Case File

The Leonardo Panama Affair

Author
Jack Cinamon
Published on
May 19, 2026
Image
From left to right, Paolo Pozzessere, Ricardo Martinelli and Valter Lavítola
From left to right, Paolo Pozzessere, Ricardo Martinelli and Valter Lavítola
From left to right, Paolo Pozzessere, Ricardo Martinelli and Valter Lavítola

Contents

Contents

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Introduction

Introduction

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In late 2010, as Panama sought to combat organised crime and drug trafficking, it signed $250 million worth of contracts with subsidiaries of Finmeccanica (now Leonardo) for helicopters and surveillance systems. These deals quickly became mired in controversy. At the center of the scheme was commercial director Paolo Pozzessere, who hired a Panamanian intermediary company, Agafia Corp, to facilitate up to $25 million in bribes to government officials. Agafia Corp was controlled by Valter Lavítola, an Italian businessman hired by Pozzessere because of his close ties to the Panamanian government, particularly its President Ricardo Martinelli. These payments were later described in testimony as a routine practice for securing arms contracts in Central America.

The fallout was severe. In 2016, Leonardo’s predecessor, Finmeccanica, was forced to reach a financial settlement after Panama’s Supreme Court found ‘credible indications’ that the contract had been tainted by abuse of power for illicit personal gain rather than the public interest. By then, the project itself had unraveled: radar systems failed to function, contract values were inflated and following a change in government, the agreements - only partially fulfilled - were ultimately annulled. The affair went on to become one of the defining corruption scandals of the administration of former president Ricardo Martinelli.

Case Details

Case details

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Seller country
Italy
Seller company
Finmeccanica (now Leonardo SPA)
Buyer country
Panama
Goods category
Surveillance Equipment, Helicopters
Equipment sold
6 AW139 patrol helicopters, 19 radar systems, and Topographic mapping system
Deal value
USD 250 million
Sum involved in corruption
Up to USD 25 million
Start year
2010
End year
2017
Outcome status
Out of Court Settlement, Trial Closed - No Convictions

Actors

Actors

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  • Finmeccanica (now Leonardo): Italian arms company; 30% state-owned; specialising in Helicopters, Aircraft, Aerostructures, Electronics, Cybersecurity; the parent company of the three companies awarded contracts with the Panamanian government; headquartered in Rome, Italy.

  • AgustaWestland SpA (now Leonardo Helicopters): Italian arms company specialising in helicopters; subsidiary of Leonardo; contracted to supply six patrol helicopters; headquartered in Rome, Italy.

  • Selex Sistemi Integrati (now Selex ES): Italian arms company; subsidiary of Leonardo; contracted to deliver a maritime radar system; headquartered in Rome, Italy.

  • Telespazio Argentina: Argentinian arms company providing satellite services; subsidiary of Telespazio SpA (a joint venture between Leonardo (67%) and Thales (33%)); contracted to develop a topographic mapping system; headquartered in Buenos Aires, Argentina.

  • Agafia Corp: Panamanian shell company; incorporated in 2010; headquartered in Panama.

  • Ricardo Alberto Martinelli Berrocal: President of Panama (2009–2014); multimillionaire supermarket tycoon.

  • Paolo Pozzessere: Finmeccanica’s Commercial Director (2007–2011); later worked for various arms companies including Northrop Grumman (2019–2023); hired Agafia Corp and, in turn, Lavítola as intermediary to help secure Panamanian contracts for Finmeccanica.

  • Valter Lavítola: Italian businessman and former editor of the newspaper Avanti; reportedly very close to Silvio Berlusconi; also said to have ties to then-Panamanian President Ricardo Martinelli; hired as an intermediary to facilitate the payment of bribes by Finmeccanica to the Panamanian government.

  • Karen Yizell de Gracia Castro: Lavítola’s partner and both Director and President of Agafia Corp (shell company in Panama).

  • Alexander Herodoto de Campos: Director of Agafia Corp (shell company in Panama).

  • Danielle Louzada: Director of Agafia Corp (shell company in Panama).

Timeline

Timeline

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2010
  • 17 JunAs contracts between subsidiaries of Finmeccanica and the Government of Panama were being finalised, Valter Lavítola incorporated a Panamanian company, Agafia Corp. Although owned by Karen Yizell de Gracia Castro and two Italian associates, Alexander Herodoto de Campos and Danielle Louzada, wiretapped conversations later suggested that Lavítola was the true controlling figure at the company.
  • Agafia had no technical or financial expertise, yet it entered into consultancy agreements with three Finmeccanica subsidiaries, invoicing them for services and ultimately receiving around 10% of the total contract value, just over €18 million (up to $25 million). The role of the company was ‘to transmit bribes to the Government of Panama’.
  • Testimony from Giuseppe Schiatterella, one of the Italian policemen in charge of the case, also referred to a recorded discussion between Paolo Pozzessere and Lavítola in which they considered allocating 33% of Agafia’s proceeds to Panamanian President, Ricardo Martinelli.
  • AugThe Cabinet Council of Panama, led by Martinelli, approved the purchase of the radar systems at a cost of $125 million, formally advancing one of the central contracts within the broader Finmeccanica deal.
  • Panama formally signs a series of contracts with three subsidiaries of Finmeccanica aimed at strengthening its capacity to combat organised crime and drug trafficking. AgustaWestland was contracted to supply six patrol helicopters, Selex Sistemi Integrati to deliver a maritime radar system, and Telespazio Argentina to develop a topographic mapping system. The combined value of these agreements was approximately $250 million.

Outcomes

Investigation Outcomes

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2011
  • JanJust months after Finmeccanica secured its contracts in Panama, Italian authorities began wiretapping the phones of Finmeccanica’s Commercial Director, Paolo Pozzessere, and Valter Lavítola, a former Avanti newspaper owner and close friend of Italian Prime Minister at the time, Silvio Berlusconi. The surveillance marked the beginning of a broader investigation into suspected corruption surrounding the contracts.
  • Italian authorities submitted a 568 page preliminary report to the Naples court.
  • AugLavítola opened a bank account in Bulgaria on behalf of Agafia.
  • SepPozzessere stood aside as Commercial Director of Finmeccanica, instead assigned a role by Finmeccanica in Russia.
2012
  • 23 OctPozzessere was arrested for international corruption and placed in precautionary custody at Poggioreale prison in Naples for about 90 days.
  • 10 NovLavítola is sentenced to 3 years and 8 months in prison on multiple charges, including fraud and embezzlement of public funds linked to the newspaper Avanti, as well as extortion. He was also accused of attempting to extort around $5 million from Silvio Berlusconi, allegedly in exchange for withholding damaging information about escort services he had arranged for parties involving sex workers.
2014
  • 30 JulShortly after taking office, Panamanian President Juan Carlos Varela publicly questioned the viability of the radar project. Speaking to the press, he stated that ‘I always said that the problem of the radars was serious. After 30 days in government, the evidence suggests that they are not functional. We have to reassess and redefine the future of the project.’ It emerged that the radar systems were only capable of detecting larger vessels.
  • 25 SepLavítola and Pozzessere, were called to trial in Rome to face charges of diverting $25 million in bribes from the company to Panamanian officials in exchange for the lucrative contract.
  • NovSchiatterella, one of the officers leading the case, later confirmed to the court in Naples that intercepted conversations through wiretapping revealed a close relationship between Pozzessere and Lavitola that appeared to have corrupt intent. According to his account, ‘the two spoke about the need to bribe senior officials and presidents of foreign governments, to get work orders’.
  • 11 DecLavitola is found guilty at a Naples court and sentenced to a further 3 years in prison after being found guilty of attempting to extort Italian construction company Impregilo over alleged bribes for separate Panamanian contracts.
2015
  • 28 JanAmid growing corruption probes, now former President Martinelli flees to Miami, US.
  • JulAmid growing legal and political pressure, Panama’s Minister for the Presidency was instructed to pursue the annulment of the Finmeccanica-related contracts, signalling a shift toward formally challenging the agreements.
  • SepPanama’s Supreme Court ruled in favour of suspending the radar contract with Selex. By that stage, the government had already paid approximately €51 million, with a further €38 million still outstanding.
  • The Court, upon assessing the evidence, came to the conclusion that ‘there are credible indications that the formation of the disputed contract, there was a misuse of power, as it was done to obtain personal gains of an illicit nature and not for public interest.’ The reasoning suggested that the same underlying issues could affect the other Finmeccanica contracts, all of which were linked to consultancy arrangements involving Agafia.
  • 21 DecPanama's Supreme Court issued a warrant for the arrest of Martinelli after investigations over various corruption allegations and for using public funds to spy illegally on more than 150 prominent people.
2016
  • JanDuring a preliminary hearing in Rome, Pozzessere testified: “If I could go back in time, I would not hire Agafia,” the company set up in Panama to handle “commissions” for $250 million government contracts.
  • According to his testimony, his team had only checked the company’s formal legal structure, even though Agafia received around a $25 million commission for acting as the registered agent of the consortium in Panama - a payment that prosecutors later described as a bribe.
  • At the time, Pozzessere said he was not alarmed by the arrangement, explaining that in Central America it was considered normal practice for companies to pay “commissions” of roughly 7% to 15% on major public contracts.
  • 23 FebThe Government of Panama announced that it had reached a settlement with Finmeccanica in order to avoid a ‘long and costly legal judicial process’. The agreement involved several concessions.
  • First, the radar contract with Selex was terminated, and Panama was released from any outstanding payment obligations. Second, Finmeccanica agreed to compensate Panama for funds already spent on the radar system through a credit arrangement worth €29 million, which could be used to purchase other equipment. Third, the topographic mapping contract with Telespazio was revised to include additional functionality, funded up to €1 million from this credit. Fourth, Finmeccanica provided a free AgustaWestland AW-109 air ambulance helicopter valued at €8.1 million to Panama.
  • In return, Panama agreed to withdraw all ongoing legal proceedings, allowing the helicopter contract with AgustaWestland and the revised Telespazio agreement to proceed.
  • While the formal resolution did not explicitly address payments linked to Agafia, accompanying government statements acknowledged that Finmeccanica failed to pay Agafia, but that ‘Panama sustains that the same represent an overcharge at the agreed price’. The consultancy arrangement had effectively resulted in inflated contract prices. The provision of the helicopter was framed as a gesture to resolve the dispute and restore commercial relations. At the time, criminal proceedings against Lavitola in Italy were ongoing, and it remained unclear whether Ricardo Martinelli would face charges in connection with the contracts, pending extradition proceedings.
  • 21 AprThe hearing in Rome took place after Lavitola had already been released from prison, where he had served roughly four years for unrelated convictions. The new trial focused on his alleged role in corruption connected to contracts with the Panamanian government during the administration of former President Martinelli. In relation to the Finmeccanica deal, he was accused of helping channel up to $25 million in bribes to Panamanian officials.
  • SepPanama sent an extradition request to the U.S. for the return of Martinelli.
2017
  • 12 JunMartinelli was arrested in the US on an extradition warrant from Panama.
  • 21 SepLeonardo faces Italian court over Panama bribery claims. Preliminary hearings for the case are launched by the Rome Public Prosecutor's Office. The 2017 preliminary court review failed to progress to a major trial, conviction or ongoing public proceedings against Leonardo.
2018
  • 11 JunThe US extradited Martinelli on separate charges so he could stand trial in Panama. He faced four charges connected to an alleged illegal wiretapping scheme carried out during his time in office.

References

References

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