Lawyers meet over court ruling

The ruling, issued on July 17 by the Sala de lo Civil is signed by Magistrates Alberto Cigarruista, Harley Mitchell, and Oyden Ortega. It rejects a plea for an injunction filed by the firm of Aleman, Herrera and Associates representing Geelong. In effect, the ruling maintains the embargo against Geelong's assets imposed two years ago by HSBC Bank USA and HSBC Bank Panama as part of a libel suit in which the banks accused Peter Gordon, a Canadian retiree living in Panama, and the foundation of damaging their image through ”libellous, hostile, and damaging correspondence.”

The Star consulted a number of attorneys about the ruling. None wished to be identified. One noted the need to warn clients who wish to establish foundations. The Panamanian offshore finance industry has touted the private foundation as a legal instrument proof against civil law suits.

Since its creation through Law 25 of June 12, 1995, some 24,000 foundations have been formed in Panama. They generate millions in attorneys’ fees and protect many millions more.

The Geelong ruling, however, shows that the protection they offer is weak, if not illusory. Clients now must be warned.

Nonetheless, when one compares the ruling with the case, one notes a significant error. The case file contains 22 e-mail messages by Peter Gordon introduced in evidence by HSBC. Of these, 21 are private messages sent to officers of the bank.

The other was published on an Internet bulletin board. In only three of the 21 does Gordon mention the foundation. The rest, including the one published, have his name only. The ruling, however, has this on its page 7:

“It is worth mentioning that in all the e-mails Peter Gordon concludes by manifesting that he is acting not only for himself, but on behalf of the Geelong Foundation.”

The crucial question in the case is if Gordon acted only for himself or for Geelong as well. The erroneous phrase “all the e-mails” gives a very different impression than the correct number, three of 22. It prejudices the reader against Geelong and in favor of HSBC..

The Panamanian justice system offers few remedies and foreigners doing business in the country should be aware at all times of possible pitfalls.