Projects in Panama - Spanish, Italian, Chinese construction firms interested, says VP

"Latin America and Panama needs companies to understand that my country will no longer permit corruption in public works. There will be consequences," Saint Malo said in an interview last week.

Construction firms from Spain, Italy and China are interested in public works in Panama, Vice President Isabel Saint Malo told Reuters, filling a gap left by Brazil's Odebrecht, which is banned from tendering in the wake of a graft scandal.

"Latin America and Panama needs companies to understand that my country will no longer permit corruption in public works. There will be consequences," Saint Malo said in an interview last week.

"Odebrecht has maintained a presence in Panama for many years but we want new companies to arrive," she said. "And companies are arriving ... There are Spanish companies, Italian companies, Chinese companies with a lot of interest." She declined to name the companies as conversations were ongoing.

China Construction America Inc stepped in to complete the Amador convention center in Panama City, which should be ready by year-end, Saint Malo said.

However, the Chan II hydroelectric power plant is in limbo because Odebrecht won the contract but had not started work, she said.

Panama was due to start negotiations with China soon over a trade deal that could open the world's second largest economy to more Latin American goods, the vice president said.

"We think that Panama's geographic position and its port, air and maritime connections make it an ideal place to consolidate Latin American production for export to Asia," she said.

The government of Panamanian President Juan Carlos Varela has allowed Odebrecht to complete projects already underway in Panama to minimize job losses and the economic impact of the scandal, drawing criticism from political opponents.

Odebrecht agreed in August to pay $220 million in fines to Panama and to cooperate with investigators probing bribes of Panamanian officials, but was suspended from tendering for new projects while the investigation continued.

Odebrecht admitted in a 2016 leniency deal with Brazilian, Swiss and U.S. authorities that it had paid hundreds of millions of dollars in bribes since 2002 for infrastructure projects in 12 countries, including Brazil, Argentina, Colombia, Mexico, Venezuela and Panama.

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