By Elida Moreno
PANAMA CITY (Reuters) -Panama has opened an investigation into a contract granted to Hong Kong-based CK Hutchison for the operation of two ports in the Central American country, Attorney General Luis Carlos Gomez said on Tuesday.
Gomez made the announcement after Panama’s comptroller general criticized the contract, renewed in 2021, earlier this week. Comptroller Anel Flores said Panama “left $1.3 billion on the table,” referring to tax incentives and benefits granted by the government to CK Hutchison.
“This prosecutor’s office is conducting an investigation initiated ‘ex officio’ for the alleged commission of a crime against public administration and other crimes against the State,” Gomez said in a letter sent to Flores on Tuesday.
The 25-year contract awarded to Panama Ports Company, in which CK Hutchison has a 90% stake, for the concession of the Balboa and Cristobal ports has been under audit since January.
The audit is nearing completion, Flores said on Monday, adding that a lawsuit would be filed against government officials who authorized the contract. Since February, Panama’s Supreme Court has also discussed the concession.
The contract reviews are seen as possible roadblocks in a key $22.8 billion deal announced in March by a group led by U.S. investment firm BlackRock to get access to CK Hutchison’s port business in 23 countries, including the two ports in Panama.
CK Hutchison and BlackRock did not immediately reply to requests for comment. BlackRock CEO Larry Fink, speaking earlier this week at a conference in New York, said the deal was not made for geopolitical reasons, but the company was aware that China would review it as much as other jurisdictions.
Regulatory review of the deal could take nine more months, Fink said, adding he was optimistic it would be approved.
China’s embassy in Panama said on Tuesday in a social media post that it has and will continue respecting Panama’s sovereignty, and added that the relationship between the U.S. and Panama should not be “excluding.”
If irregularities in the concession renewal are confirmed by Panama’s government or the Supreme Court declares the contract to be unconstitutional, the concession could be revoked, lawyers and experts have said.
(Reporting by Elida Moreno; writing by Marianna Parraga; additional reporting by Tatiana Bautzer. Editing by Leslie Adler, Lisa Shumaker and Nia Williams)
