PANAMA CITY—The Hong Kong firm in charge of two ports at either end of the Panama Canal—which sparked US President Donald Trump’s threats to seize the waterway—has flouted the terms of its contract, according to Panamanian audit results released Monday (Tuesday Manila time).
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 $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 was set to arrive in Panama, which has come under strong pressure from Trump to reduce Chinese influence on the US-built canal.
The United States 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 five percent of all global shipping passes.
But Flores denied that the announcement of Panama Ports failing to honor the concession contract had anything to do with the Hegseth visit.
“This is an autonomous act by Panama,” Flores said.
However, some analysts had predicted that this audit would in fact purport to show irregularities, so that Panama could strip the Chinese company of the contract and thus 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, told AFP.