Guatemala Banking Versus Panama Banking

http://www.panamalaw.org

Introduction – This is going to illustrate some of the finer legal and asset protection points about
banking in 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.

Lawyer Acting as Signatory – This is not allowed in Panama but is allowed in Guatemala.

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.

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 tend to do pretty good here. 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. 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 the one suing 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. 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. 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 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. 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.

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. If the foreigner did not appear the case would not hold water and get
dismissed. If the foreigner 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 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.

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.

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 and New York 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.

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?

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.

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