economy

For even the most jaded observers, the government's seizure of the Figali Convention Center should have come as no surprise. Jean Figali owes the government some $17 million in back payments for his Amador concession, and given his inability to pay building contractors what he needed to pay to get his events palace together in time for the 2003 Miss Universe pageant and the center's still incomplete condition, it takes no great stretch of the imagination to figure that he doesn't have the money. Then, since President Martinelli seized the illegal landfill that Figali was putting into Panama Bay, one can notice that Figali has moved his Studio F women's fashion business back to Via España from Amador and that's also a sign that he expected to lose his Amador holdings.

The November 13 move to sequester Figali assets by the Ministry of Economy and Finance's Reverted Assets Administrative Unit --- the successor to the old Interoceanic Regional Authority (ARI) --- was thus to be expected. The landfill for the marina was already taken by the government, with notice that it wouldn't be redeemable at any price. But so far only the convention center has been seized and the fate of the rest of Figali's Grupo F Amador concessions and indeed his Studio F stores elsewhere remain to be seen. It probably depends on the value the government places on the convention center as compared to Figali's debt.

Figali had signed an agreement to pay up and may have intended to keep it, but he apparently found no investors, lenders or buyers from whom he could raise the cash in these tight economic times.

On the other hand, the many Panamanians who presume that any politician is by definition a crook who protects his or her personal financial assets above all else may not have expected the government's move to sequester the Fiesta casino chain. Some may even take it as proof that Ricardo Martinelli's famous campaign motto, "Los locos somos más," really was an admission that the man is nuts. Martinelli, you see, owns --- or at least as of a few weeks into his term of office owned --- stock in Thunderbird Resorts Inc, which through its subsidiary Thunderbird Gaming Panama Corporation owns a 64 percent stake in the six Fiesta casinos here.

The parent company, whose shares are traded in the United States and thus whose affairs are much more on the public record than a Panamanian corporation's would be,  appears to be in very bad shape. Thunderbird Resorts has investments in Costa Rica, the Philippines, Peru, Guatemala, Poland and India as well as in Panama. A related British Virgin Islands company, International Thunderbird (BVI) LTD-Sharjah Branch, is owned by Thunderbird Resorts majority shareholder Jack Mitchell and has been skimming five percent of the casinos' gross revenues, at a time when corporate debts have soared. In Panama alone Thunderbird maintained a debt of some $57 million, more than $46 million of which was owed to local banks. Maybe the most important creditor of all, the Panamanian government, is owed some $3.7 million in back taxes. Thunderbird also faces a tax evasion investigation in Guatemala.

Thunderbird has also run afoul of the Panamanian government by having certain managers who were not approved by the Gaming Control Commission (JCJ), as required by law. Past administrations have routinely failed to investigate the criminal records of people getting casino concessions here or running the businesses for concessionaires, and have never hired enough casino inspectors to even make a token pretense of enforcing any gambling regulations.

The Martinelli administration, however, may have a more vigilant gambling policy. It took as one of its earliest actions the revocation of gambling concessions given to members of former President Ernesto "Toro" Pérez Balladares's inner circle --- probably including the ex-president himself, if the indications of casino proceeds going to companies he owns are what they appear to be --- during Toro's 1994-1999 tenure. At the time, PRD spokespeople blasted Martinelli's action as an unfair move against his business rivals, as the current president owns stock in Thunderbird. But Martinelli protested that he owned less than a one percent stake in the Fiesta casinos' parent company, which he bought on the US market, and that interest had no bearing on his move against the Pérez Balladares gambling concessions.

A politician playing juega vivo isn't supposed to send the taxman after his own company. However, the Ministry of Economy and Finance's General Revenue Office (DGI) has seized the Fiesta casinos, which employ some 1,800 people here. The action was taken on November 13, the same day that another branch of the ministry moved against Figali. Interpret that as President Martinelli taking a hard-nosed, disinterested approach to guarding the public purse; or as living proof that our new chief executive is stark raving mad, at your pleasure.

It seems that Thunderbird's failed effort to sell $77.7 million in common stock was the event that triggered the Panamanian government's action. The taxman apparently wanted his $3.7 million before Thunderbird came crashing down into bankruptcy, which word on the street says is a very real possibility.