Panamanian leader caught up in international bribery scheme

Panamanian President Ricardo Martinelli is battling charges that he received payoffs by an Italian newspaper publisher, who reportedly acted as a representative for contractors interested in building a new penitentiary system in the isthmus nation.

Martinelli canceled a trip to Colombia on Monday after Italian authorities arrested Valter Lavitola, the publisher of the daily L'Avanti, who is also charged with extorting former Prime Minister Silvio Berlusconi in exchange for not printing stories about his lavish parties with prostitutes. Lavitola's arrest and the allegations surrounding the case have rocked both Italy and Panama.

Italian authorities have charged him with bribing Martinelli. Lavitola was arrested at Rome's Leonardo Da Vinci international airport after he arrived on a flight from Buenos Aires on Monday. He was taken to a prison in Naples, where prosecutors were expected to question him on Wednesday.

One key witness in the case, Mauro Velocci, claims that Lavitola had an escort and an official vehicle paid for by the Panamanian government while he was living in the Central American nation. The witness says that the payoffs he made to Martinelli on behalf of several Italian developers to build four jails in Panama also went to a number of Cabinet members, including former Justice Minister Roxana Méndez.

On his Twitter account on Tuesday, Martinelli wrote: "No Italian firm is constructing any jail in Panama."

According to Italian judicial sources, Lavitola presented himself as "a representative" of the president of Panama to different Italian companies wanting to do business in the Central American nation.

For her part, Méndez, who served as Panamanian justice minister until January, explained that officials from the Italian Embassy had helped in the negotiations but no contract was awarded because the fees were too high.

"The contract for the jails was never signed. We held negotiations with an Italian company, which offered us alternatives for fast construction, but we were unable to meet the costs," Méndez told the Panama City daily La Estella.