business & economy

Also in this section:
Assembly committee sends Torrijos - Alemán Zubieta Plan back to president
Rampaging capitalism
RP-Chile free trade deal
City license crackdown hits Paitilla
The Panama News readership figures
Business & Economy Briefs

Business & Economy Briefs

RCM sale strengthens PRD grip on TV

In the debate over the Torrijos - Alemán Zubieta Plan to expand the Panama Canal almost all of the television channels have been receiving big subsidies from the Panama Canal Authority and most of them have been outright controlled by people whose political allegiances are to the ruling Democratic Revolutionary Party (PRD). Scratch "almost," so it seems. The RCM television news network has been bought for $20 million by a consortium of Panamanian and US investors led by fruit exporter Noel Riande, a friend of President Torrijos and former secretary general of the PRD's Frente Empresarial. It is reported in La Estrella that the station's editorial line has already changed to the effect that advocates of a "no" vote in the upcoming referendum will be blacked out. The station, which was effectively boycotted by the cartel of ad agencies founded by President Torrijos's father-in-law, had been losing money and much of the $20 million purchase price is in the form of assumption of debts.

Puerto Armuelles banana fields up for grabs

Chiquita has the voidable long-term distribution contract. The COOSEMUPAR cooperative theoretically has title to the business. The SITRACHILCO banana workers' union represents the co-op's membership against a leadership that's asserting its own prerogatives. The government is a creditor with a huge debt on which it could foreclose, and through its Panamanian Autonomous Cooperative Institute (IPACOOP) is moving for the co-op's liquidation. Top people in the government and news media --- members of families with illustrious surnames like Lewis and Arias whom one would expect to do such things --- have formed a fruit company with hopes of taking the whole the Puerto Armuelles banana industry for pennies on the dollar of its real value. An Italian company has made a bid to replace Chiquita that would entail the payment of world prices and pretty much solve the co-op's and government's problems, but between the pressures applied by Chiquita and the rabiblancos looking for a takeover, that bidder has been forced out of the picture. So what are the suffering banana workers to do? They went on strike again, and though Chiquita will only negotiate with the Panamanian government, the riot police intervened with clubs and tear gas against the strikers and the co-op leadership is just marking time until its replacement, SITRACHILCO managed to wrest an extra $1.40 per box in the upward direction of world prices for the fruit they produce. The government agreed to keep the co-op afloat for one month and the co-op agreed to install new leaders within two months as part of the strike settlement. However, very little has really been settled.

Teacher contract talks at impasse, August strike looms

The mid-year break for Panananian public schools is from July 27 to August 4, and the teachers don't have a new contract. As things stand now, school may not resume for awhile after the break. A coalition of teachers' unions is demanding a $190 per month across the board pay increase, while the government, pleading poverty, is offering $65. The teachers have not had an adjustment in their base salaries for more than 10 years, so have seen a steep decline in their standard of living as the result of inflation. The negotiations have been embittered by the fact that teachers participated in last year's Seguro Social strike, by a campaign of vilification waged by the administration and in the rabiblanco media accusing teachers of being responsible for Panama's poor educational standards, by Torrijos's attempt to create a puppet "union" with which to "negotiate" and by the baiting of government negotiators by the educators' representatives for their high salaries and alleged corruption. There is bad blood and at a July 11 rally in Plaza Catedral it was expressed by union leaders who cast suspicion on the Torrijos - Alemán Zubieta Plan to expand the canal, arguing that it's a financial money loser that will cut government revenues and ultimately result in less support for public education. Andrés Rodríguez, a high school art teacher at Colon's Colegio Abel Bravo, is the secretary general and top contract negotiator for the Asociacion de Profesores and also the leader of the labor - left FRENADESO umbrella group, which led last year's Seguro Social strike and is campaigning for a "no" vote on the canal expansion plan. Teachers in Veraguas walked off the job on July 10, and as these briefs were written that strike had not ended.

Exports up more than one-third

According to a Comptroller General's report, Panamanian exports rose 35 percent over the first three months of 2005 compared to the same period in 2005, up to about $240 million. Seafood exports to the United States and melon and pineapple exports to Europe led the way.

Small electric rate increase

As of July 4 the nation's electric bills went up by "no more than one percent." That's the increase that the new National Public Utilities Authority approved for the power companies to pass on to their customers. It was said to have been based on changes in the price of fuel, even though at this point in the year the great majority of our electricity is generated by hydroelectric dams.

Torrijos meets with Uribe, Chávez for pipeline start

On July 8 President Torrijos flew to Zulia, Venezuela for the groundbreaking ceremony on a Colombia - Venezuela gas pipeline project. So why would a Panamanian head of state go there for this? Because it is anticipated that this project will grow and evolve to include this country. At first the gas will flow from Colombia to Venezuela, as the latter country develops its gas fields. Then the flow will go the other way when Venezuela becomes a net exporter rather than a net importer of natural gas. Eventually an extension will be built under the Caribbean Sea from Colombia to Panama, through which both Colombian and Venezuelan gas will come to this country. A similar proposal was promoted a few years ago by ENRON, but whether that was a sham designed to impress naive investors back in the United States or a serious project remains unclear. One of the pillars of the ENRON proposal was an unrealistically low price for Colombian gas and that deal caused a scandal in Bogota that cost the energy minister of that time his job. The present version of the proposal is linked with Hugo Chávez's aspirations for closer economic ties among Latin American countries and Panama's aspirations for membership in MERCOSUR, the South American economic alliance of which Venezuela is a member.

Beach and island development law regulations

Want a concession to develop and get exclusive use of a beach or an island under the Torrijos administration's beach and island development law? The government has issued a decree with the implementing regulations. If it's an island development, only half of the island can be taken in a concession. For housing developments to qualify, they must involve at least a $300,000 investment and they must be predicated on the most flagrant and probably unconstitutional housing discrimination. Only residential projects designed to house a population that's at least 80 percent non-Panamanian need apply, according to the Torrijos administration's decree.

Government sticks with PYCSA

PYCSA Panama, the construction company owned by Máximo Haddad, is in receivership and has shifted its assets away to front companies to avoid creditors like the Metropolitan Nature Park from collecting millions of dollars owed by PYCSA. It's in default to the National Bank of Panama on an $8 million loan. It has never been able to get sufficient private financing for the jobs it has contracted to do in Panama, and the last private US banker to lend to Haddad, Eduardo A. Masferrer of Miami's failed Hamilton Bank, is facing 10 to 12 years in a US federal prison for his banking practices. (In fact, when the US government intervened in the Hamilton Bank one of the receiver's first orders was that Haddad was to receive no more loans.) Despite all of this, Minister of Public Works Benajmín Colomarco has announced that the government is working with PYCSA in order to find a way to build another extension of PYCSA's Corredor Norte, from Tinajitas to 24 de Diciembre. La Prensa also reports that the Torrijos administration is negotiating with Haddad's company to build the Colon - Panama Autopista, a project that has lain dormant for nearly a decade because PYCSA isn't solvent.

PYCSA toll increase doesn't last

PYCSA's 25 cent toll increases at three of its six toll gates lasted only a week. After many public protests and suggestions from the government, which could seize the fly-by-night company of  Mexican origin at any time due to debts and defaulted contracts, the tolls were rolled back.

Negotiations on cruise ship subsidies

Many cruise ship destinations require ship operators to pay for each person who disembarks, but in Panama the government pays the ships for each tourist who gets off the boat. There have been complaints, however, that once on land the tourism is so managed that little benefit flows away from the ships or the ports into the economy at large. The old arrangement is about to expire and the Torrijos administration is negotiating with the cruise lines for a new package. The government's position is that it's willing to continue the payments with three conditions: the lines must establish at least one more destination each, with their choice among the Bocas islands, the Perlas or Kuna Yala; passengers must be offered more tours when the ships call at Panama or Colon; and all the people working onshore with the cruise passengers must be Panamanian citizens.

More than four years later, boxer's family to get paid

On June 24, 2002, the day after losing his WBO world super flyweight title in a Las Vegas bout that ended in a TKO, Panamanian fighter Pedro "Rockero" Alcázar collapsed in his hotel room and died. He had suffered a slow-bleeding brain hemorrhage, which could have been picked up and easily treated had he been given a CAT scan. Alcázar was from the Darien, where the government is often not present, and like many people born there, he was never issued a birth certificate. When he died at age 26 he had three kids, by three different women, and was owed a $30,000 purse. Because he died there was also a $100,000 insurance policy. Immediately a legal battle erupted in Panama, with the claim being asserted that because it couldn't be proven that Alcázar was really Panamanian, his kids had no rights in the property he left behind or the insurance proceeds. There was a trial at which Alcázar's citizenship was proven. Now the kids' mothers have signed an agreement and a juvenile court has set up a trust fund account with the Banco General, so the WBO and the Nevada Boxing Commission have released the money to that account and what's left over after the lawyer bills will be shared among Rockero's kids under the control of a trust officer at the bank.

Colombians take over Arraijan garbage contract

Burned once when it tried to privatize garbage collection, Arraijan is trying again. This time it's giving the contract to Aseo Capitales, a Colombian company. Arraijan residents will have garbage collection fees of between $4 and $11.50 per month added to their water bills. The contract also obliges the company to clean trash out of the sewers, storm drains and bus stops, into which uncultured people habitually throw refuse.

Gaceta Oficial now online

The archives of past editions, which would be a critical resource for legal, historical and journalistic research, are not included. However, as of July 3 that day's and future editions of the nation's official bulletin board, the Gaceta Oficial, is available through the Internet. Panamanian laws, decrees, public appointments and government contracts have to be published in the Gaceta Oficial to become effective and a lot times legislation that gets amended in the middle of the night only comes to public attention if someone is paying attention to things that get published in the Gaceta.

IADB loan to prepare RP for free trade

Presuming that the Torrijos administration has the votes to pass whatever free trade agreement that it wants or upon which the United States insists, problems still remain. The economic power structure that gave us the Torrijos administration is full of opaque, closely held, family dominated, monopolistic businesses. Free trade means that almost all of these businesses will be bought or forced out of business by multinational corporations that may be corrupt or overbearing in other ways, but are very different from the reigning model in the Panamanian business culture. So what to do? One of the things that's being done is $5 million worth of projects financed by the Inter-American Development Bank (IADB) which are, according to a bank press release, "for a program to strengthen public institutions responsible for reforms to attain macroeconomic stability, improve the investment climate and prepare the country for free trade." The money will go for programs in the Ministry of Economy and Finance, the Ministry of Commerce and Industry, the National Secretariat for Science and Technology (SENACYT), the anti-corruption czarina's office, the PanamaCompra government purchasing office, the Panama Maritime Authority (AMP) and the Civil Aviation Office (DAC). "The program will finance technical assistance, studies and consensus-building," the bank said.

Layoffs continue in former ARI

Despite the hopes and aspirations of those who rode the political patronage gravy train of the old Interoceanic Regional Authority (ARI), which was set up to manage and dispose of the real estate that came into the Panamanian government's hands pursuant to the 1977 Panama Canal Treaties, the transfer of the lapsed authority's residue has not meant business as before. After its charter ran out ARI's assets and personnel were transferred to the Ministry of Economy and Finance, which created a Reverted Areas office for these people and things. But La Prensa reports that Olmedo Miranda and María Mercedes de Morgan have resigned from the commission in charge of assigning the remaining properties to various government institutions and that at least 25 former ARI workers have been laid off by the ministry.

Banco Continental buys Banco Atlantico

Banco Continental, which is mostly controlled by the Motta family, has bought Banco Atlantico (Panama) SA from its Spanish parent company, Banco Sabadell, for a reported $96 million. Regulators in both Spain and Panama would have to approve the deal, but no major problems are anticipated in those processes.

Audit reveals Moscoso-era agro research problems

The Fundacion para la Investigacion Agropecuaria y Forestal de Panama (FIAFOR) was one of those "private" foundations that the Moscoso administration set up purportedly to handle foreign contributions to public entities. Actually those foundations were created for entirely corrupt purposes, starting with fat extra administrative salaries paid to members of the Mireyista in-crowd for doing little or nothing, and then getting sleazier from there. The best known of these abuses was the foundation set up for the would-be children's museum in Curundu, into which much aid from Taiwan disappeared. The latest such abuse, according to findings by the Comptroller General that were reported by La Prensa, was some $53,000 that disappeared into FIAFOR when David Berroa was both president of that foundation and director of the governmental Institute for Agricultural Research (IDIAP). The audit resulted after a criminal complaint was filed about peculations from IDIAP and FIAFOR, and the Comptroller is accusing 12 individuals, Berroa and Emérito Morales, Gabriel Von Linderman, José Aguilar, Leonardo Marcelino, Marcos Media, Rodolfo Morales, Esteban Sánchez, Ignacio Salazar, Erika Castillo, Juan Jiménez and Luis Pinto, of mismanagement that led to the money's disappearance. It seems that some of the abuses were no more than sloppy paperwork that left reasonable expenditures improperly supported by documents, and some were more nefarious than that. The actual setting up of a "private" foundation through which some $798,000 in public foreign aid was funneled was not considered an abuse in itself, but nevertheless the 12 named individuals are likely to be facing civil or criminal legal troubles.

Trial in sale of seafarers' certifications

Six former public officials are to go on trial on July 21 for allegedly selling Panamanian seafarers' certifications for $4,000 apiece. The corrupt practice has gone on for decades and was highlighted during the Moscoso administration when a British maritime union leader walked into the Panamanian consulate in Manila and bought certification as a First Mate without showing any qualification. Somebody with those papers could be at the helm of a supertanker in US waters and it has long been suspected that Osama bin Laden's followers covet such documents for purposes you might imagine. Liliana Valentín, Iván Moreno, José Calzada, Daniel Moral, Shirley Castañeda and Diana Escalante, however, are not charged with selling out to terrorists, just falsification of documents and public corruption. A seventh suspect, one Diana Lay, last known to be living in Miami, is also being sought in the case.

Torrijos vetoes biologist licensing

The president has rejected legislation to limit work as a biologist in Panama to Panamanian citizens educated at or approved by the University of Panama. The law would have created a Biological Sciences Professional Board and a set of requirements for licensing. Due to existing international agreements it wouldn't have much affected the Smithsonian Tropical Research Institute, but a number of other research institutions and projects would have been closed or seriously affected.

Government wants cabs to be yellow

The Land Transportation and Transit Authority (ATTT) has for some decreed that all taxis be painted yellow by next year. According to La Prensa, it's because they do it that way in New York. Taxi drivers are protesting the order, complaining that many of them don't have the money to have their cars painted and that even if they do this mandated expense makes no intrinsic sense.

Azuero medfly-free

Panama is set to certify that the Azuero Peninsula has been free of Mediterranean fruitflies for two years now. A lot of Panamanian fruit is barred from foreign markets, most notably from the United States, for fear of medfly infestations. The certification won't get Panamanian citrus fruits, even in frozen juice concentrate form, onto the highly protected US market. However, there will be fewer restrictions on some of our agricultural produce in Europe and Asia.

Luciani: medicine shortage easing

A shortage of many medicines at both Seguro Social facilities and private pharmacies largely caused by the lapse of certifications that barred the importation of many medications is clearing up. Social Security Fund director René Luciani told La Estrella that at Seguro only 12 percent of prescription medications are now in short supply and that the situation is steadily improving. Most of the prescriptions that Seguro can't fill can now be filled at private pharmacies.

C&W fined for monopolistic practices --- again

The Cable & Wireless telecommunications company has once again been fined for a monopolistic practice. This time the UK-based company was fined $300,000 for defying a 2004 order by the former Public Services Regulating Board (Ente Regulador, since replaced in a governmental reorganization) that it must allow clients of the competing Ayayai.com Internet service provider access to ADSL lines. Cable & Wireless has a long history in Panama of monopolistic practices in Panama, for which it gets fined but more than compensate for the price of the fine by the proceeds of its illegal activities. The company all but destroyed Ayayai.com, and several other Internet service providers before that, with its illegal practice.

C&W sequesters competitors

Cable & Wireless, arguing that free Internet service offered by ClaroCom and Telecarrier amounts to a monopolistic practice, has convinced a judge to sequester the assets of those companies. ClaroCom and Telecarrier appealed, and in the former case at least got the order stayed. Both of the companies that Cable & Wireless had sequestered have won rulings against Cable & Wireless for its monopolistic practices that have effectively maintained an illegal lock on fixed-line telephony in Panama.