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Volume 15, Number 12
July 9, 2009

economy

Also in this section:
Martinelli, high court cracking down on Amador and Ancon Hill projects
GUPC consortium that includes ACP director's old company wins locks contract
Last minute Torrijos administration looting comes to light
The IMF's take on Panama's economy



Government moves in on Figali's marina. Photo by the Presidencia

Supreme court voids Ancon Hill - Amador Causeway cable car contract, rejects another Figali appeal
Martinelli moves against Amador deadbeats
by Eric Jackson

Many a politician, especially many a business executive getting into politics, promises to "run government like a business." Usually they don't mean this. Usually what they really intend is to run government for the benefit of certain particular businesses. The difference between the insincere rhetoric and the sincere intention manifests itself most starkly when the poseurs "give away the store," as contrasted against those who would seriously run government like a business zealously defending the government's assets and revenue sources.

The last three Panamanian administrations notoriously gave away the store, and nowhere more flagrantly than with respect to the choicest properties of the "reverted" areas of the former Canal Zone at the former Fort Amador and the old US Southern Command headquarters on Quarry Heights.

Created at the end of the Endara administration and lapsing early in the Torrijos administration, the Interoceanic Regional Authority (ARI) was in charge of disposing of properties obtained from the Americans pursuant to the 1977 Torrijos-Carter treaties. After ARI's mandate lapsed at the end of 2004, Martín Torrijos mostly dismantled the massive political patronage bureaucracy that was the authority and transferred its functions to the Ministry of Economy and Finance.

Prior to ARI, during the dictatorship, much of the real estate coming into Panamanian hands was distributed as gifts to PRD supporters, and the industrial assets that Panama received were largely destroyed by padding the payroll with people who didn't do very much work and grossly negligent management decisions. Probably the most noteworthy example of the latter was the fate of the Panama Railroad. It was obsolete in many respects when Panama received it, but instead of the rebuilding it needed, some genius decided to clear the tracks of weeds by burning the weeds --- and the wooden cross ties. For years after that act of administrative vandalism made the railroad unusable, the railroad kept an expensive collection of employees on the government payroll.

It was decided during the Endara administration that most of the reverted assets would be sold through ARI. During that time the first concessions for the development of the Manzanillo International Terminal and Colon Container Terminal in the Atlantic Side areas of France Field and Coco Solo were granted.

Come the Pérez Balladares administration, there was a massive wave of privatizations, both of reverted properties and money-making assets like the INTEL phone company that the Panamanian government had owned going back to pre-treaty times. Concessions for the ports of Cristobal and Balboa were sold to Hong Kong's Hutchison Whampoa, the world's largest private port company. Kansas City Southern Railways got the rights to rebuild and operate the old railroad.

In charge of ARI in the Pérez Balladares times was one Nicolás Ardito Barletta, a man many Panamanians call "Fraudito" mainly but not only for his theft of the 1984 presidential election. He lived up to that reputation as head of ARI. Concessions on the Amador Causeway were granted to people and companies that lied about their assets or financing, even though Barletta's bloated ARI bureaucracy was supposed to investigate the claims of would-be concessionaires. People with no ability to comply with the agreements that they made with ARI went, concessions in hand, to potential investors or potential buyers. For the most part, these beneficiaries of Ardito Barletta's largess ended up with their concessions canceled during the course of the next administration.

Mireya Moscoso put her late husband Arnulfo Arias's nephew, Alfredo Arias Grimaldo, in charge of ARI. Under that kleptocratic regime, choice Amador properties were passed out to friends, blocks of houses on the old military bases were sold to Colombian drug lords and a former associate in the Robert Vesco ponzi schemes --- the man who personally delivered Richard Nixon's hush money to the Watergate burglars, in fact --- got a piece of the action in the concessions for the old Horoko military golf course. For the most part, the people who got concessions from the Moscoso administration never paid the government. Complicating things, and theoretically creating a legal dodge, was a Moscoso-era "parity" --- equiparación --- law that provided that if one concessionaire got a tax break or some other special financial treatment from the government, then its competitors would also receive this benefit. Thus the argument was raised that, since others with concessions on Amador weren't paying, nobody had to pay.

The worst offender on Amador was one Jean Feghali, who does business under the name Jean Figali. The Moscoso administration put great priority on the opening of the Figali Convention Center in time for the 2003 Miss Universe pageant. Figali didn't have the money to pay the contractors in full, and the pageant was held in an uncompleted hall, with Figali and the builders litigating. Figali moved his Grupo F women's apparel business out to Amador, after closing his Via España store and laying off most of the work force there. But the vast international fashion center he planned has mostly not happened. Figali has never paid the Panamanian government, but instead has bombarded it with a barrage of lawsuits with claims for hundreds of millions of dollars for things like, on the one hand, not developing the Amador infrastructures he wants, and on the other hand, putting an underground power line through the land over which he has a concession. A concession to build a marina --- for which Figali has never paid --- was used to build a landfill about twice the size of that allowed, and without getting any of the required environmental permits.

Figali has used personal friendships in high places to play these games, most infamously to get Supreme Court magistrate Winston Spadafora to rule, with no basis in law and without even a formal request for this before the court, that Figali does not have to pay for his Amador concessions. But notwithstanding Spadafora's ruling --- which has widely been held up as an example of judicial corruption --- Figali owes the government more than $15 million.

A September 2007 complaint against Spadafora has been before the National Assembly without action being taken on it, and theoretically the new legislature could revive it and hold an impeachment trial. On the face of it, the fact that Spadafora lives in a Paitilla luxury apartment owned by a company of which Figali is the legal representative raises questions of bribery. However, because Spadafora comes from the Arnulfista ranks and his party is one of the important elements of Martinelli's government coalition, regardless of any proofs it's doubtful that there could be a sufficient super-majority in the assembly to convict him.

And then there was Ancon Hill, a bipartisan assault on a national park led by Arias and the rector of the University of Panama, Gustavo García de Paredes, who was at the end of the Moscoso administration the head of the ARI board of directors. A big chunk of the national park was assigned to be divided into lots and sold. The hill's summit was to be handed over to a private concessionaire who would build a cable car that would connect to the Amador Causeway and build a recreation and tourism facility on the hilltop. It turned out that one of the companies in the Inversiones Guararé Teleférico cable car consortium was alleged to be a front for the international Rayo Montaño drug cartel, but the battle against the cable car, and the construction in the park, was not fought on that basis.

It was furious neighbors on Quarry Heights, who had moved up there to get some respite from the city's noise, pollution and litter. It was a ragtag collection of environmentalist groups who were determined not to allow the dismemberment of a national park. It was the mayor of Panama City, Juan Carlos Navarro, a guy with roots in the environmentalist movement himself, and a sensitivity to issues that moved his constituents. The Ancon Hill projects were held up in multiple lawsuits and administrative procedures that in some cases pitted former Mayor Navarro against his erstwhile running mate, former Housing Minister Balbina Herrera (she would give her ministry's permits for developers to build in the park, while he wouldn't give city permits for such things).

Now we have a new, business-oriented government. At first glance, it seems that it's not an administration disposed to give away the store.

On July 7, with photographers, a work crew and several ministers in tow, President Martinelli showed up at the Figali marina landfill. They tore down the fence, put up a sign declaring the area government property, and left cops on guard to keep Figali or his employees from entering upon the premises. "I can't be giving away or abusing public resources," Martinelli said, serving notice that Figali and the other deadbeat Amador concessionaires will have 30 days to pay up and get their permits in order. "We can't permit the same people to go on defrauding the government, not paying their obligations, impeding us from delivering more health and education services, improving police officers' and teachers' salaries and rendering assistance to senior citizens."

The pressure on Figali, a Lebanese citizen who immigrated to Panama in 1987 and is said to have subsequently naturalized as a Panamanian, was ratcheted up by a series of leaks to the press about how his immigration file has disappeared and may not have been in proper order.

The following day, the Supreme Court dismissed one of Figali's lawsuits, wherein his Grupo F Internacional had sued the government for $261 million for allegedly deficient services by the Panama Maritime Authority with respect to his marina.

Meanwhile on July 7, the Supreme Court's administrative bench declared the March 2004 ARI concession contract for the cable car development null and void. It held that only the National Environmental Authority (ANAM) has the power to grant concessions for developments in national parks. Under the Torrijos administration ANAM might have been disposed to grant such a concession, but this was not done. The process could be started again, but for the authority to revive the controversial project would likely be more of a political headache than the Martinelli administration would care to endure.

Martinelli has said that his administration will be reviewing Torrijos administration concessions to the Club de Yates y Pesca and Herman Bern's Hotel Miramar on the recently opened Cinta Costera. The new Minister of Economy and Finance, Alberto Vallarino, adds that there is about $1.1 billion in arrears owed mainly for corporation fees and property taxes and that he's going to try to collect as much of this as possible.


Correction: In a previous version of this article, Alfredo Arias Grimaldo was mistakenly identified as "Alberto" Arias.


Also in this section:
Martinelli, high court cracking down on Amador and Ancon Hill projects
GUPC consortium that includes ACP director's old company wins locks contract
Last minute Torrijos administration looting comes to light
The IMF's take on Panama's economy


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