business & economy

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From "patriot" militias to offshore hustles
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Teachers' contract may be rejected
The Panama News readership figures
Business & Economy Briefs

Business & Economy Briefs

Torrijos forces out Cárdenas as bank superintendent

President Torrijos is facing a barrage of criticism from business groups, anti-corruption organizations, opposition politicians and foreign embassies for demanding and receiving the resignation of Delia Cárdenas, the independent minded and highly respected banking superintendent. Cárdenas was a member of the MOLIRENA party and served in Guillermo Endara's cabinet, but resigned from the party when appointed as banking superintendent by Ernesto Pérez Balladares in 1998. She was reappointed by Mireya Moscoso five years later. The former banking superintendent's divergences from the partisan political mainstream include support for a constituent assembly to rewrite Panama's system of government and her expressed opinion that the War on Drugs as we have known it is a lost cause that only promotes corruption. She has left open the possibility of a return to political activism. The president is refusing to state his reasons for demanding her resignation, and wouldn't even admit that he had made that demand until after Cárdenas confirmed that he had done so. The new banking superintendent is Olegario Barrelier Chiari, who was educated at Texas A&M as an engineer of irrigation systems but has worked as a banker here for many years. There may be a legal issue with the appointment, as Barrelier Chiari is also a member of the vote-counting board for the October 22 referendum on the Torrijos - Alemán Zubieta Plan to expand the Panama Canal, but the new banking superintendent says that if there's a conflict he will resign from the election post.

Asian countries join RP lawsuit

Panama has a pending case against Colombia before the World Trade Organization due to Bogota's restrictions on exports of textiles and shoes from the Colon Free Zone to Colombia. The Colombians say it's about money laundering and tax evasion involving the Free Zone, while Panama alleges that the restrictions are just protectionism. Now Panama has been joined in its complaint by several countries, all of them shoe or textile producers and all but one of them Asian. The new co-plaintiffs are Guatemala, China, Taiwan, Thailand, Pakistan, the Philippines and the Hong Kong special district of China. The WTO will go through an arbitration process at first, but if that doesn't resolve the case there will be a trial before the world body.

US raises RP sugar quota

Last year's hurricane damage in Florida and Louisiana created cane sugar shortages that northern beet sugar producers couldn't make up, so the United States has increased the sugar import quotas for 12 countries, including Panama. Our sugar exports to the USA will be capped at 40,000 tons instead of 33,000.

Rice woes

When inspectors from the Consumer Protection Authority visited grocery stores recently, they found that all but one of the 25 brands of rice sold as Grade A was actually of an inferior quality, having more broken grains than permitted. That's because nationally produced rice was in short supply as this season's harvest, which is now underway, approached, and most of the nation's 35 rice packers are not too honest. Thus the government allowed the importation of 800,000 quintals of foreign rice --- about a month and one-half supply given this country's consumption norms. Farmer groups were not at all happy, because the imports will drive the prices their members get for their crops down.

IADB pans RP tourism strategy

Nearly one year after Rubén Blades adopted buzzwords about "second residences" as the cornerstone of a national "residential tourism" strategy, the tourism minister and entertainer has received a horrible review from the Inter-American Development Bank. The IADB says that under this government's tourism policies the subsidies are going to those who don't need them, the country isn't promoting an attractive image abroad, there are no land use plans about tourism development and there is little coordination between branches of government. The "residential tourism" idea, as expressed in housing developments for retirees in Bocas and other key areas, is panned by the bank as a bad use of prime tourism potential and something that's likely to cause some severe social problems in the long run. The bank's report was made for the benefit of the Panamanian government and delivered to it this past March, but its contents only recently became known to the public when they were reported on by La Prensa.

Chiquita cuts purchases from independent growers

Chiquita Brands, citing hard times in the banana market, has cut purchases from independent farms in Bocas del Toro and warns that it may eliminate them altogether. The independent growers are demanding the cancellation of Chiquita's exclusive buying rights, which the US-based multinational demanded of the growers in before they would buy any of their products. Labor Minister Reynaldo Rivera went to Bocas to urge the independents not to block the roads and docks by which Chiquita's plantations export their fruit, but without any official response to the farmers' demand to void Chiquita's monopoly.

ACP rehires Parsons Brinckerhoff as consultant

The Panama Canal Authority has rehired US-based Parsons Brinckerhoff, whose services it has used since 2002, for 10 more years of engineering consulting work, including for the Torrijos - Alemán Zubieta Plan to expand the Panama Canal. Parsons Brinckerhoff is most famous for its consulting work on another major construction project: they're the guys behind Boston's infamous Big Dig boondoggle.

Alleged drug lord's front had ACP contract

The Panama Canal Authority was hoping that Nautipesca would deliver the $1,798.75 worth of circuit breakers that it had been contracted to deliver by May 25. But alas, on May 17 Nautipesca was seized because prosecutors say it was one of the many front companies for alleged Colombian cocaine lord Pablo Rayo Montaño. El Panama America reported the story on July 30, and the ACP administrator Alberto Alemán Zubieta responded with a furious note accusing the daily of "looking for sickness with sensationalistic headlines and speculative content." But then, Alemán Zubieta didn't actually deny that the story was true. To have discovered that Nautipesca was a drug trafficking front would have involved an investigation that would have cost way more than the small purchase contract was worth, to be fair to the ACP. But El Panama America's editors defended their story on its merits and said it was newsworthy because it "calls attention to the fragility of the Panamanian system" of public contracting.

C&W, ClaroCom declare truce

Cable & Wireless Panama (C&W) and Galaxy Communications Network, the latter of which does business as ClaroCom, have settled a series of lawsuits and countersuits out of court. The latter had accused C&W of monopolistic practices for among other things various maneuvers to disconnect them from the fixed line phone system, over which the UK-based C&W has pulled political strings to maintain an illegal monopoly despite legal and contractual provisions that were to have opened that market to competition in 2003. C&W still faces legal battles with the Motta family's Telecarrier and pending complaints from consumer groups.

C&W fined for monopolistic practice --- again

So, did they make enough from their latest offenses to make crime pay again? Users of the Telecarrier and VOIP long-distance services recently found that their phone bills reflected Cable & Wireless's rates. It seems that C&W changed its competitors' rates, without notification or permission or anything like that, in order to make their own services look better during a sign-up campaign. The National Public Services Authority (ANSP) hit the UK-based phone company with a $100,000 fine, which C&W says it will appeal. Every few months Cable & Wireless does some amazingly thuggish new thing and quite frequently it gets fined for it, but usually the fines are less than the proceeds of the corrupt things that the company does.

Court gives cigar company a tax break

Pretty neat trick, huh? Three companies that claimed export subsidies for having exported more cigars than all of Panama grew enough tobacco leaves to produce got their subsidies suspended by the Ministry of Economy and Finance --- but the Supreme Court has ordered the subsidies restored. The high court's presiding magistrate, Graciela Dixon, wrote the ruling in favor of one of the companies,  G&R International, SA in a fashion that will apply to the others. She held that it's not proper for the Comptroller General's office to advise the ministry not to issue tax certificates to those whom its investigations have caught in tax frauds. Joining Dixon in the decision were magistrates Winston Spadafora, Alberto Cigarruista, Aníbal Salas and José Troyanos. Dissenting were magistrates Víctor Benavides, Harley Mitchell, Adán Arnulfo Arjona and Esmeralda de Troitiño, who have broken with the court's pro-corruption majority on a number of controversial decisions now.

Petaquilla faces environmental charges

Richard Fifer's legal problems are no long just about the public funds he allegedly stole when he was governor of Cocle. Now the company he heads, Petaquilla SA, is facing administrative proceedings before the National Environmental Authority (ANAM) for allegedly building a mining exploration road through the jungle along the Rio San Juan in Colon province without having done a proper environmental impact study and having it approved by the authority. The company says that it did a general environmental impact study back in 1998. The dispute arose when residents of nearby Coclesito complained that the water in their river was muddied by the company's activities. Despite Fifer's and his company's troubles with the law, President Torrijos has used the Cabinet Room as a backdrop for publicity photos with Fifer to promote the latter's stock sales on foreign exchanges.

Veraguas shark massacre

Earlier this government a law went into effect to ban the practice of "finning" sharks --- cutting off the fins of sharks to be sold at high prices for Chinese soup and throwing the rest of the fish away. However, the practice has continued --- the editor of The Panama News has witnessed it openly practiced at the fishing village in the town of San Carlos. Now it seems to being done on an industrial scale, with the discovery of hundreds of finless shark carcasses at the mouth of the Torio River on the Pacific side of Veraguas. It would almost certainly be a dumping of the evidence by a commercial fishing ship, whose owner could be fined up to $100,000 if identified and convicted. Still, done on this scale industrial finning would likely be profitable overall even if the culprit is eventually caught and punished.

Bus strike, street blockage cause chaos

It started with a payless payday for the 27 bus drivers who work on the Sociedad de Trabajadores del Transporte de Panama Viejo SA buses that ply the Panama Viejo routes into the central city. They staged a one-day protest strike on August 1, leaving thousands of commuters stranded. That same morning in Las Cumbres, about 200 residents of seven neighborhoods that have been left without water blocked the road to Calzada Larga for four hours, causing traffic backups that jammed up the Transistmica. The protesters were blaming Grupo Shahani, which is building a residential development in the area, for hogging the water supply. The company denies that and says that it's in full compliance with the dictates of the IDAAN water and sewer utility. (Of course, IDAAN and other governmental authorities have a long history of approving new developments that deprive existing communities of their water supplies.) In any event, the confluence of the two protests caused tens of thousands of people to be late for work on August 1.

New plans? More like new delays

The grossly polluted state of Panama Bay is something of a health problem and a major economic problem that makes the capital's waterfront disgusting to tourists. Knowledge about shat is needed to fix the problem, and the money necessary to do it, has been available to public policy makers for many years now --- we need a new sewer system and one or more wastewater treatment plants. However, real estate interests looking to turn much of the bay into landfills upon which to build and partisan politicians looking to block anything that makes a Panama City mayor not of their faction look good have delayed the needed improvements for many years. Now the Torrijos administration has announced that it's thinking about the construction of a huge sewer along Avenida Balboa and out to Juan Diaz, where a large treatment plant would be built. This, of course, means that existing plans will be scrapped and if we are lucky the new ones might be done by the end of this year. Such a new system would allow the Mexican ICA construction company to extend its Corredor Sur around Punta Paitilla over the bay to the Casco Viejo, thus making what is now the waterfront along Avenida Balboa available for landfill that can be sold to real estate speculators with the proper political connections.

Red Frog hit by strike

Complaints of an environmental nature from some local residents and city officials are the main bad news one hears about the upscale Red Frog Beach Club residential resort project on Isla Bastimientos. The promoters deny that they're doing anything wrong. In any case, these controversies have taken a back seat to a labor dispute lately. On August 2 the 450 members of the SUNTRACS construction workers union has walked off the job, citing overtime pay, workplace safety and other contractual issues and a demand for a pay raise for the cooks who prepare their meals. Mediators from the Ministry of Labor Development have conducted a number of sessions with representatives of labor and management, but as these briefs were being written the strike was going into its second week.

Mine surveyors held

An enraged crowd of some 400 people held a team of four mining surveyors who were caught working on Cerro Pelado in the Ngobe - Bugle Comarca. Indigenous people in the area maintain that nobody can engage in any mining activity in the comarca without the permission of indigenous authorities, but the national government and corporations maintain that the mineral and water rights in the area don't belong to the local people and no permission or payment is needed, even if a mine destroys a community's water supply or deprives people of their land. The four employees of the Aurum Exploration company were up on the mountain looking for gold when they were discovered and residents from 14 nearby villages converged on the site and detained the surveyors for 28 hours until representatives from the national government negotiated their release. People in the community warned that if people from the mining company return they will be resisted with force, but the government said it would be back to talk with "responsible" indigenous leaders about the gold mining concession.

City moves to close Wasabi

Panama City is moving to turn down the noise that emanates from night clubs, and in the process stumbling across other problems. The Wasabi discotheque, for example, was found to be selling alcohol to minors when noise inspectors came by --- not just one or two underage kids, but 300 of them were on the premises. So now Mayor Juan Carlos Navarro says he's moving to close the establishment.