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Panama Tells Sarkozy, French Bank to Stuff It
History not only repeats itself, it sometimes stutters. Panama and France are old acquaintances.
In 1876, a French company, La Société internationale du Canal interocéanique, tried to dig a canal through Panama, then a province of Colombia. The famous Ferdinand de Lesseps, who headed Suez Canal construction, was the figurehead. His reputation as the man who built the Suez persuaded speculators and thousands of French citizens to invest in a failed scheme that lost US$400 million, an amount that would exceed a billion dollars today.
The collapse of the company was a major scandal in France, and the role of two Jewish speculators in the affair enabled notorious French anti-Semites to exploit the matter. 104 French legislators were involved in the corruption.
Now 135 years later attacks on the Republic of Panama by French President Nicolas Sarkozy and French Finance Minister Valerie Pecresse has cost a major French bank a $300 million loss of business – this at a time several French backs are in trouble with the worthless sovereign debts of Greece, Italy and Spain.
No doubt the wild charges against Panama made by French President himself at the recent G-20 meeting also contributed to the loan cancellation.
DeLima’s Dilemma
My old pal, Panama’s Minister of Economy and Finance, Frank De Lima, ordered the killing of the loan agreement with the Paris-based Compagnie Francaise D’Assurance (Coface). No doubt he had the approval of Panama’s president, Ricardo Martinelli, (below) who has personally protested face-to-face to Sarkozy about the latter’s intemperate anti-Panama statements.
The Panamanian government said dumping the multimillion funding arrangement for the new Panama City metro line was in retaliation for the latest comments made by the French Finance Minister who called Panama a “tax haven” and “uncooperative. They’ll get the money elsewhere just as many countries are willing to investing in economically booming Panama.
Incredibly, these unwarranted French charges came just as Panama and France signed a double taxation treaty, one of 12 Panama has signed with other countries, including the United States.
The French Finance Minister had issued a formal apology but still insisted Panama was “non-cooperative” in tax matters despite its placement on the Organization for Economic Cooperation and Development’s (OECD) “white list.” That is supposed to be proof that Panama has “substantially implemented the internationally-agreed standard on tax information exchange.”
Anti-Panama Attacks Will Continue
Back in June 2009 I warned: “There is no doubt that the tax hungry socialist governments including Mr. Obama’s crowd, along with their puppets at the OECD, will continue to try to destroy Panama’s financial privacy laws. If Switzerland can be made a major OECD target, no country can be considered safe.”
No matter what Panama does to appease the OECD and the tax collectors of its leftist sponsors it will never be enough.
Even now the OECD is preparing its next phase of attacks on Panama recently complaining about “a number of shortcomings” alleged in sharing tax data.
An OECD “Phase One” review of Panama highlighted what it called “significant problems” in these areas:
1) availability of corporate ownership information especially joint stock corporations. Panama law allows true financial privacy in many respects. Its approximately 350,000 corporations (exceeded only by Hong Kong with 400,000) are mostly owned by offshore persons. Beneficial (actual) ownership is a private matter unless a court orders otherwise. The law does require full beneficial ownership to be revealed to the corporation’s local attorney/agent and that information is open to the government but not the public.
2) availability of accounting information on entities (corporations, trusts, foundation) that do not receive Panama source income. Under Panama’s sensible territorial tax system, entities that earn income offshore do not file or pay Panama taxes. Since they do no report to the government there is no information about them to share.
3) uncertainty regarding Panamanian authorities’ powers to obtain information for exchange purposes; See 1 and 2 above. But Panama has signed 12 double taxation treaties, the OECD required number, including with France and the United States. TIEA negotiations are now underway with the United Kingdom. All of these treaties allow Panama to obtain and share tax information, consistent with Panama law which does not allow “fishing expeditions” by foreign governments and requires first a probable cause showing of tax evasion or tax fraud.
4) availability of sanctions for failure to keep or produce information for exchange purposes; Again, see 1 and 2 above and 3 as well. Panama cannot “keep or produce” information its laws do not require.
5) Panama’s reluctance to enter into TIEAs rather than double tax agreements as a way to exchange information. Double tax agreements do allow tax information exchange, but not the automatic tax information exchanges the OECD and the world’s leftist tax collectors demand.
Re-read those five points, any and all of which would require such fundamental changes to satisfy the OECD that they would prompt a major internal political and financial revolt in Panama.
Enough Already
France, Sarkosy, the OECD et al are total hypocrites when it comes to Panama. Each time Panama agrees to be more transparent, this crowd of deficit spenders comes up with a new requirement or launches a new barrage of verbal garbage.
In my view Panama remains as one of the best offshore financial centers in the world, a role that dates back to the 1920s.
The Martinelli government is trying to play a failing diplomatic game to delay and dilute the unreasonable demands of this bunch of foreign leftist tax pirates. But at some point the current leaders of the proud Republic of Panama, like those before them who clawed back their impressive Panama Canal from the mighty Colossus of the North, Uncle Sam, will have to tell the OECD to go to Hell.
I will be back in Panama in a few months for a fresh look but meanwhile, that’s the way that it looks from here.
Other Posts from the Author
- Are You Among the 23% Entitled to a Second Passport? - May 14th, 2012
- The Real Problem With the French Elections - May 4th, 2012
- The Life of a “Sovereign Individual” - April 24th, 2012
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Bob, I hope you live a long, long time longer in this world because your writings just keep getting better and better. We need to keep hearing from people like you in this current economic climate so we can keep getting the truth. Thanks for telling us like it is!