editorial

Pyramid schemes and other financial scams

"Nothing we can do" and associated Torrijista myths

We had a 27-year-old Colombian millionaire with a fortune of doubtful provenance living in Panama when back in Colombia his classic Ponzi scheme collapses, leading to rioting in several cities. Worse yet, the guy was running the same investment pyramid here and the Banking Superintendent and National Securities Commission told us that under the law there was nothing that they could do about it. Attorney General Gómez said much the same, until the Colombian authorities issued an international warrant through INTERPOL and the guy was arrested in Campana.

Anyone who is taking deposits of money from people is subject to the Banking Superintendent's regulation. Anyone offering an investment scheme is subject to regulation by the National Securities Commission (Comision Nacional de Valores, or CNVs). The latter case was decided some years ago, when the CNV shut down the operations of one Marc M. Harris and on appeal that action was upheld by the Supreme Court. Our fraud laws have worked against the operators of Ponzi schemes in the past.

What has changed is not so much the law but the depth of corruption in Panama.

Recall that Marc Harris ran in PRD presidential candidate Balbina Herrera's inner circle of financial advisors.

Notice that Balbina's (and President Torrijos's) campaign manager Héctor Alemán is partners with the convicted French embezzler Andre Beladina and the Colombian hoodlum Gustavo De La Cruz in the lawless Isla Viveros development project.

Bear in mind that the president and first lady served as shills for Prime Forestry, a teak plantation scam whose public face was that of one Kurt E. Meier, a key figure in the 1980s Chartwell Securities swindle that was both the largest financial crime up to that time in Europe and linked to the Genovese mafia family --- until the Swiss government shut down Prime Forestry due to its fraudulent nature and mob ties. Also notice that the Panamanian subsidiary of Prime Forestry was headed by Guillermo Salazar, until a few days ago the Minister of Government and Justice and still a presidential advisor.

Richard Fifer's illegal gold mine, for which President Torrijos did publicity photos; the illegal land grabs aimed at replacing indigenous communities with tourist resorts; Balbina's many violations of land use laws while she was Housing Minister; the dives that the National Environmental Authority has taken when their duty was to fight to uphold environmental laws; the Ministry of Labor Development's penchant to suppress unions that the PRD doesn't control rather than to enforce the labor laws; the rogue's gallery of foreigners with felony convictions whom Migracion has allowed into this country --- this, at long last, is the Martín Torrijos record.

We could quibble about whether this is “Torrijista,” as there are PRD old-timers who will argue with a certain amount of justice that this sort of thing is more akin to the Norieguista style than the way that the president's father governed. However, all historical arguments aside, this is the face of the PRD and its current leaders today.

Nothing the Panamanian government can do? The Torrijos administration has and always had all the power it needs to expel convicted felons like former KKK Grand Wizard James McQuirter, former “patriot” militia shill Mark Boswell, French bank embezzler Andre Beladina and Canadian child molester Ron Kelly. The Panamanian government has immigration laws that allowed it to shed the proprietor of the latest high-profile pyramid scheme, Colombian David Murcia Guzmán, in an instant --- when it chose to do so. The same applies to the Colombian developer who made death threats against union members, Gustavo De La Cruz.

And now the PRD-controlled Electoral Tribunal has told us that if the drug cartels finance candidates in the current election season, not only is that not their concern but that they will diligently ensure that the Panamanian people will never learn about this by enforcing the campaign contribution secrecy laws.

The problem is not that the Torrijos administration lacks the laws for it to prevent Panama from being handed over to criminals. The problem is that, notwithstanding our laws, the Torrijos administration and the current PRD leadership are deeply committed to the sale of Panama to criminals. This ought to be the central issue of the current election season.

Free trade talks with
the North Americans

We will know soon enough whether the US Congress will ratify the US - Panama Trade Promotion Agreement as currently negotiated.

It ought to be rejected because, although our economy is too small to be of much consequence to the United States, it's a bad deal for the Americans; and because, although it's not Washington's job to look out for the people of the countries with which it makes trade treaties, if it takes advantage of the cavalier disregard of their own constituents shown by the likes of Martín Torrijos, the misery and social disruptions that follow will come back to affect the United States. From the flood of Mexican farmers ruined by NAFTA illegally crossing the US border to acrimonious relations with a Bolivian government that arose from the ruins of economic dogmas promoted by Washington, chickens do come home to roost.

If the lame duck Congress declines to take up the US - Panama free trade pact, that, along with the current efforts toward a Canada - Panama free trade deal, could put Panama in the position of providing a template for a healthier form of hemispheric economic integration.

The NAFTA - CAFTA model of economic integration is fatally flawed because its central purpose is to help North American corporations flee from labor unions, taxes and public interest regulations in search of the cheapest places to do business. It's the framework for a death race down to living standards like Haiti's. Its key legal feature is a series of unelected corporate-dominated boards that get to overrule the decisions of elected governments.

Hemispheric economic integration should be democratized, not such that Canada always gets outvoted by the more populous United States, nor that Panama always loses against both Canada and the USA, but “democratic” in the sense that it's oriented toward the majorities of people in all of the countries concerned. Driven by neither corporate greed nor neoliberal dogma, democratic economic integration would respect national cultures and traditional economies while promoting trade and raising the living standards of the poorer countries in the Americas up to the levels of the richest. Democratic economic integration is a series of transparently negotiated and periodically reviewed agreements, carried out by democratically elected trans-national bodies. Although it has its flaws and should not be adopted as the universal template, the European Union is an example of more democratic economic integration from which the Americas should learn.

Within a new democratic framework a new generation of agreements, of which US - Panama and Canada - Panama free trade pacts could be the prototype, should have these features:

• They should take into account the distorting effects of agricultural subsidies, especially but not only farm price supports, so as to avoid the ruin of farmers in one country by the dumping of subsidized products from another into its markets;




• They should accept labor unions as part of the economic fabric of the Americas and lay the legal basis for collective bargaining across international frontiers;




• They should open the way for movement of working people as well as the movement of capital across international boundaries;




• They should adopt intellectual property rules aimed at making sure that creative people enjoy the benefits of their work rather than mainly extending monopolistic practices like those of Microsoft to other countries;




• They should promote the survival of distinct cultures and a flowering of cultural exchanges throughout the Americas rather than the current narrow and mostly one-way cultural diffusion;




• They should recognize the realities of life on a planet whose ecosystems know no political borders and thus treat environmental issues in a more uniform and holistic fashion; and




• They should address the linked issues of educational standards, the resources dedicated to education and child labor in order to end the perpetuation of regional underclasses.

Those are a lot of toes to be stepped on, by a Conservative minority government in Canada, an incoming Democratic administration in the USA and a Panamanian administration that will be gone in less than nine months. To make new trade agreements on a sound basis will take some time, because they're more than just the current US - Panama Trade Promotion Agreement with a few amendments about labor or environmental standards, or a Canadian adaptation of the same. To be sustainable, free trade has to deal with issues that just don't fit into the old framework. Panamanian, US and Canadian negotiators should take the time to get it right.