NEW INCORPORATIONS DECLINE IN PANAMA

Statistics released in the Republic of Panama show that there has been a decline in the number of new incorporations, ever since the Panama Papers offshore scandal broke in global media. Though Panama's civic boosters have tried to put a spin on this news, by claiming that it is actually due to declining economic factors in Latin America, clearly the effect of the disclosures has been felt. News articles, some clearly planted to improperly suggest that the government is rushing to cooperate with foreign jurisdictions, do not have a true basis in fact, but indicate a serious effort at damage control by the present leadership.

The annual fees government collects on active and existing corporations are estimated to be as high as $90m, and any diminution in new company formation, which offsets the losses represented by defunct corporations, will have a major effect on the national budget of Panama, which has suffered greatly from the effects of massive corruption by the former Martinelli government. The Varela administration has a cash crisis on its hands, but an extradition order directed at its ex-president, available since December, has still not been issued, confirming that reform efforts have been ineffective in Panama City.

Reports that a number of Panama's banks have declined to accept new corporations as bank clients indicate that the Panama Papers scandal is having an effect, but whether this will become a widespread practice is not known. There have been no moves, in the National Assembly, to revoke the existing Bearer Share laws, which effectively obstruct transparency in both Beneficial Ownership, and Source of Funds. Unless there is true reform, of corporation law, Panama will remain opaque.