Wednesday, February 11, 2015


Foreign investors, lured to the Republic of Panama by its tax-free status for offshore corporations, are finding it impossible to extricate themselves, and their wealth, once they have established themselves there. Some of the issues they face include:

(1) Any legal issues that require civil litigation are generally impossible to resolve through the court system, notorious for its corruption and delays, which extends up to and includes the highest court, the Supreme Court of Justice, where payments have made a number of the justices very rich men. Court reform, though promised by the new reform government, has not yet begun.

(2) Bearer share fraud, where investors unwittingly give up control of their Panamanian corporation, and thereby their accounts and tangible assets, to trusted local partners and their confederates, runs rampant. Panamanian attorneys continue to oppose the termination of the law which authorizes the issuance of bearer shares, as corporate formation is an extremely lucrative segment of their business.

(3) Should a foreign national be charged with a serious crime, all his assets are routinely seized. If he is acquitted at trial, the government agencies that seized his assets fail to return his property to him, and there is no effective avenue for relief. In a celebrated case, one investor lost $300m that was seized, notwithstanding that he was found innocent of all charges.

(4) A well-entrenched organized crime group, of Middle Eastern extraction, predominantly Syrian, dominates ownership of the banking industry, and has members placed in most government agencies. Its power and reach can threaten your own business there, should it be deemed to compete with OC-dominated commercial operations. It has been known to use the power of government agencies against foreign-owned companies working in Panama.

I could go on with more examples, but these should be sufficient to convince you that Country Risk for Panama is at one of the highest levels you can assign; add to the above the current political chaos, driven by a massive governmental investigation that has accused several former government ministers, and the ex-president, of  corruption, abuse of power, and mismanagement, and you must conclude that the country must be red-lined for investments, and existing investments should be extracted forthwith, even though such an act may be costly.

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