, however, most of the luxury apartments remain in darkness and the basement casinos are eerily deserted.
Panamanian real estate was a favourite investment of the boliburgues, Venezuelans who grew rich on the back of their political connections to the late president Hugo Chávez and his successor Nicolás Maduro.
But in the wake of the Panama Papers scandal it has become increasingly hard to launder money through the country, cutting off a potential exit route for those looking to cut loose from Maduro’s embattled regime.
“The Panamanian real estate boom began in 2005 – the Colombians came first, then the Venezuelans,” says Ernesto Gonzalez, an investment advisor for Dproperty, a local property broker. “They would sometimes buy up seven or eight luxury apartments in the same building and leave them vacant but the market has slowed dramatically in recent years, especially after the Panama Papers.”
In 2003 Chávez pegged the bolivar, the national currency, to the US dollar. As the bolivar devalued in real terms, huge arbitrage options opened up for individuals and companies who could buy dollars at the official rate and sell them on the black market, often at over 100 times their purchase value.
With a dollarized economy, visa-free travel and a financial sector with a habit of turning a blind eye, Panama – along with Miami, Spain and Nicaragua – became a favourite destination for offshore investment and, for a while, the boligburgues could lead their often ostentatious retirements undisturbed.
Since 2016 Panama’s banks have ceased to open accounts to individuals with companies listed in Venezuela due to concerns about exposure to possible corruption.
As authorities in the US, Panama and Spain home in on the Chavistas’ errant billions, those close to the regime are running out of time to secure their foreign assets. In any future rebuilding of the Venezuelan economy a strong emphasis is likely to be put on recovering stolen assets according to Pedro Armada, a Panama City based investigator and forensic accountant.
“As Venezuela enters ‘end-game’ we are likely to see an acceleration in the rate at which ill-gotten funds are expatriated,” says Armada. “The noose is tightening on the boliburgues.”
