How stands the Crown on hypocrisy?

by Kevin Harrington-Shelton

“We must practice what we preach”

Panama is being unfairly treated in an international pin-the-tail-on-the-donkey search for a culprit for the metastatic tax evasion underlying the chaos in the funding of public services in the United Kingdom. The Anti-Corruption Summit opening in London highlights the obvious: it doesn’t intend to get at the root of the problem. The European establishment actually promoted the principal politician behind the Luxembourg issue (Jean Paul Joncker) to the presidency of the Commission — and persecuted the whistleblowers. Neither Panama nor the British Virgin Islands — stars of the current Mossack Fonseca hit — are invited to share the red carpet in this new Oscars opportunity. “Out of sight, out of mind!”

There is (another) policy issue involved. Instead of making merchant bankers reap the whirlwind they had sown in the run-up to the 2008 financial crash, rather than insisting on a level-playing field for offshore services, on April 8 Prime Minister David Cameron quietly ramrodded through a major about-face on solving his own benefits funding problem. The City prevailed on backtracking from the UK’s 2013 G-8 landmark stance of requiring beneficial owner registries available to everyone — in the hopes that such a broad base of transparency minders will keep (even) the bankers honest. Registers on the mainland will indeed be available for public inspection from June 2016, but now the Crown’s offshore territories will — inexplicably — continue to sell secrecy, as their registers will remain closed to the public.

A killer phrase which ought be sculpted in stone at he Lough Erne shore where the Prime Minister pontificated it: “We must practice what we preach.”

Shadow foreign secretary Hilary Benn questioned it in the Commons: “If openness is good enough tor the UK, why should we accept a different position in our overseas territories?”

In light of the worldwide shock following Süddeutsche Zeitung disclosures, one is nonplussed by this about-face. And in the words the BVI government used to welcome it: “The BVI has worked for 30 years to carefully and legitimately build an industry that is well regarded and trusted by clients, global regulators and other international authorities. This agreement will play its part in ensuring that this continues to be the case.” This although its Financial Services Commission failed to consider one Mossack & Fonseca (BVI) & Co. license, after fining it $37,000 for deficient due diligence on money laundering. An Order in Council imposed direct rule on the tinier Turks & Caicos Islands in 2009, for far less than that. As befits the sunniest street in the City, the far-larger Cayman Islands (40 percent of whose residents are expatriates) describes a more thorough focus of the underlying issues, and its home rule appears to be firmly rooted in the Conservative Party donor list.

But still no one — anywhere in the Crown colonies — has posited any (moral) justification for purchasing a back-dated shelf company.

Yet not everyone in the UK is as passive as the government about reinforcing its revenues thus foregone to at least recoup $5,200 million gap arising from the Lords Spiritual recent objections to savaging benefits to the least-advantaged. Similarly concerned about the harm to which much of the Commonwealth — as well as the rest of the developing world — by granting regard of legal entity to companies formed on the mainland as well as offshore, on April 30 the charity “Christian Aid” carried out a unique protest in Mr. Cameron’s own constituency. (Curiously overlooked by media…) Using an internet database made available previously by Private Eye, Christian Aid politely pointed out two commercial properties held by Jersey and BVI corporations. Neither of which would be subject to the public scrutiny as the famous Oxfordshire pub aptly styled “The Fleece.” It may not be known in Panama that freeholders can weasel their way around (most) capital gains and inheritance taxes, by claiming not to be domiciled in the UK for tax purposes. Including nameless offshore corporations with friends in high places. The good burgers of Witney might be one day unpleasantly surprised to discover that the ultimate owner of the mall at 24-26 Witney High St. in BVI might turn out to be an instrumentality of one Chapo Guzman (and/or his heirs and assigns).

Is this why neither Panama nor Crown dependencies had been invited to the London summit? “Little children are to be seen and not heard!”

How stands the Crown on hypocrisy? Respondeat superior….

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Back to Panama’s late 80s economy?

The 1989 US invasion of Panama, with all of the innocent non-combatants killed, all of the Pentagon and Bush administration lies about it, the seizure and closure of Panama’s public archives that protected the richest criminals and both fuels corruption and impedes dignified national politics to this day, and the tawdry legal aftermath that may have seen Noriega convicted for things he actually did but also “legalized” the payment of more than $1 million in bribes to buy prosecution testimony against the former dictator as precedent for US law — those things were bad enough, and got some recognition outside of Panama. The several years of economic sanctions that preceded the invasion are less well known abroad and one of the historical memories that for a variety of reasons is suppressed here in Panama. The sanctions were devastating, and we may be headed into something similar.

Will the offshore asset protection industry and allied political forces take advantage of an economic crisis to hire dingbats to keep the protesters in line? Will loyalty to Mossack Fonseca become the wannabe prerequisite for patriotism, as loyalty to Manuel Antonio Noriega once was? Will the defense of a criminal element become a purported gesture of national unity?

And if the hard times imposed from within and without do come again, are we prepared to make all of the little private arrangements as in Noriega sanctions time to get us past the crisis? More importantly, this time will Panamanians be ready to make our own better arrangements to move on with our national life, rather than depending on a Washington crowd that neither understands nor cares about us to make arrangements for us?

We still have the dictatorship’s constitution because Panamanians depended on the United States to fix the Noriega crisis. We have a devastated agricultural sector because Washington decided that US-based companies should be the source of more of our food and we didn’t have a Panamanian government willing to walk away from that “free trade” offer. We are in trouble with much of the rest of the world — not only the United States — because we allowed politically influential predatory castes among the professions of lawyers, bankers, stock brokers, insurance executives, merchants and accountants to dictate our laws so as to build a business and financial paradigm that serves international criminals rather than ordinary Panamanians.

One tiny case in point is that a Panamanian can’t just pay a small fee and set up an assumed business name in order to get a post office box, listed telephone number, bank account and tax ID number without being prohibited by unaffordable lawyer and CPA bills. Our business laws are designed for foreigners’ shell games and the enterprises of richer Panamanians, not for the 40 percent of our work force who have been relegated by these laws to the informal economy. Isn’t it time that those considered too small to be profitable for lawyers and bankers to serve got some consideration?

Are we up to the task of overriding the politicians who have done the bidding for this untenable order? Are we ready to rearrange our business, banking, legal and productive systems to serve most Panamanians? We can’t just forget the Panama Papers or the US allegations against the Wakeds, much less international sanctions that may be imposed on us for being a money laundering center. But we can and should fix the ways we feed and govern ourselves, according to Panamanian criteria rather than according to other countries’ wishes. That doesn’t mean bogus legislation like Varela’s public contracting “reform” that might as well have been written by Odebrecht, or the continuation of predatory systems that only benefit a few Panamanians because that’s the way we have done things in the past, or endless discussions about procedure that never get to the substance of our problems. It’s a matter of looking at who most of us are and what most of us can use.

Will Dr. Stiglitz and the commission he heads tell us that? If so, fine. But that should be beside the point. We should figure it out and correct it for ourselves.

State of the jihad

STRATFOR is a corporation run by a conservative Republican whose bread and butter is advising multinational corporations. They gather and publish information to inform decisions that are mostly in the business realm, rather than to mobilize voters to make decisions at the polls. The company and its scholars have their own politics, but their information tends to be dispassionate and well grounded in fact. However, every person and every institution comes out of a social context and all have a point of view. There is no use denying it — better to acknowledge it and proceed.

So the editor was eager to read what STRATFOR had to say about Osama bin Laden’s legacy on the fifth anniversary of his death. The analysis by Scott Stewart noted that notwithstanding Bin Laden having been first run out of Afghanistan, then largely isolated from operation command of any forces, and ultimately tracked down and killed, his plans for a jihad against the West have pretty much gone according to plan, a central part of which was to draw US forces into combat in the Muslim world. “A man was dead, but the ideology of jihadism was going to continue to pose a threat,” Stewart wrote about the elimination of the CIA-trained mastermind of the September 11, 2001 attacks on the United States. Stewart also noted the split among jihadis between the al Qaeda and Islamic State factions and predicted that it would endure. He acknowledged the difficulty that governments have in waging wars against amorphous ideologies rather than armies in the field or defined organizations.

So what was the conclusion? First, that “the world simply cannot kill or arrest its way out of this problem;” and second, that “strong US leadership and cooperation from an array of regional allies and alliances” is required to confront the jihad.

The latter part of that is disappointing. Yes, it should always be a general principle of US law and foreign policy that to make war against the United States is a course of action that tends to leave one dead. But no, alliances that identify the United States with unsavory regimes in the Muslim world don’t work very well against the jihadis — they just give them political strength. What would be most effective is a policy that allows Islamists who come to power somewhere to receive all due respect and recognition — with not much of that due if they attack the United States on the one hand, but normal relations if they pursue the ordinary means by which countries and peoples relate to one another. The Sunni jihad against the Shiites — or its reverse — is the sort of cause for America to deplore rather than join. Better to pursue the traditional US role of providing a haven for those fleeing all that stuff and seeking to become Americans. It really does become an existential question for the United States because pursuit of the “Long War” against radical Islam that some Pentagon planners project to be ongoing after everyone who reads these words is dead and buried would be an adventure cut short by America’s financial collapse under the weight of such an undertaking.

Bear in mind…

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Ciencia y tecnología en Panamá

comunicado por el Centro de Estudios Latinoamericanos Justo Arosemena (CELA)

Ciencia y tecnología en Panamá son términos exóticos. Son extraños a nuestra vida cotidiana. A pesar de ello, todos los panameños reconocemos inmediatamente sus aportes: la iluminación de las noches oscuras, salud y los vuelos al espacio, sólo por mencionar algunos. La poca percepción del valor de la ciencia y la tecnología en Panamá, es aún más difícil de comprender cuando se trata de los políticos que dirigen los destinos de la República.

Sucede con frecuencia que para estas personas, la ciencia no sólo es exótica sino también exógena. Es decir, algo que está más allá de nuestras fronteras. Los beneficios de la ciencia, aducen, pueden comprarse en un laboratorio o consultora en los países más o menos desarrollados.

La ciencia no es percibida por los políticos como un poderoso instrumento que puede contribuir al engrandecimiento del país. La ciencia en el país debe estar al servicio del bienestar de la población. Es imprescindible fomentar y valorar la investigación científica. La Secretaría Nacional de Ciencia, Tecnología e Innovación (SENACYT), creada con este fin, ha sufrido un serio golpe al negársele el presupuesto mínimo para cumplir con sus responsabilidades. El Secretario Nacional de Ciencia, doctor Jorge Motta, ha denunciado este hecho e identifica al Ministerio de Economía y Finanzas como el obstáculo.

El CELA apoya al doctor Jorge Motta, secretario nacional de la SENACYT, en su lucha para promover la ciencia, pieza vital en cualquier esfuerzo por elevar los niveles de vida de la población panameña mediante sus propios esfuerzos.

El CELA exige que el gobierno recapacite y le proporcione a la SENACYT los recursos mínimos para que continúe su labor en todos los ámbitos del país.

El CELA considera urgente re-educar a la clase dirigente del país para que se ponga al servicio de las demandas nacionales y se coloque a la cabeza de los movimientos que promuevan la ciencia y la tecnología en Panamá.

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Une petite veló

by Kevin Harrington-Shelton

President Juan Carlos Varela’s address at the Council of the Americas attempted to jawbone his way through the country’s growing political instability. Polls show nearly 80 percent of Panamanians no longer believe anything his government says. Yet, in a reality disconnect, the president used his favorite buzzword (“transparency”) a total of seven times. But not once about actually putting it into practice. And although “actions speak louder than words,” he has not issued any executive regulations to ensure information in the public interest is distributed widely, rather than to media selected to ensure the less flattering bits are glossed over (in exchange for access). Varela’s lack of political will on transparency is worse even, than a management style that might only charitably be described as sloth-like.

Case in point. Despite a reference evidently for export-only, about the rule of law and “an overriding commitment to transparency and accountability in the use of public funds,” Mr. Varela has yet to have his minister for canal affairs report to the National Assembly floor regarding the canal expansion, as mandated by a 2006 law still on the books. Nor has the contract for such works ever been made available for public inspection — as provided for by the Transparency Law (formally) en force. Similar fiction involves “investing the public funds with transparency to ensure the access to drinking water, basic sanitation, decent housing, education, healthcare and transportation” which is belied in a country (quite literally) falling apart.

Neither did our president add value to an improved understanding the Süddeutsche Papers. Scarcely a word either, about the star-studded Stieglitz Commission, nor about the demand side of the drug trafficking equation. His motherhood and apple pie policy statement (“our country is committed towards the automatic exchange of tax information in a bilateral way”) does not jibe with France’s April 11 “calls on all countries to subscribe to the agreement signed in Berlin in October 2014.” The French had been even less impressed by his Flashman-like brinksmanship — using a last-moment telephone call to (unsuccessfully) dissuade Francois Hollande from following ministerial advice regarding re-insertion onto a non-cooperative offshore blacklist — and then subsequently criticizing the French head of state for having disregarded his spur of the moment plea. Between the lines the subsequent ultimatum by its treasury minister let on that automatic exchanges were sine qua non for Gallic peace. Such poor statesmanship prompted a long-time member of his Panamameñista party to express publicly that the April 18 Paris talks would best have been handled by Varela’s foreign minister (and vice president) Mrs. Isabel De St. Malo de Alvarado, who “undoubtedly enjoys the best public image within the government, as reflected by the sincerity of her demeanor.”

Last, but certainly not least, regarding omissions: while in Washington, Mr. Varela not once made a fleeting reference to the lack of level playing fields that lie at the heart of the offsore tax evasion controversy (which is sure to flare up — again — on Monday, with Suddeutsche’s announced second dump). Interest might well be growing hard by the Beltway, in Delaware, and further afield, in Nevada and Wyoming, The president might have defused revelations that the Mossack Fonseca & Co (BVI) Ltd. had suffered “an administrative penalty in the amount of $37,500” for “failing to carry out the necessary enhanced customer due diligence measures in respect of a high risk customer as required.” And, as the Guardian had it: “For the last 10 years, the analysis suggests, the BVI has been licensing the firm even though it knew it was not fulfilling its legal obligations.” Probity would have presumed that background checks carried out prior to one of the principals’ elevation to the Panamanian cabinet on July 14, 2014 would have brought these references to light — or did they?

Preaching to the choir at the Rockefeller Foundation-sponsored event doubling as powwow highlighting energy development on the subcontinent, Mr. Varela heralded a forthcoming AES (“The power of being global”) methane plant in downtown Colon. But he “forgot” to praise a coal-fired generator at a Canadian open-pit copper mine smack in the middle of the Central American Biological Corridor further up the coast (of the type the World Bank decries as “a disaster for the planet”). Praise was also heaped on the 100-strong regional multinational headquarters program, which houses the families of expatriate managers working in currently-troubled parts of northern South America — hardly the stuff of sustainable development. Our airline hub is what makes the above possible. Yet once COPA went public on the NY Stock Exchange, some 80 percent of its benefits are siphoned out of Panama — with little hope that they will return.

A country lacking a central bank and its own monetary policy is ever walking on eggshells. Leadership and confidence is indispensable in such scenarios.

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Mr. Varela goes to Washington

by Kevin Harrington-Shelton

Plus ca change

As with Alice in Wonderland, things are getting curiouser and curioser as President Juan Carlos Varela continues to mismanage the Suddeutsche Zeitung crisis.

Yesterday was World Press Freedom Day. It was also the starting date for the Council of the Americas conference in New York City, where President Juan Carlos Varela was the ranking speaker of that Rockefeller Foundation-sponsored event. Undoubtedly it was part of a misguided damage control strategy to limit the risk to Panama’s reputation. But he may well be adding fuel to the fire, just days ahead of the second dump of Panama Papers on May 9th.

In deepest background, the president has painted himself into a corner, as the result of a media policy aimed at suppressing journalists with significant audiences. On Varela’s third day in office, Dr. Miguel Antonio Bernal was inexplicably relieved of his 40-year-old radio spot, and, in quick succession, so were professors Julio Miller and Candelario Santana. With the field thus cleared for the media establishment which virtually elected Mr. Varela in 2014, press coverage had been benign, if not biased.

Thus bereft of any constructive criticism on the media lynching of former officials, Mr. Varela has kept busy painting himself into corners. Not one single Varela appointee to the prior government he initially shared with Ricardo Martinelli for 26 months was among them. But wIth his press barons now running for cover following the initial Suddeutsche blitz, he has effectively been left out in the cold, garnering the worst approval ratings in Panamanian history (at barely two years into a five-year term). Particularly on transparency — a linchpin of his election platform — on which his strongest suit against the former Martinelli government was predicated.

But this also marks new blow to his legacy.

As the penny drops and the Suddeutsche revelations rev up reasoned responses throughout the world, the National Assembly slam-dunked a bill last week, “reforming” public works bidding procedures — following a single day for each of the three readings for such a pivotal bill. It basically allows more of the same, in a framework which allowed his predecessor to pillage the treasury —“legally.”

In its first two years Varela’s Panameñista Party bent over backwards (literally) to award lucrative contracts to the Brazilian Odebrecht (of Lava Jato fame), which has proven proficient in winning public works projects in Panama since President Ricardo Martinelli and Mr. Varela (then his vice president) flew down to Rio together in 2009 — and returned with a new executive jet for presidential travel. Most memorable are their jaunts with then Italian Prime Minister Silvio Berlusconi.

Excluding prequalification restrictions makes for “legal” self-serving measures. Prior to a Washington stopover en route to his NY Rockefeller conference, the president indicated he will not veto the bill — notwithstanding public opinion that it should have precluded contractors convicted elsewhere from bidding in Panama. This in hopes of forestalling any criticism of the earlier awards to Odebrecht during Mr. Varela’s watch. That the president’s own brother José Luís Varela (who heads their party’s legislative caucus) had personally defended this specific omission in the bill highlights a family sensitivity to this particular point.

But this quickie may well carry unintended consequences: evidencing a growing lack of legitimacy to govern. Should the upcoming Suddeutsche documents involve the Varela family, Panama could well be governed by its second woman president.