HONG KONG (AP) - A subsidiary of the Hong Kong conglomerate CK Hutchison Holdings has sought legal protection in Panama as it faces lawsuits related to its contract over port assets in the Panama Canal. The Panama Ports Company expressed concerns regarding the necessity of respecting the rule of law to ensure that Panama remains a secure environment for investments.
On Wednesday, Panama's Comptroller General filed two lawsuits aiming to declare unconstitutional a contract initially granted in 1997, which allowed CK Hutchison's Panama Ports Company to operate the ports at both ends of the canal. The lawsuits also target the contract’s renewal in 2021, suggesting it was “abusive” to the interests of Panama.
In response, the Panama Ports Company highlighted its contributions to the country's economy, stating that it has created over 25,000 jobs and invested billions of balboas, Panama's currency. The company is keen to collaborate with the Panamanian government for a prosperous future.
The ongoing legal proceedings have prompted the company to assert that respect for legal protections and the rule of law is critical for instilling confidence in businesses and investors regarding Panama's investment climate. The company operates critical ports in Balboa on the Pacific side and Cristobal on the Atlantic side.
CK Hutchison's concession contract, approved in 1997 and extended for an additional 25 years in 2021, has come under scrutiny following a recent audit by Panama's comptroller's authority, which alleged irregularities in the renewal process. However, the Panama Ports Company has denied claims that it owed approximately $1.2 billion to the Panamanian government.
Adding to the complexities, CK Hutchison Holdings had previously announced a plan to sell its port assets in various countries, including a consortium involving U.S. investment firm BlackRock Inc. This proposal has been affected by the escalating tensions between Beijing and Washington. Former U.S. President Donald Trump had initially endorsed the sale, believing it would mitigate Chinese influence over the canal, yet it led to displeasure in Beijing and attracted scrutiny from Chinese anti-monopoly authorities.
Following a period of uncertainty, Hutchison indicated it may pursue Chinese investors to join the consortium, which also includes Global Infrastructure Partners, a subsidiary of BlackRock, and Terminal Investment Limited, part of the Mediterranean Shipping Company. The total value of the initial deal was approaching $23 billion, which included $5 billion in debt and aimed to control 43 ports across 23 countries, with a focus on the strategic ports at the Panama Canal.
On Friday, the Panama Ports Company stated it would engage with the Panamanian government at the right time, reinforcing the importance of collaboration for determining the company's future path. The Panamanian government maintains its full control over the canal, asserting that CK Hutchison's operations do not equate to Chinese control over the strategic waterway.
