Panama’s Comptroller To File Lawsuit Over Controversial Port Contract With CK Hutchison

Panama’s Comptroller General announced plans to file a lawsuit against former government officials and executives from Panama Ports Company (PPC), a firm majority-owned by Hong Kong’s CK Hutchison Holdings, over a controversial port concession renewal that caused the country over $1.3 billion in financial losses.

At a press conference on Monday, Panama’s Comptroller General Anel Flores revealed that the audit of the 25-year concession contract, renewed in 2021, found that the agreement heavily favoured private interest over the state.

The contract allows PPC-90% owned by CK Hutchison, to operate the Balboa and Cristobal ports on either end of the Panama Canal.

Flores said that renewable removed important financial safeguards, including a minimum annual payment of $20 million and a clause mandating a 5% yearly increase.

These changes, according to the comptroller’s team, lacked proper justification and led to reduced earnings for the country.

He also alleged that the original 1997 agreement and its later amendments were made with “magnanimity” that went against national interest.

According to the audit findings, PPC generated around $3.78 billion from port operations between 1997 and 2023, while Panama received only $236 million during the same period.

The audit report described the deal as “abusive” and accused former Panamanian officials of negotiating for themselves rather than for the nation.

Flores said that the amounts paid to the state were “little more than a tip” and stated that Panama “was left with crumbs.”

The financial review also uncovered evidence of accounting irregularities and phantom companies linked to PPC.

The comptroller confirmed that the findings would be forwarded to the Public Prosecutor’s Office to consider legal action against both company executives and the public officials involved in granting and amending the deal.

Panama’s Supreme Court is already reviewing the legality of the contract after the country’s Attorney General issued a binding option in February calling it unconstitutional.

Legal experts believe that if the court rules against the contract or the audit confirms irregularities, the concession could be revoked. The audit was launched on January 20, the day US President Donald Trump was inaugurated.

While Flores claimed the investigation was independently initiated to protect Panama’s financial interests, a source familiar with the matter stated that the government was also motivated by pressure from the Trump administration.

US authorities are concerned about the increasing role of Chinese and Hong Kong firms in Panama’s maritime business, especially around the Panama Canal.

In March, US investment giant Black Rock announced a $22.8 billion deal to acquire most of CK Hutchison’s global port operations, including the controversial Panama terminals.

Analysts see the audit as an obstacle to the completion of that deal. The transaction has not yet been finalised. Panama President Jose Raul Mulino recently reassured citizens that “the canal is and will continue to be Panamanian.”

References: Reuters, SCMP

Source: Maritime Shipping News