The future of CK Hutchison’s deal to sell two Panama ports—the Balboa and Cristóbal terminals—to a BlackRock-led consortium is facing significant challenges after Panama’s top auditor uncovered widespread contractual breaches and claimed that the port operator owes the country hundreds of millions of dollars, as reported by Bloomberg. This development comes amidst an antitrust probe launched by Beijing and escalating trade war tensions between Washington and China. At the heart of the port sale is President Trump’s initiative to safeguard hemispheric defense by removing Chinese control from critical areas of the canal.
On Monday, Panama’s Comptroller General, Anel Flores, disclosed that CK Hutchison’s Panama Ports Company’s (PPC) 2021 renewal of a 25-year port concession was riddled with procedural violations. Flores alleged that PPC utilized tax loopholes to avoid paying $850 million in taxes out of the total $1.3 billion owed during the initial 25-year contract period. He accused CK Hutchison of operating “shadow companies” to conceal revenue, claiming that PPC still owed the Panamanian government $300 million.
The timing of the audit poses a further obstacle to CK Hutchison’s proposed $22.8 billion sale of 43 global ports to a BlackRock-led consortium, which was announced in March. The deal had already been delayed last week due to mounting pressure from Beijing. Chinese media outlets have been critical of CK Hutchison’s founder, labeling him as “spineless” and questioning his allegiance. Flores cautioned BlackRock that acquiring the disputed ports would entail inheriting breaches and outstanding payments.
Flores intends to lodge a criminal complaint with Panama’s attorney general’s office against the maritime authorities who granted the contract renewal in 2021 and the executives of Panama Ports. He also plans to notify Panama’s Maritime Authority of the audit findings, leaving the agency to decide whether to revoke the contract.
At the Economic Club of New York, BlackRock CEO Larry Fink addressed concerns about the port deal, stating that the regulatory review for antitrust issues could span over nine months or longer. Despite potential hurdles, Fink expressed optimism regarding the deal’s approval, emphasizing that commercial factors, rather than geopolitical considerations, were driving the transaction.
While the Panama port deal faces delays, President Trump recently extended the TikTok deadline by 75 days. These stalled agreements serve as bargaining tools for Beijing and Trump amid heightening trade tensions. The audit conducted by Flores raises questions about the validity of PCC’s 25-year port concession agreement signed years ago.