“Privatization” is a secular religion to a lot of people on the right-hand side of the political spectrum, and anathema to a similar minority on the left. Here in Panama, most people have viewed the phenomenon without much passion, on a case-by-case basis. The 1990s privatizations of the state-owned Cemento Bayano and the ports of Cristobal and Balboa, for example, caused little public controversy here, although the latter became the subject of much criticism in the United States. The sales of the public telephone and electric companies, on the other hand, have been second-guessed by many Panamanians who are disappointed by continued high monopolistic prices and fewer improvements than had been expected.
One of the privatizations that went largely uncriticized was that of the gambling industry. One of the reasons for that was a major scandal in the state-owned casinos, where the Anderson Clan, a criminal organization headed by one Iván Anderson that included more than 100 casino employees from dealers and slot machine maintenance workers to top levels of management, skimmed off a fortune. After those folks were taken away, the government was left with a collection of ratty slot machine emporia with obsolete equipment, so few people objected to a special legislative session to give then-President Ernesto Pérez Balladares special powers, including the ability to decree casino privatization, that suddenly appeared on the assembly floor on New Year’s Eve, 1997.
One of the few who did was Vice-President Arturo Vallarino, then a legislator. He was generally suspicious of the special powers, which also allowed for presidential decrees in the banking and maritime sectors, especially when the subject was raised on the last day of a legislative session. Panama’s constitution, Vallarino argued, “establishes that the exploitation of games of luck and chance belongs uniquely to the state and that the law must regulate this constitutional norm.” He accused Pérez Balladares of wanting to change the gambling regulations to benefit his family.
But gambling was privatized and indeed, members of the Pérez Balladares family, who had been involved in the bingo parlor business, ended up as 40 percent owners of Competiciones Deportivas, which got one of the private gambling concessions.
But that was only one of seven private gambling contracts. Soon shiny new slot machine parlors proliferated, while hotel casinos expanded and upgraded. By 2002, $963,699,854 was bet at Panama’s gaming establishments, and when the figures are in for 2003, Panamanian gambling will surely have turned into a billion-dollar industry. Out of that gross, the operators take about 20 percent, more or less, depending on the game and depending on whether they beat the odds as projected. The deal has created jobs and pumped money into the Panamanian economy, according to its supporters.
Attorney Evans Loo doesn’t take such a rosy view of it. He has filed several lawsuits aimed at overturning the privatization of casinos, and warns that the profits generated by the biggest gambling enterprise of all may be diverted from the public coffers. “Tomorrow they’ll privatize the lottery,” he said.
“Everything was unconstitutional” about the “contracts of operation and administration” conceded to private concerns, mostly based in Spain, according to Loo. “There is immense corruption.”
Loo notes that when the casinos were state-owned, there were inspectors, but charges that “today there aren’t any.”
It’s not like Las Vegas or Atlantic City here. In those places gambling commissions at least go through the motions of keeping mobsters out of the industry, but with Panamanian corporate secrecy there is usually little public information about the private casino operators. We may know the officers of the corporation, and maybe the principal beneficial owner of record, but we won’t know if there are silent partners, or shady characters pulling strings behind the scene.
That’s why, Loo argues, “no serious American company” will invest in the Panamanian gambling scene.
(But of course, one Canadian company that’s listed on the Toronto Stock Exchange but maintains its headquarters in San Diego and has substantial US holdings is in the game: International Thunderbird Gaming Corporation. Maybe that’s why William Hughes, the US ambassador at the time of the casinos’ privatization, had good things to say about it at the time.)
Loo has challenged each casino concession contract, arguing that when the constitution says that “[t]he exploitation of games of luck and chance and activities based on bets only can be effected by the State,” it means just that.
As if the law means anything in Panama these days.
Also in this section:
Business & Economy Briefs
Casino privatization challenged
The Panama News readership continues to grow
