panama city
AP
—
Panama’s Supreme Court late Thursday ruled that a subsidiary of Hong Kong’s CK Hutchison Holdings Ltd. has unconstitutional rights to operate ports on either end of the Panama Canal, advancing U.S. aims to thwart Chinese influence over the strategic waterway.
The court’s decision followed an audit by Panama’s comptroller that alleged irregularities in the 25-year extension of the concession granted in 2021.
The Trump administration has made preventing Chinese influence over the Panama Canal one of its priorities in the hemisphere. Panama was Secretary of State Marco Rubio’s first overseas stop as America’s top diplomat.
Despite Panamanian government and canal authorities insisting that China has no influence over canal operations, Rubio said the United States considers port operations a national security issue, and President Donald Trump has even said Panama should return the canal to U.S. control.
The court’s brief statement offers no guidance as to what will happen to the port going forward.
Political analyst Edwin Cabrera said the next step in the process would be to notify the parties of the court’s decision. The question of what to do with the port then goes to the Panamanian executive branch, specifically the Panama Maritime Authority.
“From my conversations with some people, I got the impression that (the port) operations will not stop,” Cabrera said.
Last year, CK Hutchison Holdings announced a deal to sell a majority stake in the Port of Panama and other ports around the world to a consortium of international companies including BlackRock, but the deal appears to have stalled over opposition from the Chinese government.
In parallel, Panamanian auditors audited the concession to the Panama Ports Company, which had been under contract to operate the port since 1997. This concession was renewed for 25 years in 2021 during the previous Panamanian administration.
Comptroller Anel Flores said the audit revealed unpaid bills, accounting errors and the apparent existence of a “ghost” concession that has been operating within the port since 2015. The company denied these allegations.
The audit found that the fraud had cost the government approximately $300 million since the concession was extended, and an estimated $1.2 billion during the original 25-year term of the contract.
Flores also said the extension was granted without the necessary approval from his office.
On July 30, the Comptroller challenged the Panama Ports Company’s port operating contract in the Supreme Court.
