Lawsuits by private companies, a threat to State coffers

Publicado 2016/05/11 07:30:00

Lawsuits faced by Panamanian State for breach of contract add up to $100m and growing. Administration Attorney Rigoberto Gonzalez Montenegro has warned that lawsuits add up to “substantial amount of money”.

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The lawsuits that the Panamanian State would face were all private companies affected by paralyzed public work projects to lodge a complaint, could add up to a significant percentage of total investment budget. The administration Attorney would be responsible for dealing with any lawsuit filed by any private company involved in any of the major projects launched by the previous administration, whose cumulative value adds up to $1.5bn. Administration Atty. Rigoberto Gonzalez Montenegro has warned that lawsuits could add up to “substantial amount of money” for the state to disburse. Mr. Montenegro revealed that at present lawsuits against the state add up to approximately $100m. 
 
Nevertheless, his assertion that the state would not necessarily have to pay up, does not seem borne out by reality: in the past few years, the state has only been able to reject payments amounting to only $40m. 
 
Risks abound 
 
More than one official serving in the current administration has admitted that the state faces significant risks of having to disburse substantial amounts of money as a result of lawsuits it currently '
Martinelli challenges President Varela to play his part
 
Former President Ricardo Martinelli yesterday publicly asked that the National Assembly enact effective supervision of the current administration in relation to the fulfilment of their electoral promises. 
 
In the twitter post, Mr. Martinelli argued that “it is in the interests of Panamanian democracy that, as of the 1st of July, the opposition control the chamber, in order to act as a counterweight to the 
government.” The former president's tweet comes in response to the current administration focus on public housing at the expense of other badly needed investments. While the government maintains 25 mega public work projects paralyzed, President Varela invests his time ordering the construction of a mere 40 housing units in Calidonia, a poor neighbourhood in central Panama City.
faces. Economics and Finance Minister Dulcidio De La Guardia aired his concerns about potential payments exceeding $30m that the state has to face.
 
Panama America contacted the relevant prosecutor office within the Atty. General’s office in order to find out the exact number of lawsuits currently faced by the state. However, in obtained no answer by the time this article went to press. 
 

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The multiple lawsuits call into question the legal basis upon which the Atty. General and the government have taken decisions to paralyze works of multiple mega projects due to alleged contractual irregularities. Multiple sources have gone as far as to criticize Federico Humbert, the comptroller general, for acting in connivance with the government again officials from the previous administration.
 
Former economics and finance minister Frank De Lima has publicly denounced the fact that so far the comptroller general’s office has been unable to produce any proof of irregularities in relation to public work projects launched by the previous administration. Mr. De Lima went on to highlight how "private contractors are obliged to put their operations on standby whenever public work projects are temporarily suspended. This process generates cost overruns”, he explained. He went on to add that “if it boils down to a government’s decision, then it is the government that has to pay up for the additional costs generated by the suspension of works.”
 
The former minister highlighted example of the medical city complex, the projects that has been paralyzed for a year and a half, arguing that the National Health Service (CSS) will have to pay for the monthly costs this has generated. Mr. De Lima pointed out how the director of the CSS, Estivenson Giron, submitted an audit report to the comptroller general’s office well over a year ago: to date, there have been no formal complaints of alleged contractual regularities. The same applies to disbursements made by the national assistance program (PAN): in spite of multiple accusations of irregularities, no case has gone to trial.
 
Former security minister Jose Raul Mulino echoed Mr. de Lima’s remarks, criticizing how the media show of supposedly regularities goes on without any alleged wrongdoing been substantiated in a 
court of law. “It is not acceptable that public funds employed in multimillion public work projects should be wasted this way. We must put an end to this”, he declared. While unfinished public works are left to rot, many of the poorer provinces in the country suffer from lack of basic services such as healthcare, education and drinking water.    
 
According to Fernando Cebamanos, representative of the FAD party, the government has relinquished not only public work projects, but also the provision of basic public services. “The problems are getting worse by the day: decent jobs are more and more difficult to find, and in the meantime the government keeps countless projects paralyzed, which could otherwise produce meaningful employment”, he lamented.
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