by Rod Hughes
The U.S. government’s crackdown on Internet gambling not only got it in hot water with the World Trade Organization (WTO) but also has moved Costa Rica’s Foreign Ministry to seek compensation for losses to its economy, reports the weekly The Tico Times.
The crackdown caused the closure of as many as 20 “sportsbook” operations in this country, including the closure of the London-based BetOnSports operation, throwing 1,200 employees out of work. (Most still have not received their severance pay, according to the Ministry of Labor.) Some 180 operations are still hanging on, the paper said, employing some 9,000.
The U.S. law signed by President Bush last October prohibits U.S. credit card companies and banks from processing payments to offshore gambling firms. The Foreign Ministry notes that the 2004 WTO report calls the law in restraint of competition and specifically conflicts with the 1995 GATS agreement including specifically access to betting services.
Costa Rica has joined a number of countries from the European Union, India, Canada, Macau, Australia and the Caribbean in seeking compensation for damage to their economies caused by the law. Talks are underway between representatives of this country and the U.S., the Foreign Ministry spokesperson said.

by Rod Hughes
The international megabanks are going head-to-head to woo the small depositors and businesses in Central American and Panama, the daily paper La Nacion revealed today. Meanwhile, mid-sized international banks have been engaged in a sort of feeding frenzy.
Scotiabank bought out Banco Interfin. The BCT Corporation under direction of the respected Costa Rican financier, Leonel Baruch, absorbed the Compañia Financiera Londres with its Costa Rican capital.The London-based giant HSBC is in Costa Rica in a big way, planning to open 100 branches in the next five years.
Why all the interest in this region suddenly? “Central America, Panama and Colombia is a very attractive region. There’s economic and political stability,” Alastair J. Bryce, manager of HSBC International Bank, told the paper, adding competition among banks is relatively low, giving an enormous growth potential to banks that can offer new programs.
Robert H. Pitfield, executive vice president of Scotiabank, was frank about his ambitions for his institution. “Our principal objective is to be number one,” he told the paper, “To be the best bank in Coswta Rica by offering quality, personalized service…”
Both bankers shrewdly mentioned to the paper fast, efficient service, since this is the Achilles Heel of the national banking system. Although friendly once the customer reaches the teller’s window, they are plagued with long waiting lines, especially around the first and 15th of each month. On the other hand, they have expanded their offerings since private banks were allowed to compete with them a couple of decades ago, accepting payments of utility bills, for example as well as Internet bill-paying service. And they offer guarantees against a bank failure by being backed by the government, as investors in Banco Anglo-Costarricense learned to their relief when the bank collapsed because of sleezy manipulations by the top officials.
But the megabanks intend to offer easier access to credit for the less moneyed depositor and other incentives for small and medium business.
But banks are not the only financial establishments with their eyes set on the region, the English-language weekly The Tico Times revealed last Friday.
Two financial service companies are making Costa Rica its regional base: SC Riesgo, a 10-year-old Costa Rican company about to embark on a regional basis to provide financial risk assessments to investors in banks, funds, stocks and bonds, while PiP Centroamerica will offer pricing services.
Much of this financial interest in the region comes from changes in the countries’ banking laws that open up competition, as Costa Rica eliminated its antiquated state bank monopoly. “Costa Rica is the most mature market in Central America,” Gary Barquero of SC Riesgo told The Tico Times. But he worries that this country might be less attractive to investors due to the reluctance of a large sector of population to approve the Central American Free Trade Agreement with the U.S.

by Rod Hughes
Ever wanted a really easy informative computer program that doesn’t need Bill Gates at your elbow to help you manage it? Ever wondered what damage your discarded CDs do to the environment and wished for a worry-free way to dispose of them?
Four Costa Rican teenagers have solved your problems—or will, if they can get funding. Their projects won plaudits at an international science fair in Durbin, South Africa, this month.
Jose Pablo Jiménez, 19, Olga Yuts, 18, and Diego Ulate, 19, high school chums now studying in different universities, have worked with the fungus Geotrichum Candidum, convincing it that the plastic in CDs is even better to eat than chocolate mousse. Not much remains of the CD when the fungus gets through and even that is ecologically-friendly. But further development of a reactor (or digester) for mass disentegration of CDs will need backing.
José Andrés Morales, 18, has come up with the simplified Alekine software information program for those of us who are lost by the vagueries of present programs. He hopes, in three or four years, to have a commercial version out and to establish his own business here.
But first, both projects will be presented at the Feria Mostratec next November in Novo Hamburgo, Brazil, a science forum in Santiago, Chile, next year and at Barcelona’s prestigious Exporecerca Jove. Of course, they’ll be on the lookout for financing.

(Our forum page readers may grow tired of our frequent admonition to “use a reputable realtor” or “your realtor can recommend a reliable lawyer” but the following story reveals why this is good advice.)

by Rod Hughes
The climate must be healthy in Costa Rica because even the dead do not stay dead, but sometimes arise from their tombs and sally forth.
To sell property.
This unsettling fact was underscored by recent investigative articles in Costa Rica’s respected daily, La Nacion, which checked out 146 cases where persons dead for up to a couple of decades had “appeared” before notaries or lawyers to to sell or donate properties. Or, so National Registry records indicate.
Case in point: Raul Sanchez of Nicoya “appeared” magically before a notary named Rodriguez on Dec. 17, 2002, to nullify a title on land he had owned, despite having died on New Year’s Day, 1982, the newspaper records. Miraculous!
Even more so is the case of Victor Julio Rodriguez, died Dec.12, 1983, but who managed to appear before a notary named Mendez on June 18, 2003, to sell his property, the paper continues. Or so the notary said after “witnessing” his signature.
Of course Costa Rica has laws against such hanky-panky but one with loopholes big enough for crooked lawyers and notaries to slither through. Lawyers or an accused notary’s lawyer can find all manner of wiggle room or delay the prosecution until the prosecutors give it up as a lost cause. “Those sentenced don’t add up to five percent of the prosecutions, since the lawyers are able to exploit loopholes and tie up the process,” says National Registry director Dagoberto Sibaja.
“The lack of control has enouraged some notaries to enter into fraud,” says the country’s Vice president, Minister of Justice Laura Chinchilla, who was, in a past administration, the country’s top cop at Public Security.
Deputy Director of OIJ, the nation’s equivalent to Scotland Yard or the FBI, agrees. “We arrest notaries all the time” he says, “but more appear and commit (frauds).”
Sibaja is even more specific, “Notaries should be well screened. The National Registry does not have the resources to oversee the thousands of notaries nor the legal mechanism to prosecute them.” The Registry has filed accusations on 118 notaries suspected of dubious practices.
The price is high, the paper notes. Between 2003 and this year, 130 properties were fraudulently registered. In 2003 and 2004, 73 properties were sold, transferred or mortgaged by the lively dead of Costa Rica. Last year, 11 notaries were accused and since 2003, 31 lawyers are suspected of this kind of transaction.
Chinchilla terms this situation the cause for “national shame,” and cites the case of a Uruguayan lady whose property was taken over, three times, by two suspects who “resurrected” her deceased parents to sign the paperwork.The sellers eventually left the country after feeling the hot breath of the law on their necks.
One might ask, “Where is the Bar Association?” There is one, called the Colegio de Abogados, but this organization has been likened to a social club and traditionally its officers have shown a marked reluctance to police their own, even in cases of obvious dishonesty.
Nor is real estate the only place where the undead sign legal papers in the presence of notaries or lawyers. This happens when they appear before notaries to solicit the National Registry for replacement of “stolen” or “deteriorated” vehicle license plates. But that is a different story. Still, don’t be surprised to find duplicates of your plate number on a car driven, probably, by a deceased person.
Creepy, though…

by Rod Hughes
Take care where you invest your money, even if interest yields seem too good to be true.
They probably are.
On the heels of the arrest of Italian millionaire Matteo Quintavalle, the daily paper La Nación issued this warning today in an article about illegal financial operations in Costa Rica. The advice is hardly new and applies to any country, but the newspaper added that some 13 investment firms have been identified as operating here without registration with the proper regulatory agencies. This is equal to offering stock in the United States without registering with the Securities Exchange Commission (SEC).
Costa Rica also has its equivalent, Sugeval (for the Spanish Superintendencia General de Valores.) This agency has less policing power than the SEC and does not file criminal charges for unregistered companies dealing in stocks or other financial services. Nor does the offering of “financial advice” figure into existing law, even though that “advice” might steer the client into dubious investments. But the Sugeval list of authorized companies does offer a clear benchmark to identify legitimate companies.
The illegal firms solicit investors through the Internet, by telephone marketing and personal contact such as the venerable ploy of the business lunch. But, unless an investor files a criminal complaint, these firms operate without interference. By the time a complaint is filed, usually the damage has been done, not only to the plaintiff but to hundreds of other victims. Nor are all the victims innocent—many times, offshore investments are sought to hide taxable income or laundered funds. But legitimate offshore investments do exist and offer sometimes more stable and lucrative returns than, say, the U.S. stock exchange.
This situation has existed since the offshore Swiss Bancorp scandal of the 1970s. In the 1980s, Costa Rica experienced its own savings and loan meltdown, with its race for local investors prompting newspaper ads offering interest of up to 48%. One investment firm president, evidently overcome by belated conscience, committed suicide after his firm went under. The number of convictions continues, including one in which a con artist skipped the country during his sentencing hearing, after having sued the English-language weekly The Tico Times for libel, a favorite tactic to silence a probing newspaper. (That paper refuses financial advertising if the company offers stock but is registered neither with the SEC or Sugef, a sister agency of Sugeval.)
The most recent high-profile conviction involved the Villalobos Brothers, naturalized Costa Rican citizens who ran a high-yield investment operation guaranteeing 10% intereest monthly on investments of $10,000 or more. (See article 1138 in our search engine)
Nor are foreigners the only targets. The savings and loan scams netted mainly local investors and some affluent Costa Ricans lost thousands when the Villalobos brothers were closed and refused to pay back the principal they had invested. (Although Osvaldo Villobos was convicted of all charges except money laundering, Luis Ernesto, his brother, remains at large with an international arrest warrant on his head.

by Rod Hughes
Some years ago, the respected business magazine, The Economist, came up with a novel measure of monetary value and comparison, which they call the “Big Mac Index.” The magazine reasoned that, since everything about McDonald’s food is standardized worldwide. one should be able to measure one nation’s currency with another by using Big Macs as a guage.
By the latest measure, the local daily La Nacion reports today, Costa Rica comes off as being a bargain place in which to live.
Today’s exchange on the floating colon is 467 colones per dollar. The July 5 issue of the magazine says a Big Mac here costs 1,540 colons ($2.96) as opposed to the U.S. price of 1770 colones ($3.41).
All very straightforward, so far, but La Nacion’s economics pundits disagree with those at The Economist. The latter say that the colon is undervalued by 36% while La Nacion’s calculators read only 10% undervalued.
The situation is muddied by the fact that the Arias Administration abandoned the fixed mini-devaluation system to adjust to inflation in favor of floating the national money value against the dollar. The colon began the year at more than 500 per dollar. Whether this was President Oscar Arias’s decision or that of his economic advisors is not known, but the president is a graduate of the London School of Economics, we must remember.
(This writer is not about to enter this debate without, at least, Alan Greenspan at his elbow.)
La Nacion called in a big gun to support its arguement: They consulted respected economist and former Central Bank president Eduardo Lizano who told them that an excess of dollars injected into the national economy by brisk foreign investment in real estate plus higher volumes of exports and some speculation has forced the value of the colon up and the number of colones needed to make up a dollar down.
To complete the Big Mac indicator picture, La Nacion mentions that the burger costs the equivalent of 752 colones while in Europe it will set you back 1,558, not too much higher than here in Ticolandia.
That indicator seems to us like a terrible burdon to place on a product that can be downed in 10 minutes or so…

by Rod Hughes
We never thought we would see it happen in Costa Rica, the original “take me as I am” country.
Banks in this country are offering personal loans for extreme makeover plastic surgery that costs $2,000 and up, according to an article in the daily paper, Al Día.
Plastic surgery here has been in large part a sector of what some call “medical tourism,” the patients foreigners from developed countries. The surgeons are well-trained and some are bilingual, speaking fluent English they polished taking the specialty at U.S. universities.
According to plastic surgeons consulted by Al Día reporter Franklin Arroyo, although most of the resident patients are women, they are not all models. The younger Ticas (Costa Rican women) seek vibrosuction to remove fat cells and others seek breast augmentation, says Cristián Rivera, while the older women want breast reduction or re-shaping. Still others, he continued, want skin surgery for stretch marks after weight reduction.
But even a few Costa Rican men have caught the makeover craze for facial surgery and liposuction, according to Jorge Mora, vice president of the Costa Rican Plastic Surgeon’s Association. Women over 40 crave facelifts, he added.
But not all women are enthusiastic about going into debt. María Elena Rivera, a masseuse, told the paper, “I’m not satisfied with financing. It’s better to save up and pay cash.” (Judging from her photo in the paper, she really needs no alteration.)

by Rod Hughes
Private enterprise in Costa Rica continue to lend aid to better the lives around them.
In Quepos, for example, the famous Marina Pez Vela sportfishing company is donating a much-needed bridge. President Oscar Arias is scheduled to place the cornerstone of the tourism company’s bridge over Quebrada Suya in a ceremony Friday.
And Walmart CentroAmericano corporation has turned over to the mayor of Escazu, a western suburb of San Jose, a donation to finance scholarships for students with scarce resources plus a $10,000 check to Hogar Salvando al Alcoholico, an alcohol addict rehabilitation center. The company is also building a pedestrian footbridge and a system of “smart” traffic lights.

by Rod Hughes
Next March 20, most Costa Rican phones will have an eight-digit numbers, at a cost to the Electrical Institute (ICE) of $15 million to bring all the machinery up to speed.
Some numbers will not change, such as 911 emergency, 115 ICE customer service, 118 fire department and the 128 Red Cross lines, plus the 800 toll-free numbers. The commercial numbers 900 and 905 will also remain the same.
Demonstrating how rapid phone line growth has been, the change from six to seven digits has only been in effect since March 31, 1994. But ICE promises that the eight-digits will be good for the next 40 years.
Interestingly, cell phone use has surpassed fixed operation lines. According to an article in the daily paper La Nacion, there are currently a million fixed phones in Costa Rica (roughly 765,000 home phones and 235,000 commercial lines) while cell phone lines are now at 1.5 million (a million under the GSM system and 500,000 TDMA).
But those who have been waiting forever for a new line should not get their hopes up, the paper warned. The new numbers do not mean that new lines will magically be created. ICE’s Claudio Bermudez told the paper that new machinery is being purchased for new lines but refused to specify which areas or communities would be benefited.
So lines are not only found strung on poles or in electronic switchboards but also at ICE offices, composed of people standing around to apply for a phone number of any number of digits.

by Rod Hughes
Do you think housing costs in San Jose are expensive? The U.S. Internal Revenue Service evidently disagrees.
In a recent advisory regarding maximum deductions allowable for housing expenses, the IRS set a cap on yearly deductions at $26,500. Only Winnepeg, Canada, at $24,900 and the Salvadoran capital at $25,200 were lower.
Of course, if you really want to talk pricey, say you run an export firm out of Hong Kong. The IRS will spot you up to $114,300!
In Central America, even Guatemala City was higher, up to $37,600. Another supposedly inexpensive retirement location, Panama City, weighed in at a cap of $32,200.
Everyone knows that the European Union is not a place to hunker down on a low income: London weighs in at a housing allowance maximum of $$72,100, Paris at $79,300, Although Berlin at a reasonable $48,200. Rome is, apparently not bad at $53,500 but the northern Italian industrial city of Milan is murder at $79,800.
Some other places you might want to cross off your list of cities in which to spend your declining years on a modest Social Security annuity: Geneva, Switzerland, at $70,300, Moscow, $75,720, and Kuwait City, $59,800.