Editorial

With this Blog I would like to make available to all those interested, family, friends, colleagues, and both adversaries and sympathizers of my thesis, the product of many years of research, interviews, articles, references and collaborations that focus upon Panama as an international center for business and financial services.  Here I portray Panama as a young democracy with a dynamic economy, which is competing with the world’s major financial and business centers for the same resources.  I feel the need to refute some of the myths and fallacies that weigh upon my country, sustaining my criteria with facts and references.  I expose the United States of America´s (USA) double standards and its unfair competition.  I strongly criticize the role of the OECD as a protector of the financial interests of its members, thus lacking the status of a truly international organization.  But more than anything else, the driving force behind this effort has been my pride as a Panamanian which has led me to devote the better part of my life supporting the development of this great young nation.

My quest began in 1996 as Ambassador to Washington, DC, facing the attacks from the American Government and political sectors upon the mainstream of our economy.  This compelled me to study the merits and failures of our system, and also to delve into the policies of the USA.  In my book “Memoirs of an Embassy” I narrate how with the decisive help of the  Colon Free Zone Users’ Association, the Banking Association of Panama, the National Bar Association, and others, we embarked in a crusade to educate American officials about our economic strengths, Free Zone, international financial system and services.  As a result of these efforts, high level representatives from FinCEN (Financial Crime Enforcement Network), Department of Justice, DEA, FBI, and others, ended up praising our country’s active cooperation and commitment in the control of drug trafficking and money laundering activities.

Panama’s economy is thriving.  It has  a well-regulated financial system that is validated by the International Monetary Fund (IMF), which unlike the OECD is a true international organization.  Panama complies with the standards of the WTO and all other international organizations.  Furthermore, Panama’s investment risk ratings is supported by  Fitch, Moody’s, and Standard & Poor’s.  My blog will provide access to these and other references, studies, and links which illustrate the advantages and legitimacy of our international financial and services system.  You will find information regarding Panama´s legislation, tax regime and corporations.  I also expose the OECD’s double standard and sustain that none of its member countries has a better information system regarding corporations.  In particular, I demonstrate the true reason why the USA and several of its States, including Delaware, oppose improvements regarding LLC information; it would affect one of their main sources of revenue.

Furthermore, I discredit the myth of the bearer shares, pointing out that, more than 50% of the 31 OECD member countries, have bearer shares incorporated in their laws.  The USA is not one of these, because they do not need them; they have their LLCs (Limited Liability Companies) which in effect render their owners invisible.  The best analysis of the difficulties in identifying beneficiary owners in the USA jurisdiction are published in the studies made by the US Congress itself, in the Government Accountability Office (GAO) report, and in the hearings of Senator Carl Levin by the Department of Justice, of Customs, and the FinCEN.

The reality is that in Panama, only attorneys may act as Resident Agents and they are obligated not only to know their customers, but also to register each corporation in the Public Registry recording the names and addresses of the Agent, Directors, and dignitaries.  This Registry is online and open to any interested parties.  The US Senate hearings, clearly address that the problem of identifying the holders will not be solved by eliminating the bearer shares.  This can be established either by the Resident Agent, as in Panama, or in the State registries as proposed by Senator Levin.

In Panama regulatory, supervisory and investigative entities such as the Office of the National Attorney General, the Ministry of Government and Justice, and the Banking Superintendency,  have authority to identify any misuse of legal vehicles.  Notable examples are cases such as David Murcia, Vladimiro Montesinos, or the former presidents of Costa Rica, Chile, and Nicaragua.  All them were identified as ultimate beneficiaries, precisely because they used Panamanian corporations and were subjected to a legitimate international judiciary proceeding.

In ironic contrast, one of the principal members of the OECD, the USA, in an effort to attract foreign capital, provides clear tax advantages to “foreign” investors requiering minimal documentation to identify LLC customers, thus failing to comply with the group’s standards.  Clearly, it competes with us for the same international financial resources and businesses, thus the direct attacks upon Panama.  I include an interesting video link to Dan Mitchell´s Tax Haven Speech on Capitol Hill; Dan is a reputable tax expert, member of the CATO Institute, and publishes regularly on the WSJ and NYT.    My Blog provides extensive historical and relevant information regarding these issues.  I invite you to navigate through it and welcome your comments and contributions.