Panama’s Comptroller General has raised concerns over a deal between a BlackRock Inc.-led consortium and a CK Hutchison Holdings Ltd. unit, Panama Ports Co., to acquire two Panama ports.
The allegations stem from an audit that accuses Panama Ports Co. of failing to secure necessary approvals from the comptroller’s office for a 2021 contract extension and employing tax-exempt subcontractors to reduce payments to the government.
According to Comptroller General Anel Flores, Panama Ports Co. utilized tax breaks to save $850 million of at least $1.3 billion owed to Panama over the first 25 years of its contract. The audit further claims the company currently owes $300 million and breached an agreement to share 10% of its net income with the government.
Speaking to reporters on Monday, Flores stated, “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,” referring to the BlackRock deal. He added, “There are breaches, nonpayments and countless things that were wrongly calculated.”
The deal involves the Balboa and Cristobal ports, located on either side of the 51-mile Panama Canal, as part of a broader transaction encompassing 43 CK Hutchison facilities. If completed, CK Hutchison would receive over $19 billion in cash.
Flores announced plans to file a criminal complaint with Panama’s attorney general’s office on Tuesday against maritime authorities responsible for the 2021 contract renewal and Panama Ports executives. He will also submit the audit findings to Panama’s Maritime Authority, which will determine whether to rescind the contract.
The audit was initiated following efforts by US President Donald Trump to reduce Chinese influence in the trade route. Although the BlackRock-led consortium agreed last month to purchase a majority stake in Panama Ports and other Hutchison assets, the transaction remains unsigned amid scrutiny from Chinese authorities.
CK Hutchison Holdings Ltd. is a multinational conglomerate based in Hong Kong, founded by billionaire Li Ka-shing. Established in 2015 through a merger of Cheung Kong Holdings and Hutchison Whampoa, the company operates in diverse sectors, including ports and related services, retail, infrastructure, energy, and telecommunications. Its ports business, managed through Hutchison Port Holdings, oversees a global network of port facilities, including the Panama Ports Co., which operates the Balboa and Cristobal ports near the Panama Canal.
BlackRock Inc., headquartered in New York City, is the world’s largest asset management firm, managing trillions of dollars in assets for institutional and individual investors. Founded in 1988 by Larry Fink and others, the company provides investment management, risk management, and advisory services.
Panama Ports Co. (PPC) is a subsidiary of Hutchison Port Holdings. Established to manage port operations in Panama, PPC holds a concession to operate the Balboa and Cristobal ports, located at the Pacific and Atlantic entrances of the Panama Canal, respectively. The company has managed these ports since 1997 under a 25-year contract, renewed in 2021.