The latest issue of the US State Department's annual report on human rights in Panama has, for the second consecutive year, highlighted persistent problems in the country's judicial and penal system. The report criticised police violence, the slowness of judicial process, the timid application of alternatives to imprisonment, and cruel or unusual punishment. While the mounting international pressure on this issue publicly angers officials, it may be having the desired effect. In late January the draft of a bill for substantial reform was published. This would include maximum prison terms, the creation of a grand jury system and new laws to establish penalties for drunk driving, illicit enrichment and environmental wrongs. There are proposals to set up a supervisory commission to oversee human rights issues and prison conditions. Spanish consultants have been called in to provide technical assistance and training for modernisation of the prison system and improvement in the care of inmates, including re- socialisation. The draft reform bill was published close to the occurrence of the most macabre event yet in the Panamanian prison system -- the decapitation of four inmates on the prison island of Coiba by rival prison gang members. It has been reported that as many as 451 of the 697 prisoners on the island have not been tried or are awaiting sentencing. As of June 1997 nearly 75% of the 7,822 prisoners in the system had not yet been tried, up from 71% the year before.