Sunday, January 20, 2008

The failures of the Salvadoran judicial system

The Miami Herald runs a story today about the failure of Salvadoran courts to enforce a US court judgment against an influential Salvadoran family:

More than a year after a Miami judge ordered companies owned by one of El Salvador's wealthiest families to repay a loan of nearly $30 million, the judgment remains unpaid - buried in the bowels of El Salvador's supreme court.

Valat International Holdings Ltd., which owns the loan, is aggressively seeking its money from textile and telecommunications magnate Oscar Safie Zacarias and his family. Valat attorney Leoncio de la Pena says it is a test case to see whether El Salvador's business elites are above their country's law. A Safie first-cousin is that country's attorney general.

"The reason that the Salvadoran court isn't acting is because they are acting on the influence by Safie," de la Pena said. "You would assume a country that wants favorable trade with the U.S. would want to deal with this as quickly as possible."

The Safies' attorneys declined to discuss details of the lawsuit but maintain the case should have been tried in El Salvador, not Miami. In court papers, they also allege Ireland-based Valat, which has no employees, is merely a front for a failed Guatemalan bank that previously held the loans.(more)

It may not appear obvious to some, but having an effective judicial system which acts promptly, consistently, and without corruption is very important to making economic growth possible. Take this case as an example. Millions of dollars were invested in Salvadoran business in the form of a loan. The borrowers default. The lenders want to collect on the guarantees made by a powerful Salvadoran family, but the judicial system allows the family to avoid honoring their commitments. You can be sure that such precedents make international lenders more leery of making commercial loans to Salvadoran businesses in the future. That stifles economic growth in the country. Strengthening the judicial system in El Salvador must be a goal not just to protect the rights of its citizens, but also to permit economic progress.


El-Visitador said...

«having an effective judicial system which acts promptly, consistently, and without corruption is very important to making economic growth possible»


100% accurate.

Yet there is no concept of this in El Salvador.

After some 60-plus years of Salvadoreans hearing the Socialist mantra that "justice" means subsidies, price controls, wage controls, etc., and that such tools are the key to "economic development," Salvadoreans in general have no idea whatsoever that the judicial system is the bedrock, the very foundation of economic development.

Trust me, ask around.

This is the reason why no party, no political platform, neither the left nor the so-called "right", has ever proposed any sort of focus on fixing the judiciary.

Their "solutions" are usually a mix of proposals for subsidies, political patronage, controls, and more government bureaucracy.

Such is the legacy of decades of spreading the Socialist gospel in El Salvador.

Anonymous said...

Then why in the world does our government promote trade with El Salvador. If their Supremem COurt is not going to address or even respect our legal system then why promote other American to do business with Salvadorian's. What's the purpose of CAFTA???
Who's protecting American interst???

Anonymous said...

I'm not sure wtf visitador is refering too, and I'm beginning to wonder whose payroll he's on. Seems like a rant more than anything to distract instead of an honest answer or response to the actual post.

re: anon's post,
Cafta does not give a rip about justice. The despensa don juans own the country and our own don juan's do not care as long as they cash in.

Anonymous said...

First we have to define "economic development." Most of you silly people assume that it means something like "social and economic conditions improving throughout the country for the majority of its citizens."

If, however, we take the oligarchs' definition--"We get richer, screw the rest"--then an effective judicial system would be a barrier to development. The system works fine--for those who have power.

Anonymous said...

the Salvadoran judicial system is a joke, as the title says
my experience could be a movie or a thick novel
maybe soon with new government

visitador is CIA
that is why he is so confused pay him no attention unless you are also a confused right winger paid to say whatever and by whom you are paid to say, as in main stream reporters
CNN, FOX etc. paid to say what their advertisers tell them thank GOD for internet for real stories

as as in the last post, justice works fine for the rich

Anonymous said...

El-visitator is on crack. The ramblings on his site prove it.

Since El Salvador is basically a holding of the US, it will be interesting to see what if anything is done about the family defaulting on the loan.

Kike78 said...

The Judicial system is important in any country. A lot of conflicts could of been avoided if proper punishments if any were ever given to the proven perpetrators. The rich have very deep roots everywhere and they are always protected. Money buys everything. Especially in El Salvador, let's not forget, there's corruption at a massive scale there. As far as the Judiciary having to do with economic growth ? well in some cases I can see how this can affect the confidence of investors, but really, El Salvador and countries with similar problems only attract crooked ones, they see that this is a safe haeven for them and ladies and gentlemen all bets are in...
Bring in the exploiters, Asia, Europe, U.S. Message to all.. You can get away with murder if the price is right... Sad but True my friends. Let's see what happens with this case. Let's see what "El Primo" does for the family now that this case is out. Where's Rojo vivo y Primer impacto on this ? ???

Anonymous said...

With all your respect El-Visitador, you remind me of Pat Robertson. A right wing wacko libertarian televangelist who thinks everything that has a social justice connotation is pure communism and those who seek it must burn in hell.
Take it is it buddy, watch your blood pressure!

Tim said...

The personal attacks on El Visitador aren't appropriate. Attack his ideas if you want, but name-calling doesn't advance the debate any.

E-V: we agree on the importance of a well-functioning judicial system, but blaming the poor state of the court system on the "socialist mantra" doesn't hold up. The court system is the product of the forces in power in El Salvador for the last 70 years in the country -- and those forces have never been socialist. The system is one of patronage, defense of the rich and powerful, and lacking independence.

I agree that the left does not focus much on creating a functioning judiciary in its plans for the country, but you can't blame the current system on the leftists.

Mark said...

Hello - Let's wake up Americans!!!! The loan was granted from a US bank in the US, therefore we (the American tax payer) are paying for the default of this loan. If the Salvadorian supereme court does not enforce the repayment of this loan - then have the Salvadorian government pay for it. If El Salvador's President and/or "Primo" want to protect their "rich" people - then YOU pay the loan. Why should we American pay the loan of El Salvador's elite and rich.

El-Visitador said...

«but blaming the poor state of the court system on the "socialist mantra" doesn't hold up»

Tim, I have thought long and hard about this issue. I know that it may be difficult to believe my bold statement.

But I have had the benefit of knowing Salvadoreans at every level of the social scale. Believe me, there is precious little appreciation for what Justice means in a traditional, Western liberal-values sense of the word.

Ask around.

Most salvadoreans believe "justice" is this fuzzy world where everyone gets high government-mandated salaries, where gasoline and bus ticket prices are cheap because the government says so, where the government gives away houses FSV or IVU or FONAVIPO style.

Now, institutions such as IVU are not new. These cesspools of corruption and patronage first arose in the 1950's and Salvadoreans have heard several times a week, for many many decades, that those institutions represent "justice."

Certainly you have heard and seen government propaganda during your visits to El Salvador? It is all weirdly Stalinistic: "The government builds schools... Goverment of El Salvador, promoting justice and development for all".

This way of thinking is particularly prevalent among the middle and upper classes. People pick it up early, because that's exactly what their teachers and priests tell them... not to mention politicians.

But you don't have to believe me.

Ask Salvadoreans what do they think is "justice" next time you are arounf.

Anonymous said...

Wow these Safie's are a bunch of thugs!! Read today's El Faro

Anonymous said...

Anyone knows what the latest developments on this case are? What is el Primos position?