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

By Emily Green

PANAMA CITY, Feb 26 (Reuters) – Panamanian authorities searched a ports unit of Hong Kong conglomerate CK Hutchison in Panama on Thursday, 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 U.S.-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 not yet been made public.

CK Hutchison did not immediately respond to a request for comment.

“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 and that Panama would respond if anything materialized.  

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

“What has Panama gotten out of its relationship with China? Of course, it is an extremely important country in the world.

“Panama has weathered much more difficult moments … so, when it comes, we’ll see.

Panama’s foreign ministry had conveyed its position to China’s ambassador.

China’s Foreign Ministry and the Hong Kong government did not immediately respond to a request for comment from Reuters on Mulino’s statement.

CK Hutchison’s shares fell 2.1% in Hong Kong trading on Friday.

The Hong Kong company had agreed to a $23 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 criticized by Beijing but welcomed by U.S. 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 parking lot 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 Trump for Panama to curb Chinese influence over the Panama Canal, which carries about 5% of global maritime trade. 

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

(Reporting by Emily Green, Elida Moreno; additional reporting Clare Jim and Joe Cash. Writing by Daina Beth Solomon, Scott Murdoch; Editing by Neil Fullick and Stephen Coates)