A deal to transfer control over major Panama ports from China-tied CK Hutchison to American firm BlackRock hit roadblocks after Panama’s top auditor accused the Hong Kong business of wrongdoings and owing hundreds of millions of dollars in unpaid fees.
In March, CK Hutchison, which holds 90% control of the Panama Ports Company, announced a deal to sell its stake in two ports, Balboa and Cristobal, to a consortium led by New York-based BlackRock, the world’s largest asset management company.
However, Panama Comptroller General Anel Flores threw the deal into limbo on Monday, accusing CK Hutchison of failing to obtain required clearances for the two ports and improperly extending its 2021 contract with the Panama Maritime Authority.
The company owes $300 million after using tax breaks to avoid $850 million of at least $1.3 billion in payments, Flores said, adding that it also breached an agreement to share 10% of its profits with the Republic of Panama.
“There are breaches, nonpayment, and countless things that were wrongly calculated,” Flores told reporters in Panama City.
Criminal charges against the Hong Kong company will be filed, and Flores will inform the Panama Maritime Authority of the alleged violations, the republic’s auditor said. The legal process to reconcile the problems could take between six months and a year, which could scuttle the deal, according to the Wall Street Journal.
The audit comes as the United States has pressed the republic to rid itself of Chinese influence, and President Donald Trump has expressed hope for reclaiming control over the Panama Canal for national and economic security purposes. Defense Secretary Pete Hegseth is in Panama this week “to continue the critical work of strengthening the U.S.-Panama security cooperation.” He is the first Pentagon chief to visit the nation in over two decades.
BLACKROCK TO TAKE OVER HONG KONG-OWNED PORTS IN PANAMA CANAL IN $23 BILLION DEAL
The State Department celebrated in March after it appeared BlackRock would take control over the major ports from CK Hutchison.
“It’s also no surprise that the CCP is upset at this acquisition, which will reduce their control over the Panama Canal area,” State Department spokeswoman Tammy Bruce said. “We are also glad to see U.S. investors acquire a controlling stake in the Panama Ports Company, which owns and operates the ports at Balboa and Cristobal at either end of the Panama Canal.”