A BlackRock-led consortium’s deal to buy two Panama ports from a CK Hutchison Holdings unit was thrown into doubt after the central American country’s top auditor accused the operator of wrongdoings and owing millions in dues.
Panama Ports Co., the entity run by Hutchison Port Holdings, didn’t receive required approvals from the comptroller’s office for a contract extension in 2021 and also used a series of tax-exempt subcontractors to lower the amount it pays to the government, Comptroller General Anel Flores told reporters April 7 following an audit.
The CK Hutchison subsidiary used tax breaks to save $850 million of at least $1.3 billion it owed in payments to the republic in the first 25 years of the contract period, Flores said, adding that it currently owes $300 million. The company also breached its agreement to share 10% of net income with Panama’s government, Flores said.
The Balboa and Cristobal ports on either side of the 51-mile (82-kilometer) Panama Canal, which connects the Atlantic and Pacific oceans, form a key part of the deal involving a total of 43 CK Hutchison facilities. The Hong Kong conglomerate would net more than $19 billion in cash if the transaction goes through.
“There are two people in a transaction, but they need to know what they are selling and that what they are buying might not be what they were told,” Flores said, referring to the BlackRock deal. “There are breaches, nonpayments and countless things that were wrongly calculated.”
CK Hutchison didn’t immediately respond to a request for comment.
Flores said that he plans to file a criminal complaint with Panama’s attorney general’s office on April 8 against the maritime authorities who granted the 2021 contract renewal and against executives of Panama Ports. He said that he will also inform Panama’s Maritime Authority of the audit’s results, and that agency will need to decide whether to rescind the contract.
The government launched its audit shortly after U.S. President Donald Trump began pushing to rid the trade route of Chinese influence.
While CK Hutchison is based in Hong Kong, a Chinese territory with its own borders, currency and legal system, Beijing has tightened its grip on the former British colony since 2020 when it imposed a broad national security law that’s paved the way for a crackdown on dissent.
A consortium backed by BlackRock agreed last month to buy a majority of Panama Ports and other Hutchison assets. But the parties are yet to sign the deal while it’s being scrutinized by Chinese authorities.
