Comptroller General of Panama Anel Flores filed two separate lawsuits on Wednesday against a contract between the country and Panama Ports Company (PPC), a subsidiary of Hong Kong-based Hutchison Port Holdings, over the “abusive” contract that grants PPC control of two ports at the Panama Canal.
The lawsuits, filed at Panama’s Supreme Court of Justice (CSJ), demand that the decades-old contract be rendered null and void over the “many irregularities” that his office found in detriment of national interests during a months-long audit of the company and its management of the two ports.
“The duty of this Comptroller’s Office is to defend the money of Panamanians and always be on the side of the best national interest,” Flores said during a press conference presenting the lawsuits on Wednesday. “That is why today we are referring directly to the Supreme Court, appealing to them as the Panamanian State and as comptroller in these two lawsuits. We hope they will be admitted promptly and that we will have the results that the country obviously needs and that the citizens are waiting for.”
Since 1997, PPC, a subsidiary of Hutchison Port Holdings, has administered two ports located at opposite ends of the Panama Canal. One of the ports is located at the Pacific entrance to the canal in Balboa and the other on the Atlantic side of the trade route in Cristóbal, in the province of Colón. At the time, the administration of former Panamanian President Ernesto Pérez Balladares granted a 25-year lease to PPC for the management and administration of the two ports.
The original 1997 contract reportedly contained automatic lease renewal provisions invoked in 2021 to grant PPC an additional 25-year lease period that will run through 2047. Flores, who took office in 2024, claimed in April that the renewal did not have the endorsement of the Office of the Comptroller General, refuting statements issued by his predecessor Gerardo Solís, who claimed otherwise.
The two ports have been at the center of an ongoing debate started by President Donald Trump last year after he called for the United States to regain control of the Panama Canal — which the United States originally built and ceded to Panama in 1999. President Trump and several members of his administration have denounced China’s alleged growing influence in the country and control of the interoceanic trade route.
International outlets have described PPC’s parent company, HK-based Hutchison Port Holdings, as an “example” of China’s presence in the trade route after the Chinese communist regime ended the “One Country, Two Systems” policy in 2020 that prevented Beijing from imposing communist laws in Hong Kong through a “national security” law intended to suppress democratic protests. The law effectively outlawed anti-communist dissent and imposed Beijing’s law, which gives the Party total control over supposedly “private” businesses.
The Office of Panama’s Comptroller General has audited PPC during the past year over its management of the two ports. The audit reportedly revealed evidence of multiple breaches of contract that amounted to more than $300 million in losses to Panamanian state coffers. At the time, Comptroller Flores accused Panama’s Maritime Authority (AMP) of misrepresenting financial figures related to PPC and its management of the ports.
Flores stressed during his press conference that Panama’s relationship with PPC has been “harmful” and his office seeks to correct the “historical damage” caused to the Central American nation. The comptroller general said he hopes that the nation’s Supreme Court promptly admits both lawsuits and that the judicial process yields results that “respond to the public outcry.”
“We Panamanians do not agree with or approve of what the country has been through,” Flores reportedly said.
Flores denounced this year that, despite the growth in container traffic in the country, the economic benefits for Panama resulting from the PPC lease deal have been “minimal” and described the situation as a “colonial enclave that perpetuates economic inequalities.” In February, Panama’s Attorney General Luis Carlos Gómez deemed the PPC contract “unconstitutional,” arguing that its terms stood in violation of fundamental principles of Panama’s constitution.
At press time, Hutchison Port Holdings’ parent company CK Hutchison Holding is undergoing negotiations with asset manager Blackrock and other companies over the sale of the two ports as part of a broader sale of 43 ports spread across 23 countries.
Panamanian President José Raul Mulino expressed his support for Comptroller General Flores’ legal action in remarks given during a press conference Thursday morning. Mulino denounced the contract, its 2021 renewal, and how much it has “cost” the country.
“The Comptroller’s lawsuit, which I fully support, is well justified. We have all seen what that contract has cost the Panamanian nation over time. What we have not gained from it, apart from the fact that we are 10-percent shareholders, is a very, very paltry sum,” Mulino said.
“When that contract was renewed for another 25 years, the Comptroller did not endorse it,” he continued, “and that is what is being challenged in court, the nullity of the contract because it was not endorsed as all contracts between the State and any third party must be endorsed.”
On the subject of C.K. Hutchinson’s sale of the Balboa and Cristóbal ports, Mulino said that the negotiation “is at a standstill as far as we know.”
“Remember that this is a broad process. There are 41 ports around the world that are being sold, and the two ports in Panama are in a separate process. So one thing has nothing to do with the other,” Mulino said.
“The Republic of Panama will definitely adopt a port policy which we will announce in due course with the aim of enforcing what I mentioned about the canal,” he continued, “a coherent maritime and logistics strategy for the Panamanian state, in all its services, civil servants, etcetera, so that we can truly take advantage of the privilege of our strategic geographical position.”
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
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