Panama officials search CK Hutchison’s subsidiary office, source says

PANAMA CITY - The Panamanian authorities searched a ports unit of Hong Kong conglomerate CK Hutchison in Panama on Feb 26, according to a source familiar with the operation, escalating a rift over control of two key ports in the strategic waterway.

The search comes amid growing US-China rivalry over global trade routes that has deepened tensions between Washington and Beijing and embroiled CK Hutchison’s Panama Ports Company (PPC), which until recently held contracts to operate two terminals at the Panama Canal’s Pacific and Atlantic entrances.

The raid on PPC did not relate to a government decision to

annul deals that gave the company control of two port canals

in Panama, the source said.

The person declined to be identified because the information had yet to be made public.

“This is an independent investigation carried out exclusively by the Public Ministry of Panama in the exercise of its legal powers,” the Panamanian government said in a statement without naming CK Hutchison as the target of the raid.

Before the raids, Panama’s President Jose Raul Mulino said he did not know what China’s government might do after CK Hutchison lost the ports.

“If you want my personal opinion, nothing is going to happen,” he said at a weekly press conference.

The Hong Kong conglomerate had also acted with “arrogance” and without transparency, he said. “That company did whatever it wanted in Panama for decades, since it came to this country.”

China also relied heavily on Panama, Mr Mulino added.

“China needs Panama – a lot, a lot. Everything those people produce goes through the canal... All the gas that reaches them goes through the Panama Canal. Maybe they need us more than we need them.”

Panama’s Foreign Ministry had conveyed its position to China’s ambassador.

CK Hutchison did not respond to a request for comment regarding the search or Mr Mulino’s comments. The company said earlier this week that the Panamanian authorities had threatened its staff with criminal prosecution if they refused to leave the two canal ports.

China’s Foreign Ministry said on Feb 27 that Beijing’s position concerning the ports in Panama was “unequivocal” and it would “resolutely safeguard the interests of its enterprises”.

The Hong Kong government did not respond to a request for comment.

CK Hutchison’s shares fell 2.1 per cent in Hong Kong trading on Feb 27.

Panama ports saga rumbles on

The Hong Kong company had agreed to a US$23 billion (S$29 billion) sale of dozens of ports worldwide, including the Panamanian terminals, to

a consortium led by BlackRock

and Mediterranean Shipping Company (MSC).

The deal has been criticised by Beijing but welcomed by US President Donald Trump who had declared he wanted to “reclaim” the Panama Canal to reduce Chinese influence of the canal’s key assets.

The ports at the centre of the dispute, Balboa and Cristobal, will now be operated temporarily by Maersk and MSC, Panama’s government said earlier this week.

Panamanian media reported the raid earlier.

Television station TVN showed images of about a dozen people, some wearing vests emblazoned with the initials of Panama’s investigative police, or DIJ, in an underground carpark that the station said was in the high-end Albrook area of Panama City.

The images showed some of the people loading cardboard boxes into the back of a police truck.

The name of the location was not visible in the images, and Reuters could not independently verify the report.

Panama’s top court recently declared unconstitutional CK Hutchison’s contracts to operate port terminals at the entrance to the Panama Canal, leading the government to annul the deals.

The decision sparked a battle embroiling both Beijing and Washington, after pressure from Mr Trump for Panama to curb Chinese influence over the Panama Canal, which carries about 5 per cent of global maritime trade.

CK Hutchison has said it sees the decision as unlawful and is considering legal action. REUTERS