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Tuesday, May 21 2019 @ 10:32 PM UTC

Panamanian Supreme Court Nullifies 2003 ARI Resolution on Kobbe Beach (Playa Bonita)

Law & Lawyers By Rafael Pérez G. Raúl Bernal for La Prensa - The Third Room of the Panamanian Supreme Court recently decided to nullify a resolution issued by the now defunct Inter Oceanic Region Authority (ARI) which granted four parcels of land in Kobbe Beach in Arraiján, saying the resolution was illegal. The ARI resolution, issued in 2003, permitted a company called the Paradise Beach Corporation to build on these lands the Intercontinental Playa Bonita Resort & Spa, whose owner is Herman Bern. According to the Third Room of the Supreme Court, the ARI failed to comply with requirements established by law regarding the modification of public contracts; specifically they failed to publish the details of the bidding docket in a nationally circulated public newspaper. (more)

Editor's Comment: All hail the new commander of the anti-corruption movement in Panama - the Chief Justice of the Panamanian Supreme Court, Harley Mitchell. Damn, it sure is nice for a change to see some serious anti-corruption stuff coming out of the Justice System. Basically, it's been a long time coming. Ho-ya, baby.

What's Going On: Allow me to break this one down for you. The Panamanian government created the Autoridad de la Región Interoceánica (ARI) (Inter Oceanic Region Authority) to manage the turnover of all land, buildings, and property formerly owned by the government of the United States in the former Canal Zone. The US pulled out of Panama at 12:00 noon on 31 December 1999 in compliance with the Torrijos-Carter treaty. When they handed things over to the Panamanian government, they gave them to ARI. Imagine the salivating going on. These people were going to be eating at the largest buffet ever served up in the history of the Republic. Sound the dinner bell.

On Moscoso's Watch: At that time Mireya Moscoso was the President of Panama. Her entire administration was so incredibly fraught with corruption that Martin Torrijos won the election in 2004 largely based on an Anti Corruption platform. Officials from the Moscoso administration were so blatantly corrupt it became a national public embarrassment. Mireya Mosoco's political party actually changed their name in an attempt to erase her memory.

To Develop Kobbe Beach: One of the properties managed by ARI was Kobbe Beach, now known as the Intercontinental Playa Bonita Resort & Spa. Apparently there was a bidding process with several companies competing for the rights or a concession to develop that property. And, there are laws governing exactly how those public bids are supposed to be managed. In this case, apparently ARI changed the decision criteria without making the change publicly known, and then awarded the concession to Bern. The company that lost the bid sued and it took five years to make it through the system and for the Supreme Court to rule.

What The Court Decided: The nullified the ARI resolution granting the concession to the Bern group. In other words, legally speaking when the judges signed this document, the people staying at the hotel should have been asked to leave their rooms, immediately. Bern no longer has a concession to operate on that land. The government basically will have to decide if they want to do it again and hold another bidding process. As in, get out because the hotel is now closed. And, thanks for staying with the Intercontinental Playa Bonita Resort & Spa. This is a decision that will rattle Panama to its foundations - and that's why the President and the MEF met in an emergency session. Like, what the hell do we do now?

A Friend of the Devil: Dealing with corrupt government officials as a businessman can be tricky. I mean, it's a dilemma because you're screwed either way. If you don't pay someone off you can't do a damn thing. And then if you do pay someone off then, well, something like this can happen. Five years later the Supreme Court nullifies the whole thing and you're screwed with a capital Screw. And believe me, the Torrijos administration came to power with a desire to make all those who got too close to the Moscoso people pay, and pay dearly. They got sworn in, and started sharpening their knives.

Hold On A Minute: Unfortunately Panamanian Presidents name Supreme Court Judges who sit for ten year terms. Just now, in the end of 2007, the last two judges appointed by Ernesto "El Toro" Balladares finally left the court. The last to go was the (former) President of the Supreme Court Graciela Dixon. And she was (apparently) holding up the works for money (which is why nothing ever got done.) Another good example is Winston Spadafora, appointed to the court by Mireya Moscoso. Jean Figali has seven (count 'em, seven) Supreme Court decisions in his favor with regards to his expansion project on Fort Amador, all thanks to Winston Spadafora. Jean Figali got close to the Mireya Moscoso people, he got the concession to build his convention center, and has been going strong ever since. The Torrijos people have not been able to crack his Judicial Armor. Hey, what was that sound?

The Sound Of Cracking Judicial Armor: A whole bunch of people all over Panama City read this article this morning in La Prensa and went "holy shit." This kind of thing simply does not happen with any regularity. Or rather it would be more accurate to say these kinds of decisions have not been coming out of the Panamanian Supreme Court very often, until now. Upon being sworn in as the new President of the Supreme Court, Harley Mitchell let everyone know there was a new sheriff in town, and that things were going to be different. At the time I thought "the talk sounds good, but let's wait to see the walk." This decision is one big buttload of walking the walk. Good on 'ya.

Now What About Bern? When asked about this decision Herman Bern said "judicial security of the country is in danger." That's the other side of the dilemma - now he's screwed. Did Herman Bern pay someone off in the administration of Mireya Moscoso in order to secure the ARI action and to win the concession for Kobbe Beach? I don't know. The easiest way to spot corrupt government officials are to find one who refuses to do this or her job in a "common sensical" manner. I call it the Joe Six-Pack rule of thumb. If you take any dumb schmo (like me) and lay out all the facts it's usually pretty easy to figure out what should have happened. In this case, the ARI should have conducted themselves professionally and simply opened up the bidding in an open and correct manner, and let the best man win. But they apparently changed the rules behind the scenes to better Bern's chances of winning. Rather, it now appears they changed the rules so that only he could win. In short, they gave it to him.

Judicial Security In Danger? Only if you've been paying bribes to corrupt Panamanian government officials to get stuff done. And in my humble opinion this Supreme Court decision more strengthens judicial security in Panama rather than weakens it. It is a resounding statement from the court that the "old way" of doing things is now way too risky. Check the foundations - the Intercontinental Playa Bonita Resort & Spa was built on legal quicksand. If you're reading this and you have millions of dollars invested in some development somewhere, then the chances are good you've had to pay your share of bribes along the way. My advice - print this article (in Spanish and English) and refuse to pay another bribe, for anything, no matter what. If a government official refuses to do his or her job and is holding your paperwork hostage with their hand out, file a criminal complaint against them for being corrupt. The "system" should not go to the highest bidder. That's what this decision says.

(La Prensa Article Continues)

Originally the selection criteria would have benefited the proposal that would both pay the highest amount in rent to the state and which also would represent the most favorable investment for the state.

ARI changed the rules of the bidding process and based their decision contemplating only the criterion of who was offering to pay the highest rent, without considering at all to the proposed investment, which the court considered to be a "substantial modification" to the bidding process.

In handing down the decision the court ordered the company suing, Desarrollo Urbanístico del Atlántico, to be compensated for expenses incurred in time and money spent in participating in the bidding process, but without specifying an amount.

This decision prompted an emergency meeting between the Ministry of Economy and Finance and the Presidency to determine the consequences of this decision, said a political source.

Upon learning of the decision, Bern said their lawyers will analyze the implications, and commented "judicial security of the country is in danger."


Corte anula resolución expedida por la ARI

La Sala Tercera consideró que no se cumplió con el procedimiento que señala la ley de contratación pública.

Rafael Pérez G. Raúl Bernal

La Sala Tercera de la Corte Suprema declaró nula, por ilegal, una resolución de la desaparecida Autoridad de la Región Interoceánica (ARI) en la que adjudicó cuatro globos de terrenos en Kobee, Arraiján.

Tal adjudicación, de 2003, permitió a Paradise Beach Corporation levantar en esos terrenos el hotel Intercontinental Playa Bonita Resort & Spa, cuyo dueño es Herman Bern.

Según la Sala Tercera, no se cumplió con lo que establece la ley de contrataciones públicas para modificar el pliego de cargos: publicar la adenda al pliego en un diario de circulación nacional.

Originalmente, el criterio de selección beneficiaría al proponente que ofertara el canon de arrendamiento y la inversión más favorable para el Estado; lo cual fue cambiado por la ARI, contemplando únicamente el criterio del canon de arrendamiento más alto, sin consideración alguna a la inversión propuesta, lo que constituye una "sustancial modificación" al pliego de cargos, según la Corte.

Ante ello, la Sala ordenó indemnizar a la sociedad demandante Desarrollo Urbanístico del Atlántico por los gastos incurridos en tiempo y dinero al participar en esa licitación, mas no se especificó el monto.

El fallo provocó ayer una reunión entre personal del Ministerio de Economía y de la Presidencia para medir las consecuencias de esta decisión, dijo una fuente política.

Tras conocer el fallo, Bern dijo que sus abogados analizan las implicaciones, y comentó que "la seguridad jurídica del país está en peligro".

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Panamanian Supreme Court Nullifies 2003 ARI Resolution on Kobbe Beach (Playa Bonita) | 1 comments | Create New Account
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Panamanian Supreme Court Nullifys 2003 ARI Resolution on Kobbe Beach (Playa Bonita)
Authored by: oldmanandthesea on Sunday, March 02 2008 @ 02:57 PM UTC

Two things to keep in mind. First this occured on Mireya's watch and second, Martin did not say that there would be no corruption during his administration, only that it would not be tolerated. While Martin has missed many opportunities for keeping his promise (undoubtedly begause too many people know where the bodies [literally] are buried) it looks like maybe in the sunset of his administration he will have an opportunity to give Panama a new legacy. Hopefully Juan Carlos Navarro will continue this legacy.

Clyde Jenkins