Panama’s attorney general, Luis Carlos Gomez, has announced an investigation into a contract awarded to the Hong Kong-based CK Hutchison for operating two ports within the country. This decision came after criticism from the comptroller general of Panama, Anel Flores, who indicated that the government had overlooked potential revenue of $1.3 billion due to tax incentives and benefits granted to CK Hutchison.
In a letter addressed to Flores, Gomez noted that the investigation is being conducted “ex officio” concerning the alleged commission of crimes against public administration and other violations against the state. The contract, which spans 25 years and is held predominantly by Panama Ports Company, a subsidiary of CK Hutchison with a 90% interest, involves the concession of both Balboa and Cristobal ports.
An audit of this agreement has been ongoing since January and is nearing completion, with plans for a lawsuit against officials responsible for approving the contract. Additionally, Panama’s Supreme Court has been reviewing the concession since February, which could complicate a significant $22.8 billion deal revealed in March involving CK Hutchison’s port operations across 23 countries, including the aforementioned ports in Panama.
BlackRock, the U.S. investment firm leading the deal, has not provided comments regarding the developments. BlackRock’s CEO, Larry Fink, recently highlighted that geopolitical considerations were not the driving force behind the deal, although it is understood that China will closely scrutinize the transaction.
As the investigation progresses, should irregularities in the contract’s renewal be substantiated or should the Supreme Court deem the agreement unconstitutional, the concession may indeed be revoked, according to legal experts.