Payment of Claims Against the Panama Canal

ID-83-34: Published: Mar 4, 1983. Publicly Released: Mar 4, 1983.

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Samuel W. Bowlin
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During October 1, 1979 to March 31, 1982, the U.S. Attorney for the Panama Canal Zone sent a number of final judgments against the Panama Canal Company by the U.S. District Court for the Canal Zone to GAO for certification and payment from the permanent indefinite appropriation for judgments. The judgments were paid from a permanent judgment appropriation account. GAO reviewed this matter in response to a question as to whether these payments should have been made from Panama Canal Commission operation and maintenance appropriations.

GAO found that judgments against the Panama Canal Company should not be paid from the permanent judgment appropriation. The judgment appropriation is available only when payment is not otherwise provided for. If a given judgment can be paid out of some appropriation or fund under the control of the agency involved, then payment is otherwise provided for and the judgment appropriation is not available. Prior to dissolution, the Panama Canal Company, as a Government corporation empowered to sue and be sued, paid its own judgments. Under the Panama Canal Act of 1979, the Panama Canal Commission was made successor to the Panama Canal Company and its funds, and its liabilities. Thus, the funding source that would have been used to pay the judgments had they become final prior to the company's dissolution still exists and is now within the control of the Commission. Therefore, Commission funds are available to pay judgments against the former Panama Canal Company.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Panama Canal Commission should take action to reimburse the judgment appropriation account for the payments erroneously made. The reimbursement can be accomplished by a transfer of funds or check payable to the U.S. Treasury.

    Agency Affected: Panama Canal Commission


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