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Wednesday strike date, $2.2 billion lawsuit suggest another canal expansion breakdown

Saul Mendez
SUNTRACS secretary general Saúl Méndez. Photo by Voz de Frenadeso

Lawsuits and labor troubles, the usual sort of crisis when lowball bidding is the game — now the question is who takes the loss

GUPC shorts its workers — who say they’ll walk out on Wednesday

by Eric Jackson

In the last Panama Canal expansion crisis, between December of 2013 and February of 2014, it was the GUPC consortium composed of Spain’s Sacyr Vallehermoso, Italy’s Salini Impregilo, and as junior partners the Belgian dredger Jan de Nul and Panamanian company Constructoras Urbanas SA (CUSA) that shut down work. In 2009 their bid for the design and construction of the new locks was more than one billion dollars less than the next bidder and no serious construction industry analyst believed that the job could be done for the amount bid, let alone done at a profit. By the 2013-14 shutdown the consortium was demanding nearly $1.6 billion more. Work started again when Sacyr’s and Impregilo’s performance bond insurers agreed to pay $400 million and the Panama Canal Authority agreed to advance another $100 million while disputes would run through the course of the contract’s dispute resolution mechanism. But new claims from the contractors kept coming in and now total nearly $2.7 billion in demands, some $290 million of which have been settled in favor of the company but the rest of which are in various phases of dispute resolution that do not appear to be going so well for GUPC.

This past May Impregilo warned of an impending liquidity crisis. On July 1 the master contract between the SUNTRACS construction workers’ union and the Panamanian Chamber of Construction (CAPAC) called for the nation’s construction workers to get raises, but GUPC, whose contract with the union follows the master agreement, did not pay. After more than a month of fruitless talks SUNTRACS unsurprisingly did not agree to cover GUPC’s crisis and scheduled a strike to begin on Wednesday, August 12.

SUNTRACS has militant communist leaders who make it easy for politicians and business leaders to make it the convenient whipping boy. ACP administrator Jorque Quijano, beset by many labor troubles, is saying that the country can’t tolerate a canal expansion strike. However, he’s blaming GUPC, not the union.

Nobody in the government nor the corporate mainstream media are blaming the ACP or its former administrator Alberto Alemán Zubieta, who came to work for PanCanal having been CEO of CUSA, which members of his family own. At the time that the bid was accepted all allegations of a conflict of interest were rejected because Panama has no conflict of interest law to speak of.

The lowball bid tactic usually doesn’t involve such a conflict. Often it involves a bribe or kickback. In any case, it’s a common enough phenomenon in the construction world, especially where construction industries are allowed to play corrupt games without serious penalties. The bidder gets the contract on an unrealistic low bid, then makes astronomical demands for more money and ultimately the litigation is compromised to give the contractor a lot more money than the bid price.

So where does the new Impregilo claim come in? It’s essentially about the same allegations as the matters in the various phases of contract dispute resolution — concrete mixes that the ACP rejected, the consortium claiming to have relied on faulty ACP geological studies, higher costs of labor and materials and so on. This claim, however, is asserted under a 2009 Panamanian – Italian “free trade” agreement and in it Impregilo asserts that it’s not just part of a consortium hired to do a job, but an Italian “investor” in Panama.

It becomes an existential matter for the SUNTRACS leaders. Most of the members are not so radical as the leaders, but they do appreciate having a hardcore militant dealing with their boss. With the contact and the law on the union’s side and the nation grown weary of the games being played with the canal expansion, SUNTRACS leaders can’t afford to cave in on pay raises owed but unpaid.


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SINAPROC issues ocean swell warning for Tuesday and Wednesday

sea swells
Rougher than usual waves, coming farther onto the shore than usual, are coming to the Pacific Side this this week. Photo by SINAPROC

Ocean swells to hit Pacific beaches on Tuesday and Wednesday

Hurricane Hilda has roared past us and is into the Central Pacific, but the waves that she kicked up well south of where she now is are still on their way here. Panama’s SINAPROC disaster relief agency warns of ocean swells affecting all of Panama’s Pacific coast starting on the afternoon on Tuesday, August 11 and subsiding by Friday. The swells will be highest on Wednesday and SINAPROC warns people to stay off of Pacific beaches on Tuesday and Wednesday.


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Edward Snowden – Terminal F (2015 documentary)


[Editor’s take: Embarrassing a government by denouncing polcies that it can’t openly defend to the public is not betraying a country.]


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The Panama News blog links, August 9, 2015



Bernie Sanders in Seattle last night, speaking before 12,000 people in the hall with another 3,000 outside listening
Bernie Sanders in Seattle last night, speaking before 12,000 people in the hall with another 3,000 outside listening

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Donald Trump at his campaign launch. He reportedly paid actors $50 each to assemble this crowd, but now all the polls have him leading the Republican primary field.
Donald Trump at his campaign launch. He reportedly paid actors $50 each to assemble this crowd, but now all the polls have him leading the Republican primary field.


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Bernal, Institutional cross-dressing


bad guysInstitutional cross-dressing

by Miguel Antonio Bernal

The cloudburst of public corruption scandals that have appeared in recent months in Panama is, to say the least, appalling. It’s more evidence that crimes, and the attitude and behavior that go with them, are the social scourge of corruption and its inseparable partner, impunity. This calls for a strong public reaction to contain the damage, apply corrective measures and overhaul public service.

The common good, defense of the general interest and service to fellow citizens seem to have been banished from public office. We must act in unison to restore them to public life and to truly improve our social mores. Otherwise we will find ourselves without public institutions and, frankly, without the human resources to be a society.

The lack of enthusiasm for the study of the public sector that has existed in our society and in academia in our country affects every part of our fragile social structure every day. This fact was aggravated from the moment that we took the international responsibility of the administration, operation, conservation, maintenance and modernization of the Panama Canal. We soon lost sight that all is for naught if we have a canal without having a functional country and society.

It is worth recallning here that the concept of the state and its main instrument, the public administration, has a transverse character that overflows the bounds of any single scientific discipline and proves to be a meeting place for political science, law, economics, management theory and sociology.

The transmutation of the “political” and “official” roles has generated an institutional cross-dressing understood as the confusion of roles between politicians and functionaries. In other words, we have politicians who in practice occupy themselves with the roles and skills of civil servants, and civil servants whose practice and comptence is more of a political character. In Panama, this absurd role reversal has no name, but it’s deadly.


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Harrington, Lo que mal comienza…


AsambleaLo que mal comienza, mal acaba

por Kevin Harrington-Shelton

La falta de liderazgo del Primer Mandatario aflora en todo el gobierno. Ahora tocó a la seguridad, un problema prioritario — para el resto de la ciudadanía….

El diputado Gabriel Soto Martínez (quien habitualmente toma la iniciativa en áreas en que los demás Panameñistas prefieren pasar agachados) abordó en el Pleno la poca productividad de los millones “invertidos” en la Policía Nacional. Pero es triste que, cumpliendo con el control del Legislativo sobre el Órgano Ejecutivo, el joven e idealista líder comunitario de Arraiján sintiera la necesidad de responsabilizar a su Director General por su seguridad personal y familiar. Y escandaloso el que callaran al respecto, el resto de los diputados de todas las bancadas. Pero peor, el silencio del Jefe de la Fuerza Pública (por demás jefe político del “Panky”), quien abdica así a su responsabilidad como Jefe de Estado.

Como diputado, Soto tiene acceso a todas las finanzas del gobierno, y actúa responsablemente al expresar su opinión que no se justifica esa enormidad. Su critica específica (que el comisionado Omar Pinzón gana más que su Jefe) es patente a quienes sólo tenemos la información a la que se nos permite acceso. Consta que el Presidente tiene presupuestado $7 mil mensuales, y el señor Director General $10 mil. Lo que chorrea, queda en la penumbra. Lo de los $30 mil mensuales para lo que los franceses denominan “la porción de los lagartos” es ya otra cosa.

En vez de actuar con transparencia para aclarar la realidad, la reacción del poder tras el trono militar ha sido desatar una campaña propagandísta en medios acríticos — del patrón heredado de “el gobierno anterior”.

Al tomar posesión, el presidente Juan Carlos Varela no reparó en violar la Constitución, al nombrar a Pinzón, Pinzón en aceptar y el resto de la oficialidad en callar ante este trastoque del escalafón que en 1968 conllevó al retiro del mandatario Panameñista de entonces. Para coronar este irrespeto que hoy hace metástasis en toda la Nación, en 2014 Varela también causó que se cerrara el programa “Alternativa” del Dr. Miguel Antonio Bernal — quien le había admonido públicamente en contra del nombramiento ilegal.


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Bolivian Independence Day in Panama

Panma., like Bolivia, is one of the Bolivarian Republics -- the countries that became independent from Spain as part of the movement led by Simón Bolívar -- so the expected place to celebrate the anniversary of Bolivia's August 6, 1825 declaration of independence is Plaza Bolivar in the Casco Viejo, with wreaths to be laid at the monument to the Great Liberator.
Panama, like Bolivia, is one of the Bolivarian Republics — the six countries that became independent from Spain as part of the movement led by Simón Bolívar — so the place to celebrate the anniversary of Bolivia’s August 6, 1825 declaration of independence was Plaza Bolivar in the Casco Viejo, with wreaths laid at the monument to the Great Liberator.

Bolivian Independence Day in Panama

photos by José F. Ponce

We don’t get Bolivian ships coming through the Panama Canal. Bolivia has been landlocked since losing its access to the sea in the 19th century War of the Pacific and its relations with Chile in particular have been tense ever since. There are Panamanians who support Bolivia’s cause about this, the case is before the World Court and we may yet live to see a Bolivian container ship in the locks.

Rich in minerals but repeatedly looted for that reason, Bolivia has been one of the poorest countries in the Americas. These days things are looking up. President Evo Morales, the first indigenous head of state in the overwhelmingly indigenous country, is now into his third term and there is no allegation of fraud or coercion in his election. He brought those who speak Aymara as a first language like he does, others whose native tongue is Quechua and those who speak Spanish first, highlanders and lowlanders, into a new constitutional deal that renamed the country The Plurinational State of Bolivia, and has overseen some good times in which poverty has gone way down.

There have been ups and downs — lowland secessionists who wanted to take the parts of the country with the oil and gas out of Bolivia, people who objected to a road project through a wilderness area and those who don’t think that the lithium deposits in their region should belong to the whole nation have in their turns been quite assertive — and allegations that the United States was trying to meddle in these disputes and with Bolivian laws about coca have strained relations with the Americans. Morales’s party took some setbacks in recent local elections and he attributed the result to corruption among his followers and instead of throwing a fit he vowed to do something about that. Bolivia’s economy is better than that of its neighbors and with the world’s biggest lithium deposits that will be much in demand for electric car batteries the future is looking positive.

Here in the Casco Viejo members of Panama’s small Bolivian community, diplomats, Panamanian friends of Bolivia, kids from the Escuela Republica de Bolivia and the Escuela Simon Bolivar across the street from the plaza gathered to honor our fellow republic. Dignitaries spoke and a National Police band played. Bolívar’s dream lives.






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Corcione defies prosecutors, envelopes the ACP in a cloud of corruption

Don Corcione
Nicolás Iván Corcione Pérez Balladares, construction executive and Panama Canal Authority board of directors member who allegedly coordinated a bribery, kickback and money laundering scheme for contracts for the construction and renovation of Panama’s courts. The scheme was said to have been orchestrated by now imprisoned former Supreme Court president Alejandro Moncada Luna and some of the money trail led through a maze of companies, the owner of one of which has testified that a sum of $600,000 was divided between Corcione’s company, which got $200,000 and another company owned by Martinelli insiders Alejandro Moncada Luna, Felipe Virzi and Ricky Calvo, into the Banco Universal account of which was deposited $400,000.

Nicolás Corcione skips a deposition with the prosecutor as his lawyer asserts that as a member of the Panama Canal Authority board of directors Corcione is immune from dealing with prosecutors and the regular court system

ACP board member seeks to
be untouchable for bribery

by Eric Jackson

This is how it works, or at least how embattled Panama Canal Authority board of directors member Nicolás Corcione and his lawyers want it to work:

  • An investigation has begun, in which Corcione’s name has come up both as the coordinator of a bribery – kickback – money laundering scheme and as a recepient of $200,000 for playing that role. Prosecutors took a closer look at Corcione and called him in for questioning under oath — an indagatoria, one of the depositions that are central to Panamanian criminal proceedings.
  • As the investigation began, Corcione left the country and via his lawyers begged off on the indagatoria until he came back. The interrogation was rescheduled for August 5, but on that day he didn’t show up and his lawyer asserted that under the Judicial Code and the Constitution, prosecutors and ordinary court have no jurisdiction over him, that only the Supreme Court can investigate, prosecute and try him.
  • It is one of the rules of Panamanian criminal procedure that if a criminal investigation is begun by a prosecutor who has no constitutional jurisdiction, everything about that investigation is null and void and no new investigation about the same matter may be opened, at any level.
  • Since the law that created the Panama Canal Authority provides that members of the board of directors may only be removed for cause, and since any criminal proceedings against Corcione would be barred, he would keep his position on the ACP board.

Neat trick, isn’t it?

Except that Title XIV of Panama’s Constitution, the part about the Panama Canal, doesn’t directly say what Corcione and his lawyers claim that it says. Article 318 provides that:

The administration of the Panama Canal Authority shall be run by a board of directors composed by 11 directors, appointed in this way:
1. A director designated by the president of the republic, who will preside over the board of directors and shall have the condition of state mininster for canal affairs…

The other members of the board of directors are not given the status of ministers. Then when you go to Article 40 of the Code of Criminal Procedure — which was in force before the Panama Canal Authority was created — it provides that the Supreme Court’s Criminal Bench shall hear cases involving vice ministers, prosecutors, appeals court judges, top police officers, diplomats and a variety of other officials, including “the directors and managers of autonomous and semi-autonomous entities and those who work in whatever other post with authority and jurisdiction in all of the territory of the republic….” A government minister is a member of the executive branch with authority and jurisdiction. A member of an authority’s board occupies a post in a collegial policy-making body, but has no authority in an individual capacity to issue orders to those who work for the authority.

In the case of the toxic cough syrup mixed and distributed by the Social Security Fund, several members of that institution’s board were charged with a crime for alleged negligent oversight. They never allocated the funds out of the budget they got from the legislature for an adequate medicine testing system, but it was found by the ordinary courts that those facts did not support a conviction for hundreds of counts of negligent homicide. The case was prosecuted by the regular prosecutors at tried by a regular judge and the matter of only the Supreme Court’s Penal Bench having jurisdiction was never raised. Precedent doesn’t mean much in Panama’s legal system, but the weight of legal opinion here is that for purposes of Article 40 of the Code of Criminal Procedure “director” means the person with top administrative powers and not a member of a board of directors who has no executive duties. Constitutional law professor Miguel Antonio Bernal opines that the only one on the ACP board who has “authority and jurisdiction” is the minister of canal affairs.

In the years since the provisions found in Article 40 have been in effect, it would have been wiser in the drafting of laws creating state entities to use a word other than “director” for members of those institutions’ boards. Careless legal drafting, like falsified academic credentials, is one of the hallmarks of Panama’s political class. Sometimes confusion is actually what is intended.

The Panama Canal Authority has had problems with the canal expansion and may have more. It took a lowball bid from a consortium that includes a construction company owned for the then administrator’s family and is facing major money disputes that are in litigation or arbitration with that consortium. The authority is planning to expand into ports, oil pipeline and fossil fuel power plant businesses and some of the objections suggest conflicts of interest. A board packed with people from industries that have pecuniary interests in the canal and with old-school politicians does not escape critical mention. But polls indicate that most Panamanians give the ACP the benefit of the doubt.

Will that benefit of the doubt survive if the ACP board includes one of Martinelli’s insiders, an executive in an industry that would be favored if the ACP’s controversial plans to expand into other businesses proceed, about whom there is probable cause to investigate whether he’s a big-time crook but has gamed the system to block any investigation and to remain on the board?

Corcione may not get away with his legal ploy, but Bernal thinks that it will at least delay the proceedings against him. Other legal scholars have also opined in statements to other media that what Corcione is trying to do is legally flawed.

Bernal suggests a quicker way than endless litigation for the ACO to free itself from this Gordian Knot. “Corcione’s colleagues should vote to remove him from the board.” Can they do that? One might imply it from the powers enumerated in the Constitution, but unlike the power to remove the adminstrator it’s not something that’s explicitly granted. But the ACP board does have the power to set regulations in order to improve the authority’s functions and generally exercise all canal-related functions under the laws of Panama. So wouldn’t that give them to power to remove Corcione?

Think about it. If his colleagues kicked him out, Corcione might scream and yell and sue. To quickly set aside the action he’s have to file an ammparo de garantias with the Supreme Court, which would have to hold a summary hearing to decide if his case has enough merit to stay any action against him. But then he’d be rolling the dice with magistrates who are surely embarrassed by a corrupt scheme involving their institution, when he is alleged to have been a central player in that scheme. It would look terrible and could provoke a constitutional crisis if they ruled in favor of Corcione.

Other balls may be played in other courts. Attorney General Kenia Porcell could just order her prosecutors to proceed against Corcione as if he were a two-bit gangster from the slums, sending the police out to arrest him and bring him in for an indagatoria, at the end of which he would be ordered jailed pending trial as a scofflaw and flight risk charged with a serious crime.

The problem remains, for now. The Panama Canal Authority is under a cloud, with what appears to be a notorious scandal in its midst. The aura of patriotic pride in a canal taken over from the Americans and apparently well run and moving in a new direction may not shine so well through that sort of a cloud.


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The Panama News blog links, August 6, 2015



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From a lookout at the foot of the foothills, on the outer edge of the inner boonies….

The Panama News blog links, August 6, 2015

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Bendib, Which came first?


Hillary or Bernie?

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