business

The Private Sector Council for Educational Assistance (CoSPAE), in collaboration with international non-governmental groups and with some of their financial backing from the Inter-American Development Bank, has released a study done by Latin American educational experts about the state of Panamanian public schools. They get an F in equity, Ds in test results in math and Spanish, Ds in the evaluation and assignment of teachers, Ds in the application of standards and grading, and a C in investment of funds in Education. They didn’t issue a grade for the number of members of the Rosas family in highly paid positions. Education Minister Doris Rosas de Mata condemned the report as false and some of her supporters chimed in by claiming that it was a matter of Americans imposing foreign standards on Panama.

The government, which has been on a spending binge in an attempt to pump up the Arnulfistas’ 2004 election chances, has overdone it and is in the process of cutting about $100 million from the budget. It seems, for example, that ARI won’t get the money to install its planned four-lane highway on the Amador Causeway, given the $11.5 million cut that the authority is facing. Overall, the government is cutting $68.4 million from operating costs and $31.6 million from capital outlays, but this is with respect to the 2003 budget and other maneuvers will apply to fiscal 2004. Much of the Panamanian government’s budget is out of synch --- on international financial analyst called this country’s national budgets “mostly theoretical” - -- with debts incurred in one year being paid in the next as a means of managing cash flow problems.

The Legislative Assembly, with mostly suplentes voting in an October 13 session at which little more than a quorum was present, has approved on third and final reading the free trade treaty with Taiwan. When Taiwan’s President Chen Shui-bian comes here to celebrate Panama’s centennial, he and President Moscoso will exchange diplomatic notes to put the deal into immediate effect. The treaty gives Panama a sugar quota and opens Taiwan to more Panamanian meat, produce and seafood exports, while more Taiwanese manufactured goods will enter Panama duty-free. The elimination of tariffs for a list of most export items of both countries will be phased in over several years. The main immediate impact for Panama will probably be increased beef imports to the island nation.

The board of directors of the government’s IPAT tourism bureau has created an arcane four-factor point system for ad companies bidding for the $10 international publicity campaign for Panamanian tourism, and has eliminated all four consortia that were in the running, including the BBDO-Ketchum group that has had the contract for the past year. The first factor, “credentials of the business or group,” requires a minimum of 1,330 points. BBDO-Ketchum was the only bidder that surmounted that hurdle, with 1,555 points, while the credentials of groups that included notable international companies like Young & Rubicam, Birdsall Vos & Associates and Weber Shandwick Worldwide, plus virtually all of Panama’s biggest ad agencies, were rejected. BBDO-Ketchum, however, got failing scores for its “special marketing services.” While all bidders got acceptable scores for the ad proposals, they were all found lacking in at least one category. The bidding process will be started over.

In the latest Transparency International survey of business managers’ perceptions of corruption, Panama gets a score of 3.4 on a 1 for totally corrupt to 10 for totally clean scale. That leaves us tied with China, Syria and Sri Lanka, in 66th place among 133 countries surveyed.

Roberto Valencia, who as secretary-general of the Maestros Independientes Autenticos teachers’ union and its representative on the Social Security Fund (CSS) board of directors voted to fire Juan Jované, has been expelled from the union after sufficient members duly signed petitions and a duly constituted special assembly was held. Valencia’s removal from the CSS board is one of the labor movement’s demands of the Moscoso administration, which dismisses it out of hand. Meanwhile, even though the rank and file have overwhelmingly repudiated him and invoked procedures stated in the union’s bylaws, Valencia says he’s still in control of the union. It seems that he has the Labor Ministry and the Education Ministry on his side in the dispute, whatever the bylaws and the union membership may have to say about it.

In a series of articles in La Prensa and allegations by international maritime unions, a dredging company that has been hired for the expansion of the port of Balboa has been accused of a series of national and international labor law violations. Hong Kong Dredging Corporation has been hired by Panama Ports, the local subsidiary of Hong Kong-based Hutchison Whampoa, to do dredging work at Balboa, and is alleged to have its Chinese work crews working 24 hours on and 24 hours off shifts with no overtime, Sunday or holiday pay, without proper safety apparel, at well below Panama’s minimum wage rates. The company denies the bit about safety gear, claiming that it provides masks and helmets where appropriate but that the workers choose not to wear them. The dispute has wider implications within the Panamanian economy because the Panama Canal Authority now has a policy of outsourcing dredging work and organized canal workers claim that it’s a union-busting tactic to cut costs through abuses like the ones alleged in this instance.

On October 14 La Prensa’s reporter Wilfredo Jordan and photojournalist Víctor Arosemena were arrested by police for approaching a Hong Kong Dredging Corporation dredge in a launch to take an independent look at conditions that had been denounced by international labor groups. Company managers attempted to confiscate Arosemena’s camera and filed a trespassing complaint. After the journalists were taken to the corregiduria, the company backed off on its threat to prosecute and the two men were released.

Heavy rains on October 15 caused flash floods across much of the Interior that left three people dead and caused considerable crop losses. Panama is getting into the height of its rainy season in which weather events like these are normal but despite all precautions destructive and occasionally deadly. This is the time of year for parents to warn their kids about playing around creeks and drainage ditches, and for drivers and pedestrians to think twice, and think again, about trying to traverse city streets that are suddenly underwater.

At the September 1 opening of the current Legislative Assembly session, President Moscoso listed her government’s accomplishments, one of which is the creation of more than 100 “granjas sostenibles” --- small community agricultural projects designed to turn deforested wastelands into combined agroforestry, animal husbandry and fish pond developments that can feed hungry families that would otherwise be forced to migrate to the cities in search of work. However Joseph Homsany, the head of the Patronato de Nutricion, a foundation that gets some government grants but derives most of its money from private donations and is behind the granja sostenible project, complained in El Panama America that Mireya’s claiming credit where it isn’t due. There’s a gap “as wide as the Panama Canal” between providing some grant money and operating the project as a government program as Mireya implied, Homsany said.

Justine Pasek, the Panamanian former Miss Universe, has been named as one of the Food and Agricultural Organization’s honorary ambassadors. The FAO is a United Nations agency, and Pasek will travel the world to promote its nutrition projects.

The Panama Canal’s AFL-CIO Metal Trades Council has dismissed proposed changes to Panama Canal Authority employees’ benefit packages as a “pure cheat.” The authority’s proposal was coupled with a series of work rule changes, which the unions also reject. Harsh words and militant posturing by canal unions, which by law are not allowed to strike, have been the norm for a long time. This is Canal Affairs Minister Jerry Salazar’s first step into the realm of labor contract negotiations, however, and it serves mainly as notice that he has no special magic touch.

For the first time, Panama’s National Securities Commission (CNV) has fined someone in this country’s financial services sector for lies and omissions in financial statements. The Pegasus Capital Corporation and Pegasus Securities Corporation have been fined $50,000 and $10,000 respectively for false, incomplete and misleading statements on their financial disclosure forms.

Central de Fianzas, SA, admits that it does not have the assets to cover its possible obligations, and that’s causing law firms, shipping agencies and courts to scramble to replace the company’s bonds with more adequate guarantees. The death knell for the company sounded when in a case involving ships arrested for unpaid drydock bills general manager Eni de Garrido told the Maritime Tribunal that its bonds would have to be replaced because it couldn’t cover the potential losses.

The National Police say that three or four cars are stolen every day in Panama, that chop shops are a thriving business and that there are at least seven stolen car rings working here. It seems that a lot of car parts that are stripped in the chop shops get exported to other Latin American countries. The two worst places to park, police say, are at the University of Panama and across the street at Seguro Social’s Arnulfo Arias Madrid Hospital Center. Several gangs work the parking lots there on a regular basis, so it seems.

The Primer Banco del Istmo (Banistmo), already the largest private bank based on Panamanian capital, just got a bit bigger. They bought all of CitiBank’s residential mortgages in Panama, something on the order of $72 million in accounts receivable now or in the future. CitiBank, wracked by financial and money laundering scandals in its US home base and elsewhere, is ending most of its operations in Panama as part of a forced retrenchment. That downsizing, however, has been most profitable. Citicorp, the bank's parent company, reports sharply increased earnings and its stock price has been climbing for several months.

When one company acquires another, layers of management and whole departments become redundant. That’s what economies of scale are all about. The Primer Banco del Istmo has been on an aggressive acquisition binge for the last several years, and now pink slip time has come for 44 bankers, whose positions have been eliminated.

Also in this section:
Business & Economy Briefs
Growing strike movement
New legal woes for Marc Harris

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