Despite letters of protest from the governments of Ecuador, Peru, Bolivia, Chile and Japan, the Cabinet Council and Panama Canal Authority have approved a series of Panama Canal toll increases. On October 1 the tolls will rise an average of eight percent, with another four and one-half percent increase next July.

The Group of Seven industrial powers' Financial Action Task Force (FATF) has taken Panama off of its list of countries that don't sufficiently cooperate in the fight against money laundering. Panama landed on the list early in the current administration when Mireya Moscoso went in front of an international convention dedicated to fighting money laundering and declared her intention to renege on Panama's treaty commitment to end bank secrecy in cases where corrupt public officials conceal their ill-gotten proceeds abroad. In the end Panama had to comply with a list of 40 FATF demands to get off a blacklist that meant special scrutiny and delays for transactions involving Panamanian banks.

The IPAT government tourism bureau reports that some 420,000 visitors came to Panama during the first half of 2002, which is about seven percent more than in the same period of 2001. Because Panama pays cruise ship lines for each passenger who gets off the ship in this country, we have been seeing a steady rise in tourists arriving by sea. There is also a trend toward increased rainy season tourism, which includes students from northerly latitudes spending parts of their summer vacations here and also reflects an increased interest in ecological tours during the wet months.

As the criticism of huge tax and rent rebates to port concessionaires continues to reverberate in Panamanian business and political circles, Canal Affairs Minister Ricardo Martinelli has publicized the fact that he abstained on the cabinet vote over the policy and doesn't think much of it. Supermarket baron Martinelli, who owns and runs the Cambio Democratico party as well as the Super 99 chain, served in the Pérez Balladares administration's cabinet before switching sides to back the Moscoso government. His distancing himself from one of Mireya's most unpopular policies may have come with an eye toward the next elections.

The Bank of Tokyo-Mitsubishi Ltd. has received the banking superintendent's permission to wind up its affairs and close its Panama branch. Due to economic woes in both Japan and Latin America, the bank has fewer of the corporate clients that were the reasons for its presence here.

Swiss-based Nestle is ending the production of condensed milk at its plant in Nata, Cocle. Citing high sugar and milk prices, Nestle said that the plant is no longer competitive in the export market for which it was established.

The Social Security Fund says that in the past 20 months, despite the formal closure of some 500 businesses and arrears in payroll taxes that leave some 30 percent of the Panamanian work force outside of the health and pension system, the fund has been able to collect some $35 million in back payments owed to it. Since the early days of the Torrijos government, the fund estimates that some $900 million in payments owed to it have not been made and this affects the health care and pension rights of more than 100,000 workers. About half of Panama's businesses, including The Panama News, are in debt to the Social Security Fund.

Decameron, a Colombian-owned company that runs a tourist resort in Farallon, Cocle, has announced plans for a $33 million expansion that contemplates new hotels on the beach and in the capital and a golf course near its present facility. The company plans to build the new facilities over a three-year period.

Due to losses of some $300 million during the first six months of this year, the Banco Latinoamericano de Exportaciones (BLADEX) has had its long-term corporate bond rating slashed by Fitch Ratings from BBB- to BB+. The move is essentially from investment grade to junk bond grade, which will make BLADEX pay higher interest on any money that it might borrow. BLADEX shares are traded on US exchanges, which makes the company subject to reporting requirements that do not apply to most Panamanian banks. Much of the BLADEX loss is attributed to the Argentine financial crisis, but these are difficult times for Panama's banking sector in general and BLADEX's problems are seen by many observers as in line with those suffered by other financial institutions in this country.

On August 13 the government called of the bidding process to privatize the ATLAPA convention center. Of the three potential bidders who qualified, only one submitted a bid. The government is now talking about a no-bid "private" process to sell the facility, which is run at a loss by the public IPAT tourism bureau.

The Ministry of Commerce and Industry has announced that plans to privatize Tocumen Airport, which have been on and off again for years, are off. The airport, which many users complain is terribly run, is a lucrative source of political patronage jobs.

Citing a need for more efficiency, the state-owned ETESA power line company proposes to fire all of its employees who are age 42 or higher. Basically that would ensure the jobs of those hired during the Moscoso administration and eliminate many of the workers who came to ETESA during the process by which the old IRHE state-owned electric company was broken up and partially privatized.

The Ministry of Commerce and Industry has granted a permit to Arena Montijo SA, a company backed by several prominent Arnulfistas, to mine sand from the sea bottom off of the Veraguas district of Pixbae, without the legally required environmental study. The move has prompted criticism from environmental groups and local officials. One of the arguments against the permit is that it violates a 1994 agreement between Panama and the Spanish International Cooperation Agency to protect the area's ecologically sensitive sea bottom.

The government's IDAAN water and sewer utility has opened the Laguna Alta water treatment plant, which will serve some 150,000 people in Arraijan. The plant has an initial capacity to treat and pump 15 million gallons per day, and will be upgraded to produce 20 million gallons by the time the project is finished. Over the past several years developers have built large residential projects without providing for adequate water supplies, and the new water hookups will be at the expense of homeowners rather than the developers.

Defense lawyers for the failed BANAICO bank and several of its officers have moved to have pending criminal charges dropped under an argument that the statute of limitations applies. BANAICO's president was businessman Mayor Alemán, who was the treasurer of former President Ernesto Pérez Balladares's winning 1994 campaign. An airplane rental company owned by Alemán and financed by BANAICO had one of its planes siezed by US authorities when it was found smuggling cocaine into Chicago in 1996. Quickly thereafter, the plane rental business's insurance policy was cancelled as a result of the bust, causing it to go bankrupt. As soon as word of the US seizure got out, several large Colombian depositors, including one José Castrillón Henao, alleged by the Americans to be a top drug lord (and now a protected federal witness), pulled their money out of the bank. Other depositors tried to follow suit, causing a run on the bank and intervention by the banking superintendent. Though Alemán was not charged with any crime, the bank and several of its officials were charged with various offenses and one mid-level manager was jailed pending trial for allegedly tipping off large depositors that a crisis was brewing. The case has dragged through the courts since then, with a number of civil lawsuits on the side, but now the Supreme Court has heard and taken under advisement a motion to drop the charges on account of the statute of limitations having passed. Prosecutors opposed the motion.

ARI has announced yet another five-star hotel, casino and restaurant project, this one a $15.6 million job on Perico Island, by Brisas de Amador SA. The former Fort Amador has seen a few successful new developments and other projects are underway, but the number of hotels projected and current market realities suggest that not all of the projects that ARI touts can succeed.

On August 21 the Social Security Fund sequestered that assets of Compañía Nacional de Seguros (CONASE), which had posted a bond for the timely comletion of a hospital in Aguadulce. Shortly before the hospital was due to be finished, Seguro requested some changes in the construction plans that made the contractual deadline impossible to meet. Litigation ensued and the dispute was taken to binding arbitration, with the company prevailing. Seguro appealed to the courts, which rejected its claim, and then proceeded to sequester the company's assets. The move has alarmed Panama's insurance industry and drawn stern criticism from business groups.

The privatization of the old INTEL public phone monopoly was sold to utility workers with the promise of an indemnity. Part of this was paid, but $16.5 million has not been. Former INTEL workers, some of them current Cable & Wireless employees, sued to get paid the rest of the promised indemnity, but now a Labor Tribunal has ruled that they must look to the Ministry of Economy and Finance, not C&W, for payment. Economy and Finance Minister Norberto Delgado and his assistant, Domingo Latorraca, are also members of the Cable & Wireless board of directors. The Moscoso government and the phone company are accused by former INTEL employees of trying to steal the indemnity by claiming that it, along with other assets of the former INTEL workers' union, belong to the company and the current Cable & Wireless workers. The current phone company workers and their union note that, while former INTEL director Juan Ramón Porras was paid a bonus usually reported as a high six-figure sum, neither former nor present workers are receiving what the privatization contract provides is theirs.

The Free Trade and Consumer Affairs Commission (CLICAC) has sued the nation's major gasoline and diesel wholesalers --- Delta, Texaco, Shell, Esso Standard and Petrolera Nacional --- for what it alleges is an illegal price-fixing scheme. The case has been assigned to the Ninth Civil Court, which handles all major monopoly and consumer law cases in Panama.

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