Is the White Tower washing black money?

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Now that the Trump Ocean Club is going bankrupt, why not look at some of the other questionable real estate developments we've seen going up over the past years? After all, it isn't us, but the DEA, who continues to claim that Panama's real estate and construction sector is a repository for dirty money.

Enter the scene Gabriel Btesh and Felipe Alejandro Virzi. Close allies of president Ricardo Martinelli, who not only is part of an investigation in Italy for massive corruption, but also has some unexplained issues locally related to laundering money. Btesh and Virzi run a real estate development firm that builds towers all over the place. Btesh on paper owns newspapers El Panama America and La Critica, but is widely believed to be a proxy for Martinelli.

Anyway, on the Panama Forum website we found a post that alleges that the Btesh & Virzi "White Tower" project on Avenida Balboa is a money laundering scheme. Here's the story, start quote:

The White Tower Project:

This Avenida Balboa project consists of 196 residential units with four units per floor, all floors being equal in distribution except for the penthouse units. All four penthouse units currently remain unsold. There is a construction loan of only $826,000 dollars from Banvivienda registered. The book value for the project is $64 million dollars.

In total there are 100 unsold units. 57 have been sold to corporations and 39 to private individuals, however, most of these sales are bulk sales to anonymous or semi-anonymous groups mainly located in Spain. Currently there appear to be 0-2 closing per month with an average of 1.33 per month for the past six months, resulting in a sell-out estimation of 6-10 years.

Something that really stands out of the complete lack of American, Canadian and Northern European buyers. Buyers from the Anglo-Saxon world simply does not exist for the Btesh & Virzi projects.

The following table represents the current sales status for the project:

Owner Percent Note

  • MERCHBANC GROUP 12.54        The Spanish Connection
  • PANAMA BULK DEALS 20.68     Panama Law Firms
  • DEVELOPER 51.29                           The Developer
  • NORMAL SALES 15.49                    Normal buyers

 The cash and loan table is shown below:

Sales status Percent Dollar value

  • Units with loans      5.67 3.6 million
  • Unsold units            51.29 32.91 million
  • Sold cash                  43.04 27.49 million

It should be noted that only $2 million dollars in mortgage loans have been issued for the project in total with a total sold portfolio of $31.1 million dollars making the White Tower a quite unique "all cash" building.

The highest loan from BBVA is for $1,516 per square meter, while the second comes in at $1,440 from ScotiaBank while the rest average $1,241 making the project virtually risk free for the local banks.

The Developer

The developer, Btesh & Virzi holds their unsold inventory in MUNDIAL SERVICIOS FIDUCIARIOS, S.A. As of today, March 25th, 2013 this inventory represents 51.29 % of the building for a book value of $32.91 million dollars. Given a monthly maintenance fee of $1.45 per square meter it is estimated that the current holding cost for this inventory is about $21,000 per month, disregarding the applicable land taxes.

The Spanish Connection

According to EL MUNDO, issue number 6924 published on December 2, 2008 Spanish anti-corruption agencies were investigating the origin of massive amounts of money held by Merchbanc and JOAQUIN HERRERO GONZALEZ.

Investigan la procedencia de los dos millones que el padre de Artur Mas evadi a Liechtenstein

Sr Herrero purchased three units cash from Btesh & Virzi in Waters on the Bay using Passport number BF239367 and later purchased 14 units in cash in White Tower using an alternative passport number 17.830.453-W. He also purchased 3 additional units cash through the foreign corporation MERCHBANC (name could be misspelled on local title).

MERCHBANC S.A. is based out of Barcelona:

MERCHBAN, SA - Información mercantil en Empresia.es

and current list FERNANDO CASTELLO CLEMENTE as a consultant/advisor. FERNANDO CASTELLO CLEMENTE and MARIA CRISTINA CASTELLO CLEMENTE purchased 7 additional units cash from Btesh & Virzi. Maria also used two different passports for her purchases, namely 40823404Z and BA936144.

This Spanish group currently own 12.54 % of the White Tower building, but they can own vastly more in the anonymous corporations holding units as well.

More information on Sr Herrero can be found here:

Joaquín Herrero González, experto en fondos de inversión | EROSKI CONSUMER

He apparently is famous for creating foundations in Liechtenstein to hide funds for his clients.

The funds used to purchase these units from Btesh & Virzi in Panama most likely originate from illicit tax evasion activities in Spain and the rest of Europe. Surely Btesh & Virzi are up the date on the know your client regulations and would report strange wires from foundations in Liechtenstein?

Another Spanish business man JOSE MANUEL AMATRIAIN ARRULA purchased three units cash. A Spanish corporation SAMU-BANYOLES,S.L. also purchased one unit cash.

Panama Law Firms

There are four Panamanian law firms that stand out in the sales for White Tower, namely:

  • ILLUECA Y ASOCIADOS (Illueca)
  • NEDELKA SOTOMAYOR (Sotomayor)
  • ICAZA, GONZALEZ-RUIZ & ALEMAN (Icaza)
  • OWENS & WATSON (Owens)

Illueca created 13 anonymous corporations with the generic name WHITE followed by the unit number. Nominee directors were provided for all units and all of them closed in late 2011, expect for two which closed in February 2012. Due to the nature of the closings it is safe to assume that this was a bulk transaction paid for in cash as no mortgages appear for any of the units. The total amount appears to be around $4 million dollars. Part of the cash deal are the entire 40th and 41st floors.

Sotomayor is the next law firm to execute a massive bulk cash deal at $2 million dollars. All the sales close shortly after Illueca's and stretch from February to April and are also excuted with the generic names WHITE followed by the unit number.

Icaza executes a minor cash sale at $1 million dollars using offshore corporations CRETA GLOBAL, ESTOCOLMO INTERNATIONAL, LITHUANIA INTERNATIONAL illustrating the clients preference for names containing European cities and/or countries.

Owens & Watson is the next Panamanian lawfirm to execute a massive bulk sale of $4 million dollars. This one continuous on the standard with European countries, for example ALEMANIA LAND CORP, FRANCIA LAND CORP, ITALIA LAND CORP, PORTUGAL LAND CORP, SPAIN LAND CORP, POLONIA LAND CORP mixed with more generic names such as BORGETTO MANAGEMENT, S.A, LOMBARDIA LAND INTERNATIONAL, S.A and PRECIOUS ESMERALD, INC.

There are currently several corporations with the name WHITE followed by a unit number, for example:

  • WHITE 11-C, S.A.
  • WHITE 11-D, S.A.
  • WHITE 20-B, S.A.
  • WHITE 22-A, S.A.
  • WHITE 22-D, S.A.

with the follow dignitaries listed:

  • PRESIDENTE: FELIPE ALEJANDRO VIRZI LOPEZ
  • TESORERO: ANALIDA DEL CARMEN VIRZI VALLARINO
  • SECRETARIO: ELVIRA MARIA VIRZI VALLARINO

These five corporations were created by LCDA. DORA STANZIOLA DE CHEVALIER indicating that a new "cash" deal is pending for these and possibly other units.

Normal buyers

Apart from the Spanish Merchbanc purchasers and the bulk purchases arranged through the four lawfirms above there are a few, very few, normal buyers in this high-rise. In fact there are only three units that were sold to private individuals holding Panamanian permanent residency cards, two natives and one foreigner.

Eleven units were sold to Panamanian corporations using a variety of lawfirms with and without nominee directors. Ten of these were cash deals.

There were also seven private cash buyers and eight private buyers that required a loan to complete their purchases.

Conclusion

This project has had 15 % normal sales completed since its inception in 2006/2007. The rest represents bulk deals with people associated with Merchbanc in Spain and four lawfirms in Panama creating anonymous holding vehicles for unknown owners. The project remains over 50 % unsold.

It is hard to reach any conclusion but that substantial amount of money laundering is taking place.

This project should be seized by Panamanian authorities and the origin of the funds for each unit and the construction investigated to the fullest extent possible.

End of quote. That last paragraph seems a bit optimistic given the warm relationship between Btesh & Virzi and Ricardo Martinelli: Gabriel Btesh was part of the party that accompanied Martinelli to an upscale resort on Sardinia for a free vacation that the Italian prosecutors consider a bribe.

11 thoughts on “Is the White Tower washing black money?

  1. Way too many high rises went up way too fast in Panama City over a short period of time for it to be anything other than a wash. My guess is that many of the other projects share similar mortgage debt and builder/buyer type scenarios.

  2. And I’ll keep saying it! Here in the interior are projects that claim 80% sold etc that after 5 years appears nothing not even a tower but the keep playing like its real and 2006.

    The developers on on the ground 30 year old foreigners who lifestyle cant be condoned by a legitimate business.

    Their supporting businesses (screens) are also non profit all payroll nothing coming in except maybe on a three day weekend break even.

    And all of it is hid behind SA’s leasing back to multiple SA’s and on and on.

  3. Notice as well that Pïpo Virzi is one of the more prominent ex-PRD Martinelista turncoats, having served as second vice president of Panama in Toro Pérez Balladares’s administration.

  4. “Panama is all one big show and no GO!”

    Panama is just one big fraud with no real laws, codes, or regulations that are ever enforced unless you are perceived as an enemy of this Cartel Government real or imagined!

  5. The money launderers and drug lords in Panama are known to everyone. But US and Panamanian enforcement is sporadic at best. Once in a blue moon the Panamanians throw the Americans a bone and someone is charge. Most likely someone who has fallen out of favour. Even then, the accused sits at home until the bribes are paid or the government plays it’s five year game of musical chairs and all is forgiven. Reputations are laundered in Panama also. Today’s criminal is the next governments Supreme Court Justice.

    To me the war on drugs has nothing to do with drugs and more to do with the American fingers staying firmly placed in everyone else’s pie. The “War” sells US technology to countries that don’t need it. It keeps US operatives from dying of boredom in third world outposts. Once in a while the flow of drug money can help save the banking system(increased liquidity 2008) or finance some off the books American atrocities(Ollie North).

    They may have there trips to Disney World cancelled, but Panama’s Narco Class know full well how vital a tool they are in US Foreign Policy. The only thing that worries them is if “radical” Muslims completely replace them as the bogey man of the day.

  6. You know, there are so many high rises now that are empty, they could all get on a schedule to go bankrupt and sold to launder money again and again. This could be an endless source of dirty money for Panamá oligarchs to skim from. My God! If this isn’t the goose that laid the golden egg. Colombia gets rich from the cocaine trade and Panamá gets rich on the money laundering on the way back to Colombia. What a concept. I LOVE THIS COUNTRY!!!

    Seems to me you’d have to look hard to find a way to make an honest (literally) living.

  7. Perhaps Omar Torrijos’ greatest achievement wasn’t the patriation of the canal but instead the creation of the offshore banking system. Panama as a transit country has always been good at profiting from trade, be it legal or illegal.

  8. The construction of luxury apartments is not a forgotten business. The pace of 2007 which some called a real estate bubble has been slowing, but investments in this segment continue. It is estimated there are between 8,000 to 10,000 apartments either newly built or under construction with prices between $2,000 to $5,000 per square meter in the areas of Punta Pacifica, Costa del Este, and Ave. Balboa. However, is there enough demand to fill these apartments? Within the real estate sector people are hesitant to talk about the subject, but unofficial estimates have reported a glut that could exceed three thousand units. Put another way, about half of the units have no owner. Felix Carles, a real estate agent, acknowledges that four years ago about 70% of buyers were speculators. People were trying to lock in a preferential purchase price (before construction began) and then sell the property later for as much as three times the purchase price. However the business was not quite as accurate as previously thought, when the international crisis hit and then international buyers abstained from purchases.

  9. No offense but that is old news and those of us here saw it even back then. It was all hype with no foundation from day one. Bottom Feeders are always hesitant to speak except their chrome polished spin.

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