News
Tuesday 3rd December 2024.
December 2, 2024
Jorge Nicolau, consultant and analyst of pension systems, appeared before the Health, Labor and Social Development Committee of the National Assembly to make an assessment of the critical situation of the pension system and the modifications needed by the bill presented by the government of José Raúl Mulino.
He was critical of the scope and independence that the board of directors of the Social Security Fund (CSS) should have , and also spoke of the need to make improvements in governance and the definition of several fundamental elements in the investment policy proposed in the bill.
According to Nicolau, the deficit of the Exclusive Defined Benefit System (SEBD) is alarming: $76 billion at present value and $255 billion accumulated. This problem is aggravated if the mixed system is considered, reaching a projected deficit of $386 billion by 2095 without adjustments.
The main reason behind parametric measures is the increase in life expectancy. “No pension system is designed to support the demands of long-lived populations. In Europe, countries such as Sweden or Italy have implemented systems of automatic indexation of the retirement age,” he explained.
Parametric measures refer to changes in retirement age, increases in contributions, higher state contributions and adjustments to the employer-employee contribution.
The expert emphasized that past administrations failed to comply with Law 51 of 2005, which requires maintaining reserves equivalent to 2.25 times annual expenditure or spending. The omission of adjustments recommended by the Technical Actuarial Board worsened the crisis, leaving the system in a critical state.
The government’s proposal introduces a notional system inspired by international models that combine the Defined Benefit (DB) and Defined Contribution (DC) schemes.
However, Nicolau warned about the challenge of ensuring sustainability and sufficiency in a context of growing deficit. “The success of this system depends on periodic and transparent actuarial studies, as indicated by international experiences,” he said.
Nicolau identified critical aspects of the bill that require adjustments to strengthen governance and reduce risks:
- Article 28: Powers of the board of directors
- Current proposal: The board of directors can only request the General Management to order audits. Necessary change: In his opinion, the board of directors should have the autonomy to order external audits. “Depending on the General Management for this task generates conflicts of interest and goes against best governance practices,” he said. In addition, he suggested that audits be carried out by recognized international organizations.
- Current proposal: Allows delegating the total administration of the General Reserve Fund to a single administrator.
- Necessary change: Nicolau recommended prohibiting total delegation to a single administrator due to the high risk for contributors. “ We do not agree with delegating the entire reserve fund to a single administrator due to the risk this poses for the more than two million Panamanians who trust that they will have decent pensions at the time of their retirement,” he said.
The regulation establishes that the general management of the CSS may delegate the administration of part or all of the resources of the general reserve fund to legal entities with an investment management license, whether from Panama or from other jurisdictions, through the applicable public procurement laws.
The outlook is worrying, considering that this fund could reach between 20 and 40 billion dollars over time.
Tocumen International Airport, SA (Aitsa) has filed a criminal complaint against Maxim Donoso Teplova , who was its Vice President of Engineering and Projects until last July, accusing him of “creating a possible cost overrun” in works at the terminal carried out by a company in which he appears as legal representative.
The complaint was filed on October 30 for the alleged commission of four crimes against public administration : corruption of public servants, influence peddling, abuse of authority and violation of the duties of public servants.
Aitsa estimates that the possible overruns would have caused a financial loss of $463,985.44 .
The company at the center of the questioning is called 360M Ingeniería, SA , registered on July 5, 2021. Initially, the company was chaired by Larissa Donoso Teplova , but as of November 23 of that same year, she was replaced by her brother Maxim Donoso, who at the time, in parallel, served as Vice President of Engineering and Projects at Aitsa.
Maxim Donoso’s public office placed him in a position in which he received requests and coordinated all the adaptation work, remodeling of commercial premises and completion of gray works in the two airport terminals. To carry out these works (always with Donoso’s authorization), the concessionaires of at least six locations hired a company with no apparent experience, which had started operations on March 28, 2019 and, to top it off, operated in Las Colinas, a district of Capira , in the province of Panama Oeste. This company is called Servicios Múltiples ABA .
Soon, ABA stopped carrying out the work and subcontracted – guess who? – 360M Engineering, the vice president’s company that authorized the work and payments to its clients at the airport.
“It is clear that prima facie we can see a conflict of interest,” states the complaint filed by lawyer Pablo González , representative of José Ruiz, general manager of Aitsa since last July.
Although the concessionaires are the ones who directly contract the remodeling work, they subsequently request reimbursement or recognition of said investment from Tocumen. In this way, in the end, it is Aitsa who pays.
Donoso, in his public office, “was the person in charge, as a management unit, of supporting the amount of each work in terms of its activities and costs,” according to the complaint. Therefore, he would have “taken advantage” of his position as vice president “to obtain advantages in the approval of said works and, in addition, create a possible cost overrun by increasing the final costs of the works, which in the end must be recognized by Aitsa, affecting the regular income of this state company and, therefore, the public treasury.”
The Ministry of the Presidency will have to deliver a copy of the contract for professional services agreed with Carlos Muñoz Pope , the lawyer who represented the Panamanian State as plaintiff in the process followed by the bribes that Odebrecht paid to former officials, front men and Panamanian politicians between 2010 and 2014.
The Supreme Court of Justice (SCJ) partially granted a habeas data petition filed by former President Ricardo Martinelli , one of the defendants in this case for the alleged commission of the crime of money laundering.
Muñoz Pope, representing the State, filed a civil suit against Martinelli and another against former president and defendant Juan Carlos Varela .
By means of Edict No. 1262 published in the General Secretariat of the Judicial Body on November 2, the parties are notified of the decision taken by the full Court to partially grant the habeas data presented by Alma Cortés , Martinelli’s lawyer.
The document states that a period of five business days is granted to the Vice Minister of the Presidency, Virna Luque , to deliver a certified copy of the professional services contract signed between the former Minister of Public Security, Juan Manuel Pino , and Muñoz Pope, as special attorney in the criminal and civil actions filed in the Odebrecht case.
On September 8, 2023, the Panamanian State filed two civil lawsuits against former presidents Martinelli (2009-2014) and Varela (2014-2019), for alleged material and moral damages in the Odebrecht case, after both were designated corrupt by the US State Department for their ties to Odebrecht. Two of Martinelli’s sons (Ricardo Alberto and Luis Enrique) have already been imprisoned in the United States after confessing that they conspired to use that country’s financial system to launder at least $28 million in bribes from Odebrecht.
The Panamanian State is demanding compensation of $159 million ($59 million for material damages and $100 million for moral damages) from Martinelli Sr.; the same is true of $30 million ($10 million for material damages and $20 million for moral damages) from Varela .
A criminal complaint for the alleged commission of a crime against public administration, for non-payment of the payroll of officials of the Municipality of Panama during the previous administration, was filed with the Public Prosecutor’s Office .
The current deputy mayor of the capital, Roberto Ruiz Diaz , filed the appeal after explaining that the payroll for the months of August, September, October, November and December 2023, as well as those for April, May and June 2024, were not paid by the mayor’s office.
He indicated that they were paid by the Ministry of Economy and Finance (MEF) and the National Bank of Panama . According to the deputy mayor, this has generated a debt to the Municipality of Panama for an amount of approximately $24 million .
He indicated that when he recently took office as general secretary of the Municipality, he received a memorandum dated September 23, 2024 detailing the case of unpaid payrolls.
The document indicates that through the office of the Mayor of the capital district and the Treasurer, a series of “notes” were signed in which the National Bank and the MEF were informed that the mayor’s office would make the corresponding transfers to the central government in order to pay the salaries of the officials.
“Such instructions were given through several notes, but these notes were never physically sent, much less were the funds they said would be sent remitted,” said Ruiz Diaz.
He recalled that the Municipality receives tax payments to cover operating expenses, including the salaries of officials, but “even though they received sufficient funds to generate said payments, former mayor José Luis Fábrega (2019-2024) and treasurer Isaías Pineda did not remit the funds to the MEF or the National Bank, to meet said commitments.”
The deputy mayor requested an investigation to be opened against the officials and former officials who were involved in the process of “non-payment of municipal payrolls” during the period from August to December 2023 and from April to June 2024.
Dozens of families participated on the afternoon of this Sunday, in the lighting of the lights of the so-called Calle de los Osos, located on Uruguay Street, Bella Vista district.
The Mayor’s Office of Panama indicated that this is the official start of the Christmas season. This Christmas decoration is sponsored by the construction company Empresas Bern. Before the lighting of the lights and the Christmas tree, there was live music: carols were sung by the Bern Institute of Las Mañanitas and by the Centenario Band. There was also a Nativity scene. The First Lady’s office also held a Christmas tree lighting ceremony at Omar Park.