Officials from Panama’s Prosecutor General’s Office on Thursday raided the offices of Panama Ports Company (PPC), a China-linked organization that up until recently controlled two key ports at the Panama Canal.
The raid was part of a probe into allegations that the company deliberately withheld information to the nation’s authorities of its management of the canal ports.
PPC is a subsidiary of Hong Kong-based C.K. Hutchison Holdings, a large company controlled by pro-communist businessman Li Ka-shing. Since 1997, and until recently, PPC controlled two important Panama Canal ports located at opposite ends of the trade route in the provinces of Balboa and Cristóbal. The key ports handle as much as 40 percent of the canal’s entire traffic.
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Following a lawsuit presented by Comptroller General Anel Flores last year, Panama’s Supreme Court ruled in January to declare the contracts that gave PPC control of the two ports unconstitutional. The lawsuit stemmed from extensive investigations and audits from both the Comptroller General’s office and Panamanian Attorney General’s office, which found numerous violations of the contract’s terms and irregularities in PPC’s handling of the ports that, according to Flores, caused over $1.2 billion in damages to Panama.
The Supreme Court’s ruling went into effect on Monday. The administration of conservative President José Raúl Mulino immediately acted upon the court’s ruling and ordered the state’s temporary occupation of the two ports, taking administrative and operational control of the facilities as the Panamanian state carries out a transition process towards new port management deals with other private companies.
The Panamanian newspaper La Prensa reported that a team of officials from the Prosecutor General’s Office led by prosecutor Azael Samaniego raided three PPC offices located at Panama City’s Terrazas de Albrook shopping mall with the assistance of the National Police’s Judicial Investigation Directorate (DIJ) and Panama’s Maritime Authority (AMP).
According to the newspaper, Prosecutor Samaniego did not disclose specific details but explained that all documentation seized by the officials will remain under the custody of the Public Ministry. The official reportedly explained that there is currently an “open criminal case” under the Criminal Code, but pointed out that to protect the investigation, he cannot specify what the alleged crime is at this stage of the investigation. Unnamed sources confirmed to La Prensa that PPC is believed to have withhold information of its operations at the Balboa and Cristobál ports.
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The newspaper La Estrella de Panama reported that it observed personnel from the Prosecutor’s Office “remove boxes” from the offices and placing them in a pickup truck to be taken away from the area. La Estrella de Panama also confirmed that the raid is linked to allegations that PPC withheld information and detailed that the Panamanian government had never been able to enter the offices before.
According to La Estrella de Panama, officials from Panama’s Maritime Authority had allegedly requested entry into the offices but PCC refused them in. The company reportedly never submitted financial statements to the country’s authorities and, as such, the Office of the Comptroller General only has estimate of the amount of revenue lost to the state coffers through PPC’s handling of the ports.
“According to the Comptroller’s Office, the Panamanian government lost approximately $1.3 billion in revenue. However, estimates within the government indicate that the actual loss was three times that amount,” La Estrella de Panama wrote.
The newspaper pointed out that the raid on PPC’s offices took place on the same day President Mulino revealed during a press conference that he had attempted to meet with PPC’s executives on several occasions but that he only received negative responses.
“From several meetings with [PPC] senior executives in New York and Washington, with the aim of finding a solution to this problem, the only thing we found was arrogance,” Mulino reportedly said Thursday.
The Panamanian president defended his administration’s actions after the Supreme Court’s ruling in light of PPC’s criticism over the annulment of the contracts, and emphasized, “No one is going to kick us out of the ports. No one is going to remove us from the ports. They chose the wrong president and government, because here we do what needs to be done.”
“That company did whatever it wanted in Panama for decades since it arrived in this country,” he said.
PPC parent company C.K. Hutchison Holdings condemned the annulment of the two canal port contracts, accusing the Supreme Court ruling of being “unlawful” while claiming that the Panamanian government’s actions pose “risks” to the two ports’ operations. The company said that it would consider pursuing local and international legal actions against Panama.
Speaking to reporters during a Tuesday press conference, Chinese Foreign Ministry spokeswoman Mao Ning said that China “will firmly protect the company’s legitimate and lawful rights and interests.”
Following the formal annulment of PPC’s contracts — and to maintain canal port operations during the initial stages of the transition — the Panamanian government granted temporarily administration rights of the Balboa port to APM Terminals, a subsidiary of Danish shipping conglomerate Maersk, for a period of 180 days. Similar temporary administrative rights of the Cristóbal port were granted to TIL Panama, a subsidiary of Geneva-based Mediterranean Shipping Company (MSC).
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
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