Controversy at the Canal: Panama's Port Concession Under Legal Scrutiny

The Panamanian Comptroller General intends to sue over the controversial renewal of a port concession to CK Hutchison. A pending audit may affect BlackRock's acquisition of CK Hutchison's stake. With allegations of constitutional breach, the contract, integral to a $22.8 billion deal, faces legal challenges and geopolitical concerns.

Panama's legal and political landscape is heating up as the Comptroller General announced plans to file a lawsuit against officials for renewing a 25-year port concession to CK Hutchison. This renewal, extended in 2021, involves the Balboa and Cristobal ports near the Panama Canal.

The audit, initiated in January, reveals that Panama potentially missed out on $1.3 billion due to government-granted tax incentives, according to Anel Flores, the Comptroller General. Additionally, a binding opinion from Panama's Attorney General in February deemed the contract unconstitutional, pending a Supreme Court decision.

The situation poses a threat to the impending acquisition by BlackRock, which aims to purchase CK Hutchison's majority stake. The controversial deal has caught the attention of China and stirred geopolitical tensions, with potential implications for the broader $22.8 billion transaction, as regulatory reviews continue.

(With inputs from agencies.)