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PANAMA - Cortizo Sends Down Constitutional Reform

Just over two weeks after assuming office, the new Partido Revolucionario Democrático (PRD) government led by President Laurentino Cortizo has indicated its intention of making good a key electoral promise – enacting constitutional reform. The move is widely considered central to efforts to strengthen Panama’s institutions, which have been discredited in recent years by corruption scandals – not least that involving Brazilian construction firm Odebrecht. Also indicative of Cortizo’s efforts to shore up credibility, he paid his first official visit abroad to the US with the declared aim of improving Panama’s image and attracting investment.

On 17 July President Cortizo announced he was sending to congress a draft of the reform which had been drawn up by the national concertation council for development (CCND) and includes over 40 articles. The final version submitted by the CCND, which comprises over 2,000 representatives from the business sector, trade unions, government, and political parties, was agreed on 10 June after months of meetings with the participation of 23 civil society sectors. Since then a congressional committee has announced the start of a process of organising public meetings throughout the country in order to allow the public a say in the new constitutional reforms as well.

Proposed changes include plans to establish a five-member constitutional court (TC) and to introduce a limit on the number of consecutive terms that legislators can serve (they are currently able to serve an indefinite number of terms). Under the CCND’s proposal, legislators will be limited to one additional consecutive term.

Among the other amendments, the proposal calls for any complaint presented against a legislator to be investigated by the attorney general’s office, rather than the supreme court (CSJ), and for any complaint against a CSJ magistrate to be investigated by the attorney general’s office (rather than the national assembly). These changes seek to address what critics have described as a de facto ‘non-aggression pact’ between the legislature and judiciary as currently only the national assembly may initiate corruption investigations against CSJ judges and vice versa.

Cortizo in the US

The focus of President Cortizo’s visit to the US, which took place from 20 to 23 July, was to shore up investment and provide reassurances following the decision announced last month by the Financial Action Task Force (FATF) of the Organisation for Economic Co-operation and Development (OECD) to include Panama once again on its ‘grey list’ of jurisdictions which require monitoring due to having strategic Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies.

Accordingly, Cortizo met Mike Corbat, the chief executive of Citibank and representatives from credit ratings agencies Fitch Ratings, Moody’s Investors Service, Standard & Poor’s and Capital Markets.

Ahead of his visit to the US, Cortizo already sought to address these transparency-related concerns, announcing plans to draft a proposal to reform the law of public contracts, to guarantee transparency and amend legislation on public-private associations to facilitate public works for development. He has also announced the establishment of a new unit to address “competitiveness” with regard to international services to remove Panama from any “grey lists”.

In one timely boost for the government, three days before the start of his visit the government issued new sovereign bonds worth some US$2bn for which it received US$11bn in offers – which Cortizo was quick to trumpet as a sign of international confidence in his new administration.

  • Varela accused

On 16 July lawyers Sidney Sitton Urela, and Miguel Antonio Bernal accused Cortizo’s predecessor Juan Carlos Varela (Partido Panameñista, 2014-2019) of five different crimes in relation to the corruption scandal involving Brazilian construction firm Odebrecht, including money laundering, organised crime, illicit association, corruption, and unjustified enrichment. The attorney general’s office has said it would investigate all allegations made. In December 2017 the then-opposition PRD had called for Varela to be investigated on the grounds that one of those named in relation to the scandal was one of his close allies, Jaime Lasso del Castillo, Panama’s former ambassador to South Korea, who reportedly donated US$700,000 to Varela’s vice-presidential campaign in 2009.