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La Estrella, Panama on November 6, 2008 reports that in 2003 while land prices were rising all over Panama the mayor of Chame, Panama sold prime land by the Chame airport at bargain prices. The Chame land was sold in three parcels to the mayor’s brother and to a Chinese businessman in Panama and his wife. An audit done in 2007 states that the Chame land was not sold until 2007 and at a higher price. La Estrella says that they called the Chinese businessman to ask about the discrepancy and the businessman in question would only speak in Chinese.

Sale of Land in Chame and Panama Corruption

The La Estrella article notes that a survey of realtors put land prices for the type of property the mayor sold in Chame at more than $20 a square meter for prime land with electricity, water, and an asphalt frontage road all next to an airport. The properties were sold for $0.50 and $0.25 a square meter respectively to the couple and to the mayor’s brother. Follow up by the newspaper resulted in the “Chinese interview” and an almost comical attempt to interview the Chame mayor. La Estrella documents an attempt to see the mayor where he left and then reentered his office and then apparently left by a back door.

Insider Deals, Bargain Prices, Panama Governance and Panama Corruption

For every year since 1996 the World Bank has published a list of Worldwide Governance Indicators. Among the indicators of good governance measured, control of corruption is considered not only an indicator of good governance but also a strong indicator of a nation’s potential for economic growth and prosperity. The only category in which Panama does not place forth in Latin America is in the control of corruption. Improved control of corruption will be a strong predictor of improved success in investment in Panama business and the Panama real estate market.

It is good to see La Estrella’s article and, hopefully, some public pressure on the government to investigate what looks from the newspaper article to be an insider land sale in Chame at bargain prices. It appears that neither the Chame mayor nor the businessman involved would speak to the newspaper. Considering the huge discount at which the land was sold it is not surprising that no one wants to talk.

If there is a factor that could derail Panama’s extraordinary economic success it would be the insider deals and corruption that are noted in the World Bank survey. The apparent Chame insider land sale described in La Estrella needs to be dealt with and hopefully in a public manner.

For individual investors to have trust in Panama governance the various regulatory agencies in Panama who deal with land sales need to look seriously at this bargain sale of land in Chame. Insider deals have been Panama’s bane for years and need to be brought to the light of day.

If you are interested in real estate investment in Panama please deal with someone trustworthy and competent such as ABPanama. We have been managing real estate portfolios for more than 23 years and have experience dealing with a broad range of real estate issues throughout Panama.