PANAM CITY: The Hong Kong firm in charge of two key Panama Canal ports has flouted the terms of its contract, according to a Panamanian audit released on Monday (Apr 7), as US and Chinese firms fight for business on the waterway after President Donald Trump threatened to seize it.
The audit found “many breaches” of the concession awarded to a subsidiary of logistics giant CK Hutchison to operate the two ports, and concluded that Panama did not receive US$1.2 billion it was owed under the contract.
The subsidiary, called Panama Ports, benefited from many tax exemptions and also had irregularities in a previous audit that was used to justify an extension of the concession first awarded in 1997, said state comptroller Anel Flores.
“This is a very delicate issue,” Flores told reporters, adding that he would file a complaint with prosecutors in the coming days over the unpaid concession fees.
The release of the audit results came hours before US Defense Secretary Pete Hegseth arrived in Panama, which has come under strong pressure from Trump to reduce Chinese influence on the US-built canal.
The US has said it is a threat to its national security – and the region as a whole – for a Hong Kong company to operate ports at either end of the canal connecting the Atlantic and Pacific, through which 5 per cent of all global shipping passes.
Hegseth will meet Panamanian President Jose Raul Mulino on Tuesday and visit the canal, which opened in 1914.
He will also participate in a security conference with Central American officials.
Although the waterway has been under Panamanian control since 1999 under international treaties, Trump has threatened to take it back, by force if necessary, arguing that it is effectively controlled by Beijing.
