Guatemala Banking Versus Panama Banking

Introduction – This is going to illustrate some of the finer legal and asset protection points about banking n both jurisdictions, Guatemala and Panama. Many of you worked hard to get what you have and do not have the time to go back and earn it again, so please pay careful attention.

Anonymous Corporations – Both countries have them. They are called Societad Anonima, abbreviated as S.A. at the end of the corporate name. The names of the owners do not appear in any public registry or database. When sending or receiving wires the bank account name is the name of the anonymous corporation and no snooping bank or government can look up the names of the owners.

Lawyer Acting as Signatory – This is not allowed in Panama but is allowed in Guatemala. This is often referred to as a signatory service. When this tactic is employed you are faced with trusting the law firm but have the security of the bank not knowing who you are so no information about you could ever be turned over. It has pluses and minuses. Panama has something called trust companies, which do not offer any attorney client privilege and are not recommended in that there is no serious protection. When a Panama bank sees a trust company they will ask who their client is anyway.

Tax Treaties – Both Panama and Guatemala have none, but Panama is in MLAT’s (Mutual legal Assistance Treaties), which allows for the sharing of information regarding taxes if the offense is considered criminal by the country requesting the information. Panama used to not consider tax offenses to be criminal but they changed this in recent years thus opening the door for the requesting of tax information offenses through the MLAT treaties. Most of the information requests for tax would be flavored with additional offenses such as fraud, conspiracy, and money laundering to allow the MLAT to be used. Once again Guatemala has no MLAT.

NEW Update on Tax Treaties for Panama – Panama has publicly announced its intentions to sign OECD tax treaties with numerous nations. Do not take our word for it, read it here:

http://www.bloomberg.com/apps/news?pid=20601086&sid=aK5UdfodrRXI

Sharing of Information for Tax Offenses – Panama will share through the MLAT as described above. Guatemala will not share information for tax offenses even if it is construed to be criminal tax matter. No tax information sharing, period with Guatemala.

MLAT – Guatemala has no MLAT treaties, Panama does. The USA has 19 MLAT’s. Here is a list of them:

Argentina, Bahamas, Canada, Hungary, Italy, Jamaica, Korea, Mexico, Morocco, Netherlands, Panama, Philippines, Spain, Switzerland, Thailand, Turkey, United Kingdom (Cayman Islands), United Kingdom, Uruguay.

To check our source go here:

http://library.findlaw.com/1997/Dec/1/127851.html

Bear in mind information sharing can come about as a result of a Tax Information Exchange Agreement as well.

Civil Protection – In Panama it is not easy to have a foreigner come and take your funds away, but not that hard either. They need to hire local counsel and file a case in the Panama Courts. Prestigious law firms in Panama tend to do pretty good. Here is the bad news. If the people suing you do not know the name of your corporation or foundation they can still attack your assets if you are the signatory of the bank account. How? Panama allows the courts to send a fax to every bank in Panama with a sequestro order asking them to hold your funds. All they need is to have a claim against you by name. A sequestro means your funds are segregated, sort of like sequestering a jury, which means to keep the jury separate. The funds are set aside. A lien is a similar term. The plaintiff files his case in Panama. They present whatever allegations they want. If the judge accepts it, they post a bond, usually 10%. Then all your funds get tied up until the trial, think 3-5 years. This can all happen without you being present or even knowing any of this is taking place until you find out your funds are frozen in the bank. The damages that the Plaintiff claims to have incurred do not have to line up with the amount of money frozen. The person filing against you does not even have to physically come to Panama to file.

In Guatemala there is no such thing as faxing sequestro orders to all the banks. One would have to have the specifics on the bank account to proceed like name of bank, name of bank account and account number. This is something that is extremely rare and just about unheard of in Guatemala. The courts do not like to let civil matters from other countries work through their court system. Corporate and foundation assets are considered to belong to the corporation or foundation not the signatory in Guatemala. This does not go on in Guatemala.

Peter Gordon vs. HSBC – We are going to discuss a recent case in Panama. There was a guy named Peter Gordon. He lives in Panama. He posted on a small yahoo group that HSBC has bad customer service. He signed on a foundation bank account, which had $5,000,000 in it. HSBC sequestered his foundation bank account. In my opinion I do not see how HSBC could show $5,000,000 worth of damages from posting in a small Yahoo group. So the amount sequestered can be out of proportion to the actual damages. Peter went to the Supreme Court to get the sequestro released. The Supreme Court upheld the sequestro. So right here we can see the punitive nature of a sequestro.

The wealthy can use it to bring a less influential party to their knees. It is also alleged by Peter that the police came to his home with a court order and removed his home contents as well. So it appears that sequestering household contents is also possible in Panama. So now you have no household contents and no access to your funds, all without a day in court just because the other party filed on you and posted a bond. This was a foundation bank account. Foundations in Panama have no owner. It is a good question how the Supreme Court justified this sequestro since the funds could not have belonged to the signatory on the account since it was a foundation with no owners. Apparently this decision has far reaching conclusions regarding the security of a Panama Private Interest Foundation. For those of you who wish to see documentation on this do a Google search for Peter Gordon HSBC. There are 2-3 listings of reports in Google.

For further skeptics here is a PDF download of the Supreme Court decision upholding the sequestro of Peter Gordon’s funds.

It is in Spanish since legal processes in Panama are conducted in Spanish. You can run it through Babel to get it into computer English. If I did the translation skeptics would accuse me of posting an inaccurate translation. This is a big black eye for Panama and this article is not going to be well received.

Guatemala never ever had any similar case like this. To get a sequestro in Guatemala you would have to show a violation of law that took place in Guatemala, not something that happened abroad. You would need documentation like a contract that was breached. The sequestered amount cannot exceed the documented damages. If there were a $7000 claim against you for an unpaid medical bill, they would not be able to sequestro a $50,000 car or a bank account with $25,000 in it. They could sequestro $7,000 from the bank account. In Panama there does not seem to be any controls over the amount frozen in relation to the real damages claimed by the plaintiff. A foreigner getting a sequestro for events that transpired out of Guatemala where just a Guatemala bank account and corporation was used is not going to happen.

Civil Cases Converted into Criminal Cases – In Panama one can file criminal and civil case together. In fact one in a foreign country can retain a Panama lawyer to file a criminal and/or civil case on his behalf without him ever having to come to Panama. This creates an effective immunity from filing a false police report, perjury, obstruction of justice etc. In my opinion this sort of practice encourages lying since there is no downside for the liar. People get extradited out of Panama all the time but do you ever read in the papers that Panama is spending money to extradite people back to Panama. They do it for big political figures and major criminals. Extradition is expensive and they do not have the budget to hire local lawyers and fight in the foreign courts unless it is a big case. However one could file a criminal case on someone signing on a Panama bank account and then when the person came to Panama they could be arrested and held. The allegations could be made by a foreigner who never sets foot in Panama. It gets better. Panama has something called preventive detention. If they arrest a person the person can be held in a special jail pending the trial, which can be several years. This just might coerce an unjust settlement, you think?

The Richard Lehman Case - Here we have a Florida attorney who assisted a affluent American expatriate client married to a member of an influential Panama family in setting up a Panama Foundation which he funded with $50,000,000 to prevent malnutrition in poor children in Panama. The benefactor was named William Lucom. The influential wife apparently wanting the money has launched a simply awful legal and extra legal campaign against this lawyer for trying to get the money into the bellies of the poor children of Panama. Here is a cut and paste summary of the story which came from this page of a prominent Panama newspaper English version:

Richard Lehman sues Panama

Also if you would like to read the latest compliant filed 03/09 with the Organization for American States it is found here in English:

http://www.lucomchildren.com/humanrights/petition_humanRightsViolation.html

This matter should have been a big embarrassment for Panama but it is still ongoing and has not been shut down, not unlike the Peter Gordon vs. HSBC case. Why does Panama let such things go on unchecked?

Richard Lehman sues Panama

03-11-2009 | BUSINESS WIRE

The Lucom’s legacy would give the poor children of Panama $50 million

Panama Star BOCA RATON, FLORIDA. Richard Lehman, a Florida attorney who was falsely charged with murder and over a dozen other crimes in Panama for his efforts to defend a $50 million food aid donation, has filed a human rights lawsuit against the country with the Inter-American Commission on Human Rights (Organization of American States).

“Panama continues to foster an atmosphere of corruption in the legal system which has caused it to be in violation of several human rights treaties,” said Lehman, a tax attorney and executor of the estate of Wilson Lucom, an American expatriate who died in Panama in 2006. “Not only have my human rights been violated, but the largest private donation ever made in Panama’s history is now at risk of vanishing completely.”

Lehman has spent the last two and a half years – and over $2 million of his own money – defending Lucom’s legally sanctioned will in Panama, which gave a $50 million donation to prevent childhood malnutrition. Since 2006, this money has been blocked by an influential family (which produced two former presidents), and corrupt government actions.

As executor of the estate, Lehman has been the target of numerous illegal actions because he is the last remaining obstacle to the family’s claim on the entire Lucom fortune. These include:

Falsely arrested without charges on Feb. 6th and held under armed guard for 15 hours in an airport police detention center. (This arrest ignored the Panama Supreme Court’s weeks-old ruling that cleared Lehman of all charges in the case.)

Falsely charged with murder, extortion and 12 other crimes.

Five illegal arrest warrants issued against him.

Illegally listed on Interpol’s “Red Notice Alert” using expired legal documents issued from a private law firm.

Blocked from re-entering Panama to defend the case for over a year and a half.

A new national charity (Fundacion de Apoyo a Los Ninos Pobres de Panama) has been established to distribute Lucom’s donation – if it is released by the courts. The money is badly needed in Panama. According to UNICEF, it's one of two Central American countries to experience a rise in childhood malnutrition. One in five children are affected, and hundreds die each year. (end of article).

Aggravated Fraud in Panama – If a person, even outside of Panama hires a Panama law firm to file a police report for what is alleged to be a fraud in an amount over $100,000 you can have a warrant for your arrest issued without you appearing in any court or even knowing about it. Then lets say they did a sequestro on your bank account and stockbroker account. Ok you call the bank. They say court froze your funds. You go nuts jump on a plane to go to Panama and hire a lawyer. Whoops you forgot to hire an influential lawyer who has the ability to see if there is a criminal charge against you. Well it is perhaps better for the lawyer financially if this is overlooked and you get put in preventive detention. Now you get arrested at the Panama Airport and are in preventive detention for like maybe a few years. Will you get adequate medical care in detention? Your guess is as good as mine. Will you have access to special diets, medicines etc? Who knows? Could you post a bond and get released. Depends on who you and your lawyer are, who the opposing party and their lawyer is and other factors. Foreigners do not get released too often since it is a no brainer that they will never return. So if a client or customer of your files an aggravated fraud compliant in Panama where you bank this could happen and the complaining party does not even have to set foot in Panama to file the complaint. Possibly to get a conviction some years latter he would have to testify in court, but then again he could possibly arrange a legal work around in the system there but in any event you are in preventive detention. Do not think it is not possible for the police to get the bank to tell you that you have to come to the bank in person to clear a matter up and then you get arrested.

Fraudulent Conveyance Actions – A fraudulent conveyance is where a debtor removes assets from the reach of a creditor to deny the creditor the recovery of the debt. What is a valid debt varies from country to country. In the USA if the lawsuit has been filed, not won, they will consider fraudulent conveyances, which can be criminal in USA. In Panama fraudulent conveyance is not a crime. It does allow the creditor a three-year window to recover their money by filing a civil action in Panama. It appears that it is possible to file the fraudulent conveyance action without ever coming to Panama just using a lawyer. This of course can obstruct justice since perjury, committing a fraud on the court, etc is off the table for the person filing the complaint. A sequestro is also possible in a fraudulent conveyance civil case. If the country where the fraudulent conveyance took place was say the USA and they call the conveyance a crime then the case could be pressed with Panama under the MLAT as a criminal matter. This is because charges of fraud, conspiracy to commit fraud and money laundering would be added in to get around the dual criminality provisions of the Panama law since in Panama a fraudulent conveyance is not a criminal act.

Guatemala will not pursue foreign fraudulent conveyance matters. They lack authority and venue in the Guatemala courts unless the entire case transpired in Guatemala, like both parties did business in Guatemala. One party just banking in Guatemala does not constitute grounds for fraudulent conveyance actions brought by foreigners. In any event if the plaintiff did not appear the case would not hold water and get dismissed. When the plaintiff appeared he would be exposed to perjury and obstruction of justice if he was slinging a lot of lies and filing a fraudulent lawsuit with or without forged documents. If he filed such a case in Panama and did not have to appear in person, where is the plaintiff downside for lying or presenting forged documents? He may lose his 10% sequestro deposit after he jams up your money for some years to bring you to a settlement. No real downside for lying.

Police Search Warrants in Panama – The police in Panama do not need them to search anything or anyone. They changed their law in 2007. They can come into your business, home, your vehicle or search your person without a warrant. On the spot search powers without judicial review. Why does Panama think a police state with unbridled police powers is a good thing, I do not know? Anything found by the police is admissible. Does this mean they can go into a bank and examine bank records without any sort of search warrant? It appears so but we have no conclusive proof of this being the case or not being the case. Panama has no case law. It scares us for sure.

In Guatemala you and your property are not subject to warrant less police searches. Judges rarely ever issue search warrants and to do so they want evidence not hunches. If the police wish to search your vehicle you can tell them to wait until your lawyer gets there or you can refuse. They will say they will get a warrant. They will keep you a little while to bother you and then let you go once they realize you understand the law. If your lawyer shows up they will be nervous and conduct a superficial search and be very courteous. They will wonder who the heck they started up with and be afraid of court filings against them. Police coming into a business or home without a warrant to conduct a search is just about unheard of. Bank records are covered by bank secrecy with no contradictory laws to set the bank secrecy aside.

Offshore Derived Income Not Taxed – This is true for Panama and Guatemala.

Size and Quality of Banks – Guatemala has many banks much larger than the Panama banks. Panama has three or so large banks is all and all but one of them request waivers of bank secrecy to open an account. Guatemala is not considered an offshore tax haven, Panama is considered to be an offshore tax haven. This means Guatemala offers a much lower profile for banking.

New Change for Americans Using Panama Banks – We are starting to get reports that at least some of the largest Panama Banks will no longer open accounts for Americans. We are also getting reports that Americans with existing accounts are being asked to fill out statements concerning the nature of their business, source of their money etc even after the accounts have been open for years. The Swiss Banks started out like this and then eventually led to the betrayal of thousands of their banking clients. Be careful banking in any country that treats one class of persons different than others.

Bank Reference Letters - All Panama Banks require this. No bank reference letter necessary in Guatemala. Many banks do not issue bank reference letters. Their countries require these reference letters to be reported as suspicious transactions. If the bank issues the bank reference letter then they may have to file a suspicious transaction report. Not a good thing.

Apostile of Documents - Panama banks all require this. Guatemala banks do not. In some jurisdictions (California, New York, Alaska and other states come to mind). The apostile office wants to know what the apostile is for, such as bank account opening. In my humble opinion there is a serious risk that this is then filed with other agencies. Apostile is best avoided.

Utility Bills - Guatemala banks do not require any utility bills. We are getting reports from Panama that stockbrokers and banks are not only requiring utility bills but also wanting them to be notarized.

Bank Insurance – Neither country has bank insurance, which is the case for practically every offshore jurisdiction. Guatemala does conduct mergers and acquisitions of banks to prevent losses in the event of a bank failure. They do a good job of this too reaching into the government coffers to bail out banks in distress. Panama does nothing. Look at the closure of Stanford Bank in Panama. The bank has been closed for many months and the people have not been able to get any of their money out. The government has done nothing so far to alleviate the financial burden on those who retirement funds were caught up in this liquidation.

Currency Used – Guatemala has its own currency called the Quetzale. Panama uses the US dollar. Do you feel encouraged about the US dollar these days? Do you think the US dollar may crash soon? Do you think a dollarized country dependent on the US dollar may suffer greatly if the US dollar is no longer being used as a viable reserve currency, which is the wishes of China, Russia, India, Brazil and a number of other nations? These are questions you need to ask yourself. Do your research on Google.

Country Size – Guatemala has 14 million people. They have the largest economy in Central America at $33,000,000,000. Panama has 3.2 million people and their economy is about one –half the size of Guatemala. This is because of the Panama Canal and the duty free zone operated in Colon. Both these entities do little for the country as a whole. The canal employs 9000 people is all. Panama has no military, Guatemala does.

Foreign Relations – Panama is very close with the USA. The USA can take the canal back according to the treaty for matters of failing efficiency or security risks. Not good. The new US Embassy in Panama is suited to contain a military invading force. Thousands and thousands of troops could be housed there in this compound on top of a hill with easily closed roads and limited access. The US military police operates in Panama, generally in the jungle. The US Coast Guard stops and searches foreign vessels in sovereign Panama waters with permission from the Panama government. There is a disproportionate amount of federal law enforcement officers from the USA in Panama with diplomatic immunity. Probably far more than any other country in Latin America with possible exception of Columbia. Guatemala does not let any of the games that Panama plays with the USA take place inside of its borders. Guatemala and the USA have simply awful relations.

Panama Attitude Towards Foreigners - The Panama Government has passed a new law, Resolution 52 dated August 13, 2009 and published it. This law makes it a crime to rent out your apartment for less than one year. One would think this is unconstitutional, but hey this is Panama. So what about all the foreign investors who not only bought condos but also bought condo hotels with hotel type services planning on renting them out by the day, week etc? They get the short end of the stick. They cannot undo their purchase, the resale value will drop and they may not be able to afford their vacation home any longer. This protects the hotel industry. It also protects the police state in Panama because the police get the passports of everyone staying in a hotel but not those staying in a rented condo. This makes locating people harder for the police and any countries they cooperate with for surveillance, etc. The thousands of investors really took a hit here with this law and this did what to Panamas reputation as a good place for foreign investments?

Which Jurisdiction is Better for Asset Protection? – You decide. We rest our case.