On Wednesday, Hong Kong’s CK Hutchison, a subsidiary of Cheung Kong Holdings, denied allegations of contract violations during the operation of the Panama Canal. The company stated that it had invested nearly $1.7 billion in two ports near the Panama Canal, exceeding the contractually stipulated amount.
CK Hutchison holds a 90% stake in Panama Ports Company (PPC), a subsidiary operating Balboa and Cristobal ports at both ends of the Panama Canal. The company renewed its port operating concession in 2021.
In January of this year, the Panamanian government initiated an audit of the contract. According to Reuters, the audit by Panamanian authorities is nearing completion. Since February, the Supreme Court and the Attorney General’s Office in Panama have also begun reviewing the concession and its renewal terms.
Auditor General Anel Flores stated on Monday that the audit revealed Panama had “lost $1.3 billion” due to tax incentives and benefits granted to CK Hutchison.
CK Hutchison refuted any allegations of misconduct or violations and issued a detailed statement on Wednesday explaining how it had fulfilled its financial obligations under the contract.
The company stated that its investment in Panama exceeded $1.695 billion, surpassing the $50 million specified in the original 1997 concession contract and the $1 billion requirement in the additional terms of 2005. The company also mentioned that Panama’s Auditor General confirmed this after a thorough audit in 2020.
The company’s statement highlighted, “During the concession period, PPC has paid $668 million to the country… far exceeding contributions by any other port operators in Panama.”
The statement further noted that the tax exemptions granted to PPC by the government were “identical to those received by all other port operators in Panama.”
“PPC continues to call for respectful coordination and negotiation to protect the concession,” the company stated.
On March 4th, CK Hutchison announced plans to sell 90% ownership and operational control of Balboa and Cristobal ports at both ends of the Panama Canal, along with assets from 43 ports in 23 countries globally, to a consortium led by BlackRock for $22.8 billion.
As a result of this, Li Ka-shing faced retaliation and pressure from the Chinese Communist Party, attracting international attention.
The stock price of CK Hutchison continued to decline on Wednesday, wiping out all gains made since agreeing to sell assets related to the Panama Canal last month.