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On May 21 in a Miami federal court US District Judge James I. Cohn handed erstwhile “offshore asset protection guru” Marc M. Harris a 17-year prison term and $26.9 million in fines and restitution for a series of money laundering, tax evasion and conspiracy charges. Harris operated for many years out of Panama, where during the Pérez Balladares administration he ran in influential PRD circles, convinced Toro’s education minister to pose in publicity photos with him and ran the South African consulate as an appendage of his office.

Harris, who was the Florida head of Alexander Haig’s ill-fated 1988 campaign for that year’s Republican presidential nomination, was one of Florida’s youngest-ever certified public accountants and reputedly learned his money laundering skills as part of the Reagan administration’s Iran-Contra operation. But Florida authorities indefinitely suspended Harris’s CPA license on conflict of interest charges --- for doing an audit of a company in which he held an interest, without disclosing that fact to parties relying on the audit --- and he fled to Panama, where he later obtained a cedula. (To become a nationalized Panamanian it was legally required that Harris renounce his US citizenship and passport, but there is a dispute about whether he ever did this.)

While in Panama Harris became involved in many legal and political controversies and, by the strategic placement of clients’ funds in various Panamanian banks, developed close business ties with many members of this country’s business and political elites. At a certain point he began to steal his clients’ money, generating at least a dozen fraud complaints against himself, and meanwhile the US and German governments asked for Panamanian assistance in money laundering investigations aimed at Harris. However, he had the protection of Attorney General José Antonio Sossa, who steadfastly blocked all criminal investigations of Harris’s activities. Sossa also brought unsuccessful criminal defamation charges against La Prensa journalists who reported his relationship with Harris and backed Harris’s own calumnia e injuria charges against some of the same journalists, which were also later dismissed.

Under the Moscoso administration the bribes demanded of Harris became exorbitant and the Commission Nacional de Valores characterized his operations as an unlicensed securities business and ordered them to cease. Harris then fled to Nicaragua, from whence he was expelled and handed over to US authorities.

The Harris affair was also the source of scandals within the press, as Marc Harris recruited and bribed reporters and used his influence on editors and publishers to either get favorable news coverage or block unfavorable stories. These practices prompted some fierce disputes within The Panama News under its former ownership.

The Cabinet Council has approved the Panama Canal Authority’s request for a fiscal year 2005 budget of $1.061 billion. That’s $136.7 million more than in fiscal 2004 and a new record. The Legislative Assembly will have to approve the budget for it to go into effect.

The Coffee Growers Association of the Ngobe-Bugle Comarca has launched an effort to grow and sell organic coffee, mainly to the European market. In the mountainous areas of the comarca, which encompasses parts of Chiriqui, Bocas del Toro and Veraguas provinces, people have long grown coffee, and because the area is so poverty stricken farmers there have rarely been able to afford agricultural chemicals even when they desired to use them. Thus Ngobe coffee, most of it grown for local use, has always tended to be organic. Now about 100 farmers are expanding their coffee plantings, using natural fertilizers and no pesticides, and awaiting certification of their product as organic by European authorities. Some Ngobe coffee has made its way onto the German market, where it has been well accepted. The problem with coffee, however, is that at the moment a worldwide glut has depressed prices. But prices for specialty coffees, including organically grown products, are a bit higher.

According to La Prensa exports from the Colon Free Zone, which slumped until February, had rebounded by April. In February the duty-free import-export zone exported $326.5 million worth of merchandise, and in April it was up to $438.6 million. The figures for total business activity (imports and exports) for the first trimester of 2004 represent an increase of 6.6 percent over the same months in 2003. The Colon Free Zone accounts for about 7.4 percent of the nation’s Gross Domestic Product. The increase is mainly due to an improving South American economy.

On May 14 in David and Tonosi farmers got on their tractors and took to the streets to protest US-Panamanian free trade talks. The farmers want a list of 16 agricultural products taken off of the table during free trade talks, arguing that the United States subsidizes its agriculture and that they could not compete with American products when they don’t get the same subsidies. The Moscoso administration dismissed the farmers’ concerns as premature, as no specific free trade agreement has yet been drafted.

The University of Panama Academic Council has passed a resolution asking the government to exclude education from free trade talks with the United States. The council cited a Panamanian constitutional provision that mandates free public education and argued that the inclusion of education among the service sector bargaining issues would be improper. Left unstated, but probably as important, are the national university’s legal roles in approving or rejecting private universities on the isthmus and the licensing of foreign-educated professionals. Due to many factors, including its entrenched political patronage bureaucracy and prevailing provincial attitudes, the University of Panama is not highly regarded in the international academic world and attracts relatively few foreign students.

An unusual severe windstorm that swept through Bocas del Toro’s banana country toppled some 100,000 banana plants in the Changuinola area on May 15. Worst affected was the independent Eneida farm, which claims to have lost 40,000 plants.

It was inevitable. Once José Morris Quintero and his buddies were ousted from power from the union representing banana workers at the former Puerto Armuelles Fruit Company (PAFCO), the union would throw them out of the leadership of the cooperative that took over PAFCO’s operations. The firings came at a meeting of the COOSEMUPAR cooperative, where the union members sent Morris and the other directors packing. Morris had attempted to exclude most of the union’s rank-and-file from membership in the co-op and give his clique choice management jobs in the organization. But the union legally owns the co-op and once the former changed hands then Morris’s days were numbered.

On May 15 the PYCSA consortium raised tolls on the Tinajitas, Martín Sosa, Ascanio Villalaz and Madden sections of the Corredor Norte, by amounts ranging from 15 and 30 cents per section. The tolls on the other sections were not raised. The Corredor Norte has never been profitable, due in large part to an unforeseen reluctance by most Panamanian drivers to pay tolls when there are alternative non-toll routes available.

Taiwanese TV is coming. Taiwan’s Eastern Media Group (EMG) is planning to locate a Latin American regional office and broadcast facility here and start broadcasting Mandarin-language programming over the Panamanian airwaves and on cable channels here. Mostly they’ll be rebroadcasting signals from Taiwan, which are now only available to satellite subscribers, of whom there are about 100 in Panama.

According to La Prensa the US National Aeronautical and Space Administration (NASA) plans to install a computer research node in Panama later this year, mainly to handle data collected by satellites monitoring the Meso-American region, its adjacent waters and the atmosphere above it.

CITES, the international organization set up to enforce the UN-sponsored Convention on International Commerce in Threatened Species, put Panama on its blacklist of countries that don’t cooperate in the suppression of illegal trafficking endangered plants and animals at the end of April, but nobody noticed until foreign customs officers began banning Panamanian shipments of leather products made from the hides of legal farm-raised crocodiles and farm-propagated orchids. The problem was not that Panama was flouting CITES regulations, but that nobody in the Moscoso administration bothered to do the paperwork documenting our compliance. After some hurried scrambling by the National Environmental Authority and the Foreign Ministry, Panama’s regulations were updated and its papers were put in order, and three weeks after the sanctions were imposed CITES lifted them.

The Supreme Court has interpreted Panama’s building codes to the effect that the determining factor is the size of the right-of-way rather than the density of the land use, and in turn this means that all Panama City buildings over 12 stories would be illegal. The ruling does not apply to structures already built, but does affect buildings that are under construction. The city government and the construction industry are protesting the decision, and the legislature may amend the codes to get around it. But many Panama City residents do not like the traffic jams and other problems that result when new highrises are built in neighborhoods that lack the proper urban infrastructures to cope with the implicit increased demands. Panama’s building and zoning laws are at an embryonic --- some might argue that “aborted” is a better word --- stage of development.

Are you one of those people who uses the Amador Causeway as one of the metro area’s few safe places to ride your bicycle or skate on your rollerblades? The Interoceanic Regional Authority (ARI) wants you to forget about that. The authority, headed by the nephew of Mireya Moscoso’s late husband Arnulfo Arias, has asked the Cabinet Council to approve a plan to install a four-lane highway on the causeway, saying that this is needed for the development projects contemplated there. What’s the rush to replace people with cars at Amador? The defeated Mireyistas’ desire to control a lucrative construction contract may have something to do with it.

The Interoceanic Regional Authority’s (ARI’s) culture of denial, the US-Panamanian dispute over unexploded ordnance (UXO) left at former American military bases, successive Panamanian governments’ failure to do their own research and workplace safety issues have all come into play in a residential construction project in the Nueva Veracruz of Arraijan. Construction workers putting in a sewer line there have uncovered about 20 old military artifacts during their work and the SUNTRACS construction workers’ union has complained that it’s an unacceptable workplace hazard and demanded a cleanup. “Bomb number 20,” the union claimed, was an unexploded mortar shell that could have blown one of its members to bits. Nonsense, claims ARI. That authority, set up to receive and dispose of real estate acquired under the 1977 Panama Canal Treaties, has always downplayed claims of leftover hazards, to the point of denying well-known problems so as to conceal them from potential buyers. In this case, ARI says that the UXO in question wasn’t a mortar round but a bangalore torpedo, which is intended to blast holes in barbed wire or razor wire defenses. But of course, bangalore torpedo explosions can and do maim and kill people as well. ARI also says that most of the other objects that SUNTRACS characterizes as hazardous are just flares or smoke grenades, leftover from when the construction site was used as a parachute drop zone and maneuver ground for airborne military units. Complicating the dispute is that the fact that during the Pérez Balladares and Moscoso administrations Panama accepted without question US maps which indicated that the only UXO problems in the former Canal Zone were in the designated impact areas of the Empire, Balboa and Piña firing ranges. However, during their 95-year military presence the Americans conducted war games with live ammunition at many other sites and only began keeping records of these activities in the 1970s, and the construction site in Arraijan is one example of an area that was not marked as a potential trouble spot on the maps that the departing Americans gave to Panama.

During the debates over Seguro Social and its possible privatization, business groups held up Hospital San Miguel Arcangel as an example of the direction in which Panama’s public health care system should go. Built by the Ministry of Health, that San Miguelito hospital was then devolved to a semi-autonomous public authority, which in turn hires private contractors to render most of its medical services. However, in the budget juggling leading up to the May 2 election the Moscoso administration put off government subsidy payments to the hospital authority so as to pretend that public spending was under more control than it actually was. Now the hospital hasn’t been paid since last December and a spokesperson for its management told El Panama America that if the money doesn’t come in immediately they will have to close the facility.

Those accused of being part of a large embezzlement ring that operated in the Banco Nacional de Panama for many years have yet to come to trial, and the bank has not made the full dimensions of the scandal public --- if indeed they know this --- but now we have one good indication of its scale. The bank’s insurer, Internacional de Seguros, SA, has paid $1.654 million to cover the losses. But then, what was the deductible?

The HSBC bank here, HSBC Panama, is being transferred from one of the parent company’s holding subsidiaries to another. Formerly a subsidiary of HSBC USA, it’s being assigned to Grupo HSBC. The company is downplaying rumors that this might be a prelude to a sale or downsizing of the bank’s operations here. There may be US tax and regulatory factors at play, as HSBC USA is in the process of converting itself into a “National Association” (NA) to expand its operations there. HSBC, originally the Hongkong Shanghai Banking Corporation, is a UK-based multinational with its roots in British colonial history and one of Europe’s largest banks. Its presence in Panama and throughout the Americas has been growing in recent years.

The utility companies’ losses due to illegal hookups and non-payment of bills are greatest in Panama’s wealthiest neighborhoods, because those people use more electricity, water and telecommunications services. However, the public and private utility companies mostly leave places like Paitilla alone but take a harder line in lower-income places where low-level theft of services is a way of life. One tactic is collective punishment of entire apartment blocks or neighborhoods with high rates of illegal connections, cutting off services both to those who pay and those who don’t. On May 18 this practice, brought a small mob out onto the street in the Arraijan neighborhood of El Chumical, which had its power shut off due to widespread electricity theft. The angry neighbors blocked the road to the port of Vacamonte on that day.

Panama does have a ladies’ fashion design scene, but it’s not for the president. For the recent royal wedding of Prince Felipe and Leticia Ortiz in Spain Mireya had Couture Marie de George in Atlanta make her an originally designed, bejeweled ivory and champagne-colored dress, shoes and hat. The price tag was not disclosed. Only five Latin American presidents attended the royal wedding.



Also in this section:
Business & Economy Briefs
Gas prices up, bus strike possible
Anatomy of a Scam, part 4

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