Identifier
Created
Classification
Origin
07PANAMA1112
2007-07-03 13:53:00
UNCLASSIFIED
Embassy Panama
Cable title:
PANAMA: 2007 REPORT ON INVESTMENT DISPUTES AND
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHZP #1112/01 1841353 ZNR UUUUU ZZH R 031353Z JUL 07 FM AMEMBASSY PANAMA TO RUEHC/SECSTATE WASHDC 0731 INFO RULSDMK/DEPT OF TRANSPORTATION WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS PANAMA 001112
SIPDIS
SIPDIS
FOR STATE WHA/CEN - TELLO
FOR STATE EB/IFD/OIA - GOETHERT
FOR STATE L/CID - MCDONALD
E.O. 12958: N/A
TAGS: CASC ECON EFIN ENIV KIDE PGOV PM OPIC
SUBJECT: PANAMA: 2007 REPORT ON INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS
REF: STATE 55422
UNCLAS PANAMA 001112
SIPDIS
SIPDIS
FOR STATE WHA/CEN - TELLO
FOR STATE EB/IFD/OIA - GOETHERT
FOR STATE L/CID - MCDONALD
E.O. 12958: N/A
TAGS: CASC ECON EFIN ENIV KIDE PGOV PM OPIC
SUBJECT: PANAMA: 2007 REPORT ON INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS
REF: STATE 55422
1. Below is Embassy Panama's input for the Congressionally
mandated annual report on investment disputes as contemplated
in Section 527 of the FY 94-95 Foreign Relations
Authorizations Act. Test is keyed to reftel.
The United States is aware of one claim of United States
citizens that may be outstanding against the Government of
Panama. Two other cases previously reported, discussed
below, have been removed from Post's list of active cases.
There are no new cases since Embassy Panama's filing of its
2006 report.
2. Last update: 27 April 2006
a. Claimant A
b. 1999 and 2000
c. Following the 1998 energy market privatization, Claimant
A, a majority-owner of an electricity generator, assumed
existing contracts between government power generation
entities and private distributors. When energy spot prices
fell below the contract prices, the Energy Regulatory
Commission in December 1999 unilaterally altered the
contracts between the generation and the distribution
companies. Claimant A estimated damages of $9 million.
Claimant A has 16 court cases (filed in 2000 and completed in
2003) awaiting rulings by the Panamanian Supreme Court.
POST ACTION: At Post's request, the Ministry of Industry and
Commerce (MICI) agreed in principle to reinstitute a
bilateral investment committee to provide a general forum for
resolution of pending disputes before the Panamanian
judiciary. In Claimant A's case, Post never received the
requisite advocacy questionnaire to proceed with further
advocacy. Moreover, as Claimant A has not requested any
further advocacy and given that it sold its interest in the
electricity generator to a French energy concern in February
2007, Post wil remove Claimant A from its list of active
cases.
3. Last Update: 14 June 2007
a. Claimant B
b. 2005
c. In 1998, Claimant B invested $11 million in a Panamanian
energy company's equity and arranged for the company to
receive a $ 17 million bank bridge loan convertible into
bonds. Claimant B alleges that both the equity and debt
investments are subject to equal value tax credits under
Panamanian Law No. 28 of 1995. In March 2005, the
Vice-Minister of Finance notified Claimant B that the sale of
any of the original $11 million in stock was not subject to
any tax benefits. Claimant B has taken the matter to
arbitration under the U.S.-Panama Bilateral Investment
Treaty. Claimant B is also in litigation with various
Panamanian banks regarding payment of its bridge loan.
Claimant B has been seeking assistance from various USG
agencies in this matter, and has requested Post to intercede
on its behalf and arrange meeting with high-level GOP
Ministers.
POST ACTION: Post has urged the GOP to resolve the tax
credit dispute promptly and fairly, but given that the matter
is in arbitration, plans no further action. Post remains in
contact with Claimant B and is following the matter.
4. Last update: 3 May 2006
a. Claimant C
b. 1999
c. Claimant C owns the only private property in the former
Canal Zone. The property was purchased in 1921. The GOP
claimed the property became Panamanian federal property as
provided for by the Panama Canal Treaty of 1977. Claimant C
asserted that Senator Robert Dole entered a letter into the
Congressional record recognizing Claimant C's ownership of
the property.
POST ACTION: On September 15, 2006, Post informed Claimant
C that tenants and owners of property in the former Canal
were permitted to retain use of their property subject to
payment of a reasonable price (in the case of individuals or
businesses) or minimal (in case of non-profit organizations)
to the GOP. Since the GOP had no record of Claimant B
availing itself of this right during the applicable period
(until 1999),the GOP is entitled to possession of the
property without payment. Post will remove Claimant C from
its list of active cases.
List of Claimants:
Claimant A: Ashmore Energy International (former majority
shareholder of Bahia Las Minas)
Claimant B: Corporacion Panamena de Energia (70% interest
held by U.S. controlled companies, Unisource Energy
Corporation and Electric Machinery Enterprises Inc.)
Claimant C: Sojourners Lodge of the Ancient and Free Masons
Eaton
SIPDIS
SIPDIS
FOR STATE WHA/CEN - TELLO
FOR STATE EB/IFD/OIA - GOETHERT
FOR STATE L/CID - MCDONALD
E.O. 12958: N/A
TAGS: CASC ECON EFIN ENIV KIDE PGOV PM OPIC
SUBJECT: PANAMA: 2007 REPORT ON INVESTMENT DISPUTES AND
EXPROPRIATION CLAIMS
REF: STATE 55422
1. Below is Embassy Panama's input for the Congressionally
mandated annual report on investment disputes as contemplated
in Section 527 of the FY 94-95 Foreign Relations
Authorizations Act. Test is keyed to reftel.
The United States is aware of one claim of United States
citizens that may be outstanding against the Government of
Panama. Two other cases previously reported, discussed
below, have been removed from Post's list of active cases.
There are no new cases since Embassy Panama's filing of its
2006 report.
2. Last update: 27 April 2006
a. Claimant A
b. 1999 and 2000
c. Following the 1998 energy market privatization, Claimant
A, a majority-owner of an electricity generator, assumed
existing contracts between government power generation
entities and private distributors. When energy spot prices
fell below the contract prices, the Energy Regulatory
Commission in December 1999 unilaterally altered the
contracts between the generation and the distribution
companies. Claimant A estimated damages of $9 million.
Claimant A has 16 court cases (filed in 2000 and completed in
2003) awaiting rulings by the Panamanian Supreme Court.
POST ACTION: At Post's request, the Ministry of Industry and
Commerce (MICI) agreed in principle to reinstitute a
bilateral investment committee to provide a general forum for
resolution of pending disputes before the Panamanian
judiciary. In Claimant A's case, Post never received the
requisite advocacy questionnaire to proceed with further
advocacy. Moreover, as Claimant A has not requested any
further advocacy and given that it sold its interest in the
electricity generator to a French energy concern in February
2007, Post wil remove Claimant A from its list of active
cases.
3. Last Update: 14 June 2007
a. Claimant B
b. 2005
c. In 1998, Claimant B invested $11 million in a Panamanian
energy company's equity and arranged for the company to
receive a $ 17 million bank bridge loan convertible into
bonds. Claimant B alleges that both the equity and debt
investments are subject to equal value tax credits under
Panamanian Law No. 28 of 1995. In March 2005, the
Vice-Minister of Finance notified Claimant B that the sale of
any of the original $11 million in stock was not subject to
any tax benefits. Claimant B has taken the matter to
arbitration under the U.S.-Panama Bilateral Investment
Treaty. Claimant B is also in litigation with various
Panamanian banks regarding payment of its bridge loan.
Claimant B has been seeking assistance from various USG
agencies in this matter, and has requested Post to intercede
on its behalf and arrange meeting with high-level GOP
Ministers.
POST ACTION: Post has urged the GOP to resolve the tax
credit dispute promptly and fairly, but given that the matter
is in arbitration, plans no further action. Post remains in
contact with Claimant B and is following the matter.
4. Last update: 3 May 2006
a. Claimant C
b. 1999
c. Claimant C owns the only private property in the former
Canal Zone. The property was purchased in 1921. The GOP
claimed the property became Panamanian federal property as
provided for by the Panama Canal Treaty of 1977. Claimant C
asserted that Senator Robert Dole entered a letter into the
Congressional record recognizing Claimant C's ownership of
the property.
POST ACTION: On September 15, 2006, Post informed Claimant
C that tenants and owners of property in the former Canal
were permitted to retain use of their property subject to
payment of a reasonable price (in the case of individuals or
businesses) or minimal (in case of non-profit organizations)
to the GOP. Since the GOP had no record of Claimant B
availing itself of this right during the applicable period
(until 1999),the GOP is entitled to possession of the
property without payment. Post will remove Claimant C from
its list of active cases.
List of Claimants:
Claimant A: Ashmore Energy International (former majority
shareholder of Bahia Las Minas)
Claimant B: Corporacion Panamena de Energia (70% interest
held by U.S. controlled companies, Unisource Energy
Corporation and Electric Machinery Enterprises Inc.)
Claimant C: Sojourners Lodge of the Ancient and Free Masons
Eaton