The Panamanian government has refused to resume compensation negotiations for 500,000 acres of Panamanian land formerly owned in part by millionaire Washington developer Dominic F. Antonelli Jr. and former ambassador to Luxembourg Kingdon Gould Jr. The two men have consequently asked the U.S. government to cut off foreign aid to the country which seized the land in 1970.
The government of Panama took the position in December that "it will not discuss, no less negotiate, a settlement until after United States ratification of the (Panama) Canal treaties," Jack I. Heller, the attorney for the two men, wrote to Assistant Secretary of State Terence A. Todman. A copy of that letter has been obtained by The Washington Post.
Heller said in a telephone interview that Panama was not using the compensation question to help obtain treaty approval, but rather was hoping not to clutter the treaty issue with questions of claims against the government.
The land involved is a huge plantation formerly owned by the Boston-Panama Co., in which antonelli and Gould are the principal stockholders. Heller is the attorney for the company.
The plantation consists of 500,000 acres of coconut groves, rubber trees and hardwood forests now populated by squatters. It was formally seized by the government of Gen. Omar Torrijos in 1970, after a decades-long dispute over a back tax bill. The Panamanian government took over the property after a public sale by the government failed to produce any private buyers.
The government had claimed it was owed about $3 million in back taxes on the property, although his clients have "never seen a paper" to that effect, Heller said.
Antonelli and Gould acquired their interest in the property in 1956 when they bought an interest in Boston-Panama.In addition to their interest in that company, the men are the principal figures in Washington's largest parking concern. Parking Management Inc., and developers of numerous office buildings here.
According to Heller, negotiations between his clients and Panama had gone forward since October 1974 with the help of the State Department in "encouraging the Government of Panama to enter negotiations." In May 1977, however, Panama indicated that it considered "the case closed," according to correspondence from Heller to the State Department.
At that point, Heller asked for sanctions against Panama, including the cutoff of aid. Negotiations resumed, however, and the demand for sanctions was not pressed.
In the most recent letter from Heller to the State Department, Heller said that after a "cordial and productive" meeting in October 1977, attended by the ambassador of Panama and others, a second meeting was agreed to.
That meeting never took place. On Dec. 1, Heller was told "by a senior official at the Embassy of Panama that no further meetings would be held." he wrote Todfan in December. At this point, Heller again asked for sanctions against Panama.
An official at the State Department here cautioned that no government sanctions could be imposed on the Panamanian government "until there has been a legal finding by the Department of State that Boston-Panama has been expropriated."
He said the department in the past had begun studies to determine the merits of the company's case but had abandoned the investigation when negotiations resumed between the two parties.
Should the State Department decide that the Boston-Panama firm has been expropriated, it could invoke foreign aid sanctions against Panama. These are permitted under two laws known as the Hickenlooper and Gonzalez amendments.
The Hickenlooper amendment suspends U.S. bilateral assistance, including aid in the form of housing and agricultural development loans, to countries that have seized private American holdings without compensation. The Gonzalez amendment suspends loans from international institutions such as the World Bank and the International Monetary Fund.
A U.S. firm cannot seek a finding of expropriation until negotiations and other means of relief have been exhausted, according to the State Department official.
Boston-Panama, according to the State Department, bought property in Panama more than 20 years ago from another U.S. firm. At the same time, the previous firm owed about $160,000 in taxes to the government. The new owners objected to the tax bill, seeking to have it completely abolished or reduced.
Negotiations on the tax matter continued on and off for years, the officials said, until the Torrijos government decided to seize the property in lieu of taxes.
The State Department is aware of the impasse reported by attorneys for Boston-Panama, the official said, and the next step is up an inter-departmental group on expropriations that must rule on the firm's case.
The official said that as far as he knew, no other American firm has asked the State Department to seek sanctions against Panama for expropriation of any holdings. He said that the Hickenlooper penalties were last applied to Peru in the mid-1960s following expropriation of holdings by the International Petroleum Co.