Panama to file criminal complaint over canal concession
Move comes hours before visit by Pete Hegseth as US raises pressure over Chinese influence on waterway
Panama’s government on Monday said it would file a criminal complaint against local executives of a Hong Kong company that runs ports at either end of its famous canal, as the country comes under intense US pressure over alleged Chinese influence in the waterway.
US President Donald Trump has repeatedly threatened to retake control of the Panama Canal, the 110-year-old crossing that handles about 5 per cent of global maritime trade, alleging that a concession for two ports held by Hong Kong-based conglomerate CK Hutchison posed a national security risk.
Panama’s comptroller announced the criminal complaints, which were the result of a three-month forensic audit, at a news conference on Monday just hours before US secretary of defence Pete Hegseth was due to arrive in the country.
Auditor Anel Bolo Flores alleged the contract held by CK Hutchison’s subsidiary was “abusive” and resulted from a renegotiation that was highly unfavourable to the Panamanian state, causing it to lose $1.3bn in revenue.
Flores said his team would present criminal complaints in the coming days against company and government officials involved in the renegotiation. They would have to “explain to the Panamanian people and the prosecutors why such magnanimity, why such benevolence in a contract that has been abusive to say the least”, he said.
A BlackRock-led investor group last month offered to buy CK Hutchison’s ports division, which holds the concession, in a deal worth $22.8bn. Chinese authorities are reviewing the transaction, casting doubt on whether the bid will succeed.
However, BlackRock chair Larry Fink on Monday said he was optimistic the deal would get done despite Chinese objections.
“I’m pretty confident. The Panamanian ports only represent 4-5 per cent of the total valuation of the whole enterprise,” he told the Economic Club of New York.
The auditor’s announcement is a boost for Hegseth, who plans to attend the Central American Security Conference in Panama and is expected to meet President José Raúl Mulino on Tuesday.
Hegseth’s trip will “drive ongoing efforts to strengthen our partnerships with Panama and other Central American nations towards our shared vision for a peaceful and secure western hemisphere”, said Pentagon spokesperson Sean Parnell.
US military personnel were visible in Panama City last week as the two countries concluded the initial phase of annual military exercises focused on the security and interoperability of the Panama Canal. The US military said more joint exercises would be held this week.
NBC News last month reported the White House had directed the Pentagon to draw up plans to potentially increase US troop presence in Panama, including an option for American soldiers to seize the waterway by force. The White House did not respond to a request for comment.
Panama has been reeling from suddenly becoming a US foreign policy priority. Washington’s move comes as Mulino is dealing with several domestic challenges including a sharp economic slowdown, water risks in the canal and the future of a large copper mine that it closed 18 months ago.
Mulino and Hegseth in February agreed “to expand co-operation between the US military and Panama’s security forces” and safeguard the canal, according to a Pentagon readout of the call.
Panama has also been trying to placate Trump by cracking down on migrants heading for the US via the Darién Gap, a 60-mile stretch of dense jungle between Colombia and Panama.
The first trip abroad for Marco Rubio, the US secretary of state, was to Panama earlier this year. He told Mulino that Trump views “the current position of influence and control of the Chinese Communist party over the Panama Canal” as a violation of the canal’s neutrality treaty, a state department spokesperson said at the time.
Mulino and other Panamanian officials have said the canal is fully controlled by the independent Panama Canal Authority (PCA) and that the country’s sovereign control was not up for debate.
CK Hutchison has denied Trump’s criticism played a role in its decision to sell the ports and said the deal was “purely commercial in nature”.
On Friday, deputy secretary of state Christopher Landau spoke to Panama’s foreign minister Javier Martínez-Acha. The state department said the pair discussed the “importance” of the audit.
“The visit reflects how important relations with Panama have become for the US,” said Orlando Pérez, professor of political science at the University of North Texas. He added that if the audit were to find irregularities, as many believe it would, then “the pressure for Panama’s regulator to take some action against the port concessions will be significant”.