The Perils of Panama : IN THE TIME OF THE TYRANTS; Panama: 1968-1990 <i> By R. M. Koster and Guillermo Sanchez (W.W. Norton: $22.95; 430 pp.)</i>

In Panama they are called bolas , rumors that spread daily if not hourly through the society. Someone has died, another is sleeping with a friend’s wife, a politician is planning a coup. One vice president nearly punched the other vice president during a cabinet meeting. Bolas touch on nearly every aspect of Panamanian life.

Some bolas are funny, others meaningless, but many are taken seriously in Panama, so seriously that they frequently turn into the myths that too often become the basis of journalism or, worse, pass for history.

A major example is the myth of Omar Torrijos, the handsome and dashing Panamanian colonel who held power from the late 1960s until his death in 1981. The myth of Torrijos is that he was a populist who took on the rich, white Panamanian establishment and the imperialist United States to bring the poor people of his country out of misery and to establish the political and economic independence for his nation by wresting the Panama Canal from the giant to the north.

It was a myth bought by the British writer Graham Greene, President Jimmy Carter and many others. The truth was otherwise, as pointed out in “In the Time of the Tyrants.”

In what is the most valuable aspect of this book, the authors carefully remind a forgetful world that Torrijos was not a George Washington-like hero but an unstable colonel who, in the late 1960s with American complicity and approval, established and cemented military rule in Panama and defined its brutal and criminal nature.

Koster and Sanchez also effectively explain that Torrijos’ supposed greatest achievement--new treaties giving sovereignty and control of the Panama Canal to Panama--fell far short of what could have been accomplished, and even gave the United States rights it already had renounced.

“In the Time of the Tyrants” contains some other positive aspects. With the United States still congratulating itself on throwing out Manuel Antonio Noriega a year ago and destroying the military structure that brutalized, raped and plundered Panama, Koster and Sanchez remind us again not only that Noriega was a paid agent of the American government but also that high U.S. officials--including Presidents Reagan and Bush-- condoned, protected and publicly praised the dictator through most of his murderous rule.

And as the Bush Administration, for its own political needs, pushes Panama to participate in Washington’s war on drugs, even though it threatens the Panamanian economy and raises the specter of a militarized police force, “In the Time of the Tyrants” recalls how the United States for its own ends created a military institution unneeded by a peaceful society unable to protect itself.

Yet while Koster and Sanchez demolish the myth of Torrijos and point out the hypocrisy of American policy regarding Noriega, much of what is valuable in this book is offset by the excesses and faults of the authors, particularly the portrayal of unsubstantiated gossip and rumors as facts. Their well-grounded disgust with and hate for Torrijos and Noriega has led Koster and Sanchez to perpetuate or create other bolas and myths unacceptable in serious journalism.

What is sad is that the confirmed record of Torrijos, Noriega and the United States is so awful it needs no embellishment.

For instance, in their central allegory of Noriega’s total depravity--the 1985 murder by beheading of Dr. Hugo Spadafora, one of the dictator’s most dangerous opponents--Koster and Sanchez repeat accounts that Spadafora had been tortured and anally raped, and that Noriega’s henchmen had cut his thigh muscles to prevent him from resisting. However, as John Dinges wrote earlier this year in “Our Man In Panama,” which remains the most responsible and authoritative account of recent Panamanian history, an autopsy by an independent Costa Rican doctor showed no signs of sexual abuse or torture.

Worse, Koster and Sanchez refer to Dinges as an apologist for Noriega, an absurd assertion to anyone who has read Dinges’ book.

The Spadafora murder stands on its own as an example of Noriega’s depravity. There is no need to make him out as an even greater monster, particularly by using unsubstantiated rumors. In their loathing for Noriega and those American officials who supported and helped him, Koster and Sanchez also give total credence to the unconfirmed accounts of at least two former Noriega associates who turned on their onetime master as part of a plea bargain: political operative Jose Blandon and convicted money launderer Ramon Milian Rodriguez, described by the U.S. attorney’s office in Miami as “wholly without credibility.” As for Blandon, Dinges wrote: “Although Blandon undisputably had a major political role in Panamanian events and had inside knowledge of many major events in Panama, a significant number of his allegations defy confirmation and in some cases are implausible or demonstrably false.”

Again, the public and confirmed record against Noriega is so strong that it doesn’t need the use of suspect and unsubstantiated testimony from special pleaders.

With the anniversary of the U.S. invasion of Panama having just passed, this would be a good time for a serious examination of the reasons for the American action and its impact since. For the most part, “In the Time of the Tyrants” fails on both counts. It provides neither new information nor insight into the events that led to the Dec. 20, 1989, American attack nor a thoughtful look at the effects and implications of that drastic act.

All of this is a surprise and a disappointment. Guillermo Sanchez is one of Panama’s most influential journalists, a man who bravely and constantly exposed the barbarities, crimes and betrayals of the uniformed thugs and their civilian front men who ruled his country for more than 20 years. Few knew more and even fewer disclosed what was going on in the country, a knowledge he continues to display in a column for La Prensa, Panama’s best newspaper.

For his part, R.M. Koster, a longtime American resident of Panama, had a well-earned reputation as a writer, having published a engrossing novel in 1972 called “The Prince,” which was an amazingly prescient portrayal of a banana republic taken over by venal military men and turned into a center of corruption.

On their records, Koster and Sanchez not only could have written a better book, they should have.