The Comptroller General of Panama, Anel Flores, said on Monday that the audit carried out on the company Panama Ports Company (PPC), a subsidiary of the Hong Kong multinational CK Hutchison, revealed multiple contractual breaches, a million-dollar debt with the Panamanian State and legal irregularities in the automatic renewal of its concession to operate two key ports at the entrances of the Panama Canal.
“More than 300 million dollars that they owe us for breaches of contract,” Flores said during a press conference, referring to PPC, which manages the ports of Balboa and Cristóbal, located respectively on the Pacific and Atlantic coast of the canal.
The company has been managing both ports since 1997, after obtaining a 25-year concession contract, which was automatically renewed in June 2021 for a new equivalent period. This extension was concretized in the midst of public complaints about alleged corruption and unfavorable conditions for the State, which has only 10% of shareholding in PPC.
According to the Comptroller’s Office, the original contract was modified in 2002, during the government of Mireya Moscoso (1999-2004), eliminating an annual fee of 22 million dollars to the tax authorities and establishing as the only source of income for the State a charge for the movement of containers, in addition to granting extensive tax exemptions.
Flores estimated that these conditions have meant a cumulative loss for the public treasury of approximately 1.2 billion dollars, at a rate of 55 million per year.
Flores also indicated that the automatic renewal of the concession was approved by the Board of Directors of the Maritime Authority of Panama (AMP) without complying with the legal requirements or having the mandatory endorsement of the Comptroller General’s General’s State.
The official announced that a criminal complaint will be filed with the Public Ministry against the members of that board of directors and against PPC officers, with the aim of clarifying the conditions of a renewal that, in his words, was “excessively benevolent.”
The case has gained geopolitical relevance after statements by the President of the United States, Donald Trump, who assured that his government is “retaking back” control of the interoceanic route by stating that “China is operating the canal,” in reference to the presence of CK Hutchison in the ports of entry and exit of it.
In that context, Trump celebrated as an achievement the announcement of a transfer agreement of the port concession between CK Hutchison and a consortium led by the US asset manager BlackRock, within the framework of a global operation that covers more than 40 terminals in about 20 countries, valued at almost 23 billion dollars.
Panamanian President José Raúl Mulino again denied the statements of the US president and reaffirmed national sovereignty over the interoceanic route: “President Trump is lying again! The Panama Canal is not in the process of recovery. The channel is Panamanian and will continue to be Panamanian.”
The transaction between CK Hutchison and BlackRock, which included the ports of Balboa and Cristóbal, was scheduled to take place on April 2, but has been delayed due to an ongoing investigation by the Chinese regulator, which has postponed its execution.