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Panama to file charges over alleged sweetheart port contract

Officials target Chinese conglomerate CK Hutchison as US-based BlackRock eyes purchase of operations at key ports

Steve Barrett
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Mediterranean Shipping Co. is part of a consortium looking to buy operations at ports on each end of the Panama Canal. (Photo: Jim Allen/FreightWaves)
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Key Takeaways:

  • Panama will file criminal complaints against CK Hutchison Holdings and Panamanian officials over a disadvantageous port contract.
  • The contract, renegotiated in 1997, allegedly cost Panama $1.3 billion in revenue.
  • A $23 billion sale of CK Hutchison's Panama port operations to a consortium including BlackRock is pending, facing scrutiny from China.
  • The sale is complicated by allegations of unpaid fees and contract irregularities by CK Hutchison.
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The comptroller of Panama said on Monday that the country will file criminal complaints against officials at CK Hutchison Holdings, the Hong Kong conglomerate that runs ports on each end of the Panama Canal, as well as Panamanian government officials, after determining that CK Hutchison’s contract heavily disadvantages Panama, the Financial Times reported.

The announcement comes as CK Hutchison considers a $23 billion sale of operations at the two ports to a consortium including U.S.-based investment firm BlackRock Inc. (NYSE: BLK) and Geneva-based ocean carrier Mediterranean Shipping Co.

A subsidiary of CK Hutchison in 1997 renegotiated a contract that has since cost the country $1.3 billion in revenue, Panama’s comptroller general, Anel Bolo Flores, claimed.

Flores said the Panamanian people and prosecutors deserve an explanation for “such benevolence in a contract that has been abusive to say the least,” the Financial Times reported.

Further complicating the potential BlackRock sale is an ongoing review of the purchase by officials in China. The sale would include terminal operations at the Balboa and Cristobal ports and was announced soon after statements by President Donald Trump that the U.S. should retake control of the canal for reasons of national security.

U.S. Defense Secretary Pete Hegseth is in Panama and was slated to meet President José Raúl Mulino on Tuesday. Panamanian officials have dismissed Trump’s concerns that China has too much control of the canal.

Larry Fink, chair of BlackRock, said at a meeting of the Economic Club of New York on Monday that the sale will likely move forward over China’s objections, the Financial Times reported. Fink said the port operations in Panama are only a small fraction of the value of a deal designed to ensure U.S. access to 43 ports in nearly two dozen countries, according to investor-oriented news outlet Benzinga.

Benzinga reported that CK Hutchison is alleged to owe hundreds of millions of dollars’ worth of unpaid fees and that the contract with the Panama Maritime Authority was extended without proper clearances.

Related:

China to review sale of Panama Canal shipping terminals to US investor: Report

Steve Barrett

A copy editor for FreightWaves since 2019, Steve Barrett has worked as an editor and/or reporter for The Associated Press as well as newspapers in Texas, Georgia, North Carolina, Tennessee and Nebraska. He also served as a senior managing editor for a medical marketing company, collaborating with some of the nation's most respected health care organizations and specialists in major markets in New York and Pennsylvania. He earned a Master of Mass Communications degree from the University of Georgia and a Bachelor of Arts in English and Spanish from the University of South Dakota.