The scandal of Panamá is a business of Corruption related to the boring of the Canal of Panamá, which splashed several politicians and industrial French during the Third Republic, and ruined tens of thousands of subscribers.

Ferdinand de Lesseps

In 1879, Ferdinand de Lesseps, the builder of the Suez Canal is chosen by an international committee to launch the project of boring of the Isthme of Panamá, which must make it possible to connect the Atlantic Ocean to the Pacific Ocean by the Central America. It considers a 75 km long channel, without lock, and quantifies construction to 600 franc million.

Lesseps creates a Public limit company, the universal Compagnie of the interoceanic channel of Panama to join together the required funds and to lead the project. Work begins in 1881 and encounters several difficulties: epidemics of Malaria and Yellow fever causing a very strong mortality among the personnel, waves land due to the difficulty in crossing the mountainous cordillera which skirts the isthmus.

The withdrawal of the banks pushes Lesseps to launching a public subscription. But it uses part of these funds to corrupt journalists and to hide the difficulties of the building site. In 1887, half of boring is carried out but the project already cost 1400 franc million.

Gustave Eiffel

In front of these obstacles, Lesseps calls upon Gustave Eiffel, which agrees to take again the project. Eiffel completely calls into question the design, by envisaging locks in particular, whereas Lesseps had wanted to make a channel on level, as in Suez, without worrying about the mountainous character of the crossed area.

Continuous Lesseps to collect funds near savers and to corrupt journalists and ministers to obtain the promulgation of laws to measure, which must allow the floatation of a loan. Four franc million will be thus diverted.

Scandal

In spite of the issue of the loan, it is impossible to rectify the situation, and the Company is put in compulsory liquidation the February 4th 1889, causing the ruin of 85  000 subscribers.

In 1892, Edouard Drumont, a journalist openly anti-semite denounces the business and blames several financial Jews which supported the project. This renewal of anti-semitism in France will be one of the releases of the Affaire Dreyfus, three years later.

The scandal concludes in 1893 by the judgment at five years of prison from the former minister from public works, Charles Baïhaut. Ferdinand de Lesseps and Gustave Eiffel will be condemned, but will escape the prison thanks to a regulation. Charles de Lesseps, wire of Ferdinand, is condemned to the same sorrow as his/her father (5 years of prison) and bails out in another one year lawsuit for corruption. Condemned to two years of prison and 20.000 francs of fine, Gustave Eiffel will be finally rehabilitated by an investigation which will show that it was not implied in the embezzlements.

The construction of the channel will be finally taken again by the the United States of America which repurchase the concession, the actions and the assets of the new Compagnie of the channel of Panamá by the Traité Hay-Bunau-Varilla of November 1903. After having rejected a way crossing Nicaragua, they will take again and prolong the French layout, to complete it in 1914, with a overcost of only 40 million dollars. The work started in 1904 led to the inauguration of the channel the August 3rd 1914, the very same day of the declaration of war of Germany in France.

See too

Related article

• Channel of Panamá
• politico-financial Businesses

External bonds

• Panama, or the construction of an accounting scandal on Edubourse.com.
• March 20th, 1893: lawsuit of the teaching scandal of Panama on hérodote.net
• Summarized of the business on the site of the academy of the Meeting