Auditors in Panama have reported that the Hong Kong-based owner of key Panama Canal ports has violated the terms of its contract.
Comptroller-General Anel Flores announced on Monday that the audit had found “many breaches” of the concession awarded to Hong Kong-based logistics giant CK Hutchison to operate the Balboa and Cristobal ports, which sit close to the Panama Canal.
The report comes as United States President Donald Trump continues his push for control of the strategic waterway, and it has been suggested that its findings and the timing of the announcement may be linked.
The auditors concluded that CK Hutchison had failed to pay Panama $1.2bn owed under the contract. Flores said Panama Ports, the subsidiary that operated the facilities, benefitted from many tax exemptions and had been found responsible for irregularities in a previous audit.
“This is a very delicate issue,” Flores told journalists, adding that he would file a complaint with prosecutors in the coming days over the unpaid concession fees.
“There are many violations that will have to be explained,” he added.
Panama Ports won the concession to operate Balboa, located near the Pacific end of the Panama Canal, and Cristobal, in the Atlantic, in 1997. The contract was renewed in 2021 for 25 more years.
However, the control of the facilities by a Hong Kong-based company has come under scrutiny since Trump accused China of interfering with the strategic waterway. He has pledged to retake control of the Panama Canal, which the US handed to Panama in 1999, insisting that it is vital for US national security.
CK Hutchison agreed earlier this year to sell the ports to US company BlackRock, effectively putting the ports under US control. However, a contract has yet to be finalised, which has been met with anger in Beijing.
Flores said the audit results would be sent to Panama’s Maritime Authority, which oversees the ports and has the power to terminate the concession contract.
That is the main point, some analysts suspect, with the audit designed to allow Panama to strip the Hong Kong company of the contract to appease the Trump administration.
“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, a professor of international relations at the University of Panama, told the AFP news agency.
The release of the audit results came just hours before US Defense Secretary Pete Hegseth arrived in Panama to meet President Jose Raul Mulino and visit the canal.
Flores denied that the release of the report had any connection to the visit.
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