The sale of Hutchison Ports to the consortium formed by BlackRock and MSC is becoming increasingly complex. While China’s antitrust authority is currently reviewing the transaction—since the seller is Hong Kong-based conglomerate CK Hutchison Holdings—Panama’s Court of Auditors is probing the legality of the concessions granted to Panama Ports for the Balboa and Cristobal terminals. These two facilities, located at opposite ends of the Panama Canal, are considered strategic assets and are likely the key reason behind BlackRock and MSC’s offer of 22 billion dollars to acquire Hutchison Ports’ global operations, excluding those in China. The deal emerged after former US president Donald Trump raised concerns over alleged Chinese control of the canal.
According to Anel Flores, Panama’s Comptroller General, CK Hutchison, through its subsidiary Panama Ports, extended its contract in 2021 without the mandatory approval from the Court of Auditors. The company is also accused of using tax-exempt subcontractors to artificially reduce the amounts payable to the state, allegedly breaching key contractual clauses. Flores estimates the damage to public finances to be significant. Of the at least 1.3 billion dollars owed over the first 25 years of the contract, the company is said to have paid only a fraction, improperly saving around 850 million. Currently, Panama Ports reportedly still owes a further 300 million dollars. In addition, the company allegedly failed to comply with its obligation to transfer 10 percent of its net profits to the government.
News of these findings has immediately cast doubt on the acquisition project announced just a month ago by the BlackRock-led consortium. “When you’re buying something, you need to know exactly what you’re getting,” said Flores at a press conference, as quoted by Bloomberg. “And in this case, there are breaches, missed payments and accounting errors on several fronts.”
Based on Flores’ statements, the authority overseeing the Panama Canal must now decide whether to revoke the two concessions. Meanwhile, the Comptroller has announced that he will file a criminal complaint with the Attorney General’s Office against the officials who authorised the contract extension and against Panama Ports’ top executives. If the termination of the contract is confirmed, it would set a major precedent for the renegotiation of similar concessions in other ports across the region and beyond. For now, BlackRock and the acquiring consortium will need to assess their next moves with the utmost caution.
