NEW YORK, USA – In a development combining legal and diplomatic friction, the Trump Organization faces allegations of tax evasion in Panama, while President-elect Donald Trump has sparked controversy by criticising fees imposed on U.S. shipping through the Panama Canal.
The parallel disputes have heightened tensions between the United States and the Central American nation.
Tax Evasion Allegations
The legal matter dates back to June 2019 when Ithaca Capital Partners, led by private equity manager Orestes Fintiklis, filed a lawsuit in the U.S. District Court in New York.
Ithaca, which owns a Panama City hotel formerly managed by Trump Panama Hotel Management LLC and Trump International Hotels Management LLC, alleged that the Trump businesses failed to pay the required 12.5% tax on earnings from hotel management activities in Panama.
Additionally, the filing claimed irregularities in reporting hotel employee numbers, allegedly allowing the Trump entities to avoid Panamanian social security payments.
The Panamanian government subsequently conducted a tax audit on the hotel, reportedly uncovering significant discrepancies.
Ithaca claims it was forced to cover the Trump Organization’s unpaid taxes, a move that has become central to its updated complaint filed in March 2020.
The updated legal filing stated: “Had Trump been honest with Ithaca about its failure to pay taxes on the management fees it earned and its failure to properly report employee salaries to Panama’s social security agency, Ithaca would have never entered into the [licensing deal].”
The Trump Organization has not publicly commented on the allegations, and the litigation remains unresolved.
Diplomatic Strain Over Canal Fees
As the tax case proceeds, President-elect Trump has accused Panama of imposing excessive fees on U.S. shipping through the Panama Canal, a vital waterway connecting the Atlantic and Pacific Oceans.
Trump suggested that the United States might demand the canal’s return if fee reductions are not negotiated.
On his social media platform, Truth Social, Trump wrote: “The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the U.S. This complete ‘rip-off’ of our Country will immediately stop.”
Panama’s President, José Raúl Mulino, responded with a firm video statement on X (formerly Twitter): “Every square meter of the Panama Canal and its adjacent areas belong to Panama and will continue belonging to Panama.”
Trump swiftly replied, also on Truth Social: “We’ll see about that.”
Speculations and Implications
Political commentator Ana Navarro Flores speculated that Trump’s sudden focus on the Panama Canal may be connected to his unresolved tax obligations in the country, writing on X: “Now we know what the sudden threats against Panama and ownership of the Panama Canal are all about.”
Now we know what the sudden threats against Panama and ownership of the Panama Canal are all about.
Trump Companies Accused of Tax Evasion in Panama — ProPublica https://t.co/I1pt4guQd4
— Ana Navarro-Cárdenas (@ananavarro) December 22, 2024
However, no evidence has emerged linking Trump’s diplomatic stance to the ongoing court case.
I crossed the Panama Canal, yesterday. Not 1 Chinese soldier in sight. It’s operated by the Panama Canal Authority & run by proud Panamanian employees. Thousands died building the Canal. Few were American. Most of the workers came from West Indies. Everything Trump says is 💩. pic.twitter.com/RFIHS6ZRLZ
— Ana Navarro-Cárdenas (@ananavarro) December 26, 2024
Both the Trump Organization and the President-elect’s representatives have refrained from publicly addressing any connection.
Treaty and Legal Context
Under the 1979 treaty signed by President Jimmy Carter, the United States ceded control of the Panama Canal to Panama in 1999.
Trump has criticised the agreement as “foolish,” but experts suggest he has limited legal grounds to challenge the arrangement under international law.
As Trump prepares for his inauguration on January 20, 2025, analysts predict the disputes will test his administration’s diplomatic strategy.
Panama, for its part, has vowed to defend its sovereignty and the canal’s operational independence.
Resolving these disputes will likely require careful international diplomacy to prevent further escalation.
The Trump Organization, the Panamanian Ministry of Economy and Finance, and Fintiklis’ Ithaca Capital Partners have not issued additional comments as of this report.
