June 4, 2015 / 5:40 PM / in 2 years

Panama arrests ex-Vice President Virzi on suspicion of graft

PANAMA CITY (Reuters) - A former vice president of Panama, Felipe Virzi, has been arrested on corruption and money laundering charges, the latest high-profile political figure to tumble in a wave of graft scandals sweeping Central America.

Virzi, a close friend of former President Ricardo Martinelli, who is also being investigated for corruption during his time in office, was arrested on Wednesday night after 10 hours of questioning, Panama’s attorney general’s office said late on Wednesday.

The 71-year-old Virzi, who was vice president to Ernesto Perez-Balladares between 1994 and 1999, is accused of receiving $10 million from an Ecuadorean company that won a $37 million contract from Martinelli’s government to build an irrigation system that never materialized.

According to the charges against him, Virzi received the money shortly after the contract was awarded. He then distributed the cash to various bank accounts, including one investigators suspect was linked to Martinelli, who was president between 2009 and 2014.

Virzi, who since leaving public office has forged lucrative business interests in livestock, real estate and banking, says he is innocent of the charges.

Virzi is the latest figure to be accused of corruption in a slew of graft controversies that have swept Central America, heaping pressure on the presidents of Guatemala and Honduras.

On Wednesday, facing a wave of protests calling for his resignation, Honduran President Juan Hernandez said his 2013 presidential campaign took money from companies linked to one of the worst corruption scandals in the country’s history.

In Guatemala, meanwhile, President Otto Perez is fighting to defend his political legacy after being forced to dismiss various cabinet-level colleagues over a snowballing series of corruption allegations.

Martinelli, who has not set foot in Panama for months, is also under investigation for corruption. In April, Panama’s election authority said he would no longer be immune from prosecution.

Central America is one of the poorest and most violent regions in the world, and has long been a hotbed of corruption.

Reporting by Elida Moreno and Enrique Pretel; Writing by Gabriel Stargardter; Editing by Richard Chang

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