CK Hutchison, a multinational conglomerate, has been found in violation of its contract to operate ports near the Panama Canal, according to a recent audit. The report comes just as US President Donald Trump is further ramping up his own attempts to wrest control over the increasingly strategic waterway. The two ports in dispute, Balboa and Cristobal, have been operated by Panama Ports, a subsidiary of CK Hutchison, since 1997.
Auditors found that CK Hutchison underpaid about $1.2 billion due under the provisions of its contract. This lack of oversight has raised major red flags about the ability of the company to manage the facilities. We will send the audit findings to Panama’s Maritime Authority. They could and should do this by exercising their power to terminate the concession contract for these repeated and egregious violations.
To make matters worse still, the Panama Ports subsidiary received a long list of tax exemptions while operating the facilities. Irregularities had just been uncovered in an audit of Panama Ports, raising questions about the company’s operational integrity. The recent findings have intensified scrutiny over CK Hutchison’s control of the ports, particularly in light of Trump’s accusations regarding potential Chinese interference with the Panama Canal.
CK Hutchison’s advance sale of the ports to BlackRock is now formalized. This decision reveals the ongoing international disagreement over authority over this strategic waterway chokepoint. In 2021, the city manager granted the company an extension of an additional 25 years. Worries persist about its lack of adherence to its obligations.
Euclides Tapia, a professor of international relations at the University of Panama, said the finding in the audit has huge implications.
“It comes as a surprise to no one that the audit turns up alleged irregularities, since the idea was to have some kind of legal justification strong enough to cancel the concession.” – Euclides Tapia, University of Panama.
In 1999, the United States ceded administration of the Panama Canal to Panama. This was the start of a new, collaborative, accountable style of governance for the area. Since then, control over operations at the canal and its adjacent ports has raised ire. External pressures have increasingly begun to dominate conversations around control and management.
As news continues to break about CK Hutchison and its future role with Panama Ports, stakeholders are keeping a close eye. The repercussions of these findings will likely have broad and deep effects on local democracy and U.S.-Cuban relations.
