PANAMA DRUG BUST REVEALS TRAFFICKING'S SLOW LANE

PANAMA CITY -- Call them "the not ready for prime time traffickers."

That's how Panamanian and U.S. authorities are describing alleged
functionaries of a Mexican drug cartel that lost a $270-million load
of cocaine in a colossal bust off Panama's Pacific coast last month.

In interviews here, officials were practically shaking their heads
over the carelessness and inattention to detail by the Sinaloa-based
cartel during the two months that a pair of alleged lieutenants spent
in Panama City arranging the Colombia-to-Mexico shipment.

The big break in the case, officials said, came shortly after the two
men arrived in town, when Panamanian police got a tip from a
"walk-in" source in this city's huge shipping industry. His
suspicions were apparently aroused by the fact that the men's company
was leasing metal cargo containers in the free-trade zone of Colon --
but had no apparent plans to fill them with cargo.

But the classic moment came several weeks later, when U.S. Coast
Guard officers and sailors boarded the ship the men had bought, a
300-foot Panamanian-flagged cargo vessel called the Gatun.

Finding drugs on board was no sure thing, because traffickers find
ingenious ways to hide their cargo behind false floors and walls, or
submerge it in fuel tanks, or weld it inside heavy machinery, or
embed it in cans of tuna or jars of marmalade.

But this time it was easy. U.S. Coast Guard and Panamanian officials
noticed that customs seals on two of the 12 metal cargo containers on
the Gatun had been improperly broken. When they opened the doors,
bales of cocaine came tumbling out. Officials estimated the haul at 20 tons.

The biggest bonus for law enforcement officials may have been the
laptop computer that one of the suspects, Jesus Mondragon, allegedly
had in his possession when he was arrested at the airport in Panama
City. Authorities say it contained a treasure trove of information
that could lead to more arrests.

"I think he showed an excess of confidence," a top anti-drug
prosecutor, Jose Abel Almengor, said in an interview.

Power Shift

The bust, and an emerging portrait of the cartel allegedly headed by
Ismael "El Mayo" Zambada as a gang that at least in this case
couldn't shoot straight, offers a snapshot of the changing roles in
the region's drug trafficking. It appears that the assumption of
power by Mexican cartels from Colombian traffickers -- who once
exclusively managed the transit of big cocaine loads to Mexico or the
U.S. -- is hitting some snags.

Whether Zambada's men botched the deal or not, the seizure has raised
fears that a bloodbath could ensue in Panama if, as expected, Mexican
gangsters revisit the scene to exact revenge and settle scores.
That's been traffickers' practice in the past when cocaine loads were
lost along the U.S.-Mexico border or in the Caribbean.

"It's obvious that something went wrong for the narcos," Almengor
said. "In any business, when something goes wrong there are consequences."

Said one foreign counter-narcotics official: "This could stir things
up quite a bit."

It all began this year, when the two alleged traffickers, Mondragon
and Jose Nunez, both Mexican nationals, arrived in Panama. Officials
say they came to set up a front company called Marine Management &
Chartering whose real purpose was to buy the Gatun for $3 million and
use it to move drugs.

The plan called for the ship to pick up cargo containers in Colon, on
the Caribbean side of the Panama Canal, then transit the 50-mile
waterway and sail south to pick up the multi-ton load of cocaine off
the Pacific coast of Colombia.

The ship would then head north to deliver the drugs to the cartel at
the Mexican port of Topolobampo in Sinaloa state, according to law
enforcement sources here.

Containerized cocaine is no novelty. As much as four-fifths of all
Colombian cocaine is shipped to the United States via Central America
and Mexico aboard fishing vessels, so-called go-fast boats, or hidden
on cargo ships like the Gatun. A decade ago, most traffic was
airborne, before tighter aerial surveillance forced traffickers to
change tactics.

But the tip about the men's apparent disinterest in actually putting
any cargo in the containers kicked off an investigation that involved
Panamanian authorities and members of a multinational
counter-narcotics task force called Operation Panama Express, which
includes the United States. The team investigated the company and
began monitoring the two men's activities. Mondragon was found to
have a U.S. criminal record for drug trafficking and robbery and to
have used various aliases, officials said.

Colombians involved in narco-logistics are usually careful to use
intermediaries who run seemingly legitimate businesses and who have
no rap sheets, officials said. Colombians also send a second layer of
"supervisors" to make sure their on-the-ground logisticians aren't
cooperating with law enforcement, miscounting the drugs or otherwise
making errors.

Red Flag

Before the March 18 bust, the Gatun had already made several trips
from Guyana through the Panama Canal and then up the Pacific coast of
Mexico to Sinaloa.

That raised another red flag because Guyana, on the Caribbean coast,
has become a drug trafficking hub in recent years, as has neighboring
Venezuela, according to U.S. and Colombian law enforcement authorities.

The task force tracked the Gatun as it traveled through the canal
March 16, then veered south early the next day, allegedly to pick up
the load of cocaine. Through unspecified surveillance methods,
officials detected several trips by fast boats leaving Colombia's
northwestern coast to offload drugs on the Gatun, which was anchored offshore.

The ship then turned north for Mexico.

Thinking the shipment was safely on its way, task force officials
allege, Mondragon and Nunez left their mid-priced Panama City hotel
that Saturday to catch a flight back to Mexico. They were arrested as
they boarded a plane at Tocumen airport and charged with drug
trafficking. They have denied any wrongdoing.

About the time they were arrested, the U.S. Coast Guard cutter
Sherman, with the Panamanian government's permission, was stopping
the Gatun off the Panamanian coast. The bust occurred the next day
when Panama gave permission to search the vessel. The Sherman is one
of half a dozen naval and Coast Guard vessels on call to intercept
suspicious boats off the coasts of Mexico and Central and South America.

Like other Central American countries, Panama is seeing a surge in
cocaine trafficking as well as criminal side effects such as gang
violence and deadly turf wars. Government and business officials are
concerned the country could lose its sobriquet of "the safest country
in Central America."

In fact, the Gatun bust brought the year-to-date total of cocaine
seized in Panamanian waters or territory to 40 tons, which by some
estimates is more than 5% of all the cocaine Colombia produces in a
year. The seizures already surpass the 32 tons taken during all of
2006, Almengor said.

Officials fear the trend may be hard to reverse. Panama's proximity
to Colombia and its robust economy provide perfect cover for the traffickers.

"Panama has financial institutions, the banking, the canal and the
free zone that are attractive to honest investors," the foreign
counter-narcotics official said. "But they appeal to delinquents too."