By Marianna Parraga and Brendan O’Boyle
(Reuters) – BlackRock could hit another roadblock in its attempt to secure control of two flagship ports near the Panama Canal once the Central American country releases an audit on a 25-year concession granted to Hong Kong-based CK Hutchison.
Final signature of the deal in Panama, part of a broader $22.8 billion transaction between a BlackRock-led group and CK Hutchison including over 40 ports in 23 countries, is expected to be delayed as criticism grows in China, sources told Reuters last week.
The deal’s definitive documentation was initially expected to be signed by April 2, BlackRock and CK Hutchison said last month when they announced the deal.
As China’s market regulator begins an antitrust review on the deal, Panama’s government is requesting documents from CK Hutchison, a telecoms-to-retail conglomerate owned by tycoon Li Ka-shing, to complete an audit on the concession.
Panama’s Maritime Authority also asked BlackRock and CK Hutchison to provide details of their deal, which must ultimately be green-lit by Panama.
The deal includes 90% of the Panama Ports Company, which operates the Balboa and Cristobal ports at either end of the Panama Canal.
WHAT COULD THE AUDIT FIND?
The Panama ports audit was announced in January by the Comptroller General office as “the most important” of a series of reviews of key infrastructure concessions in Panama. Comptroller general Anel Flores said last week that results are expected in the coming ‘days or weeks.’
Flores has criticized previous audits, including one completed before CK Hutchison’s concession was renewed in 2021, saying they were limited to confirming the fulfillment of operational goals.
“We’ll begin a severe, strong audit of those books and company,” he said earlier this year.
Flores has also complained about the ‘poor yield’ of the contract for Panama and the slow delivery of documents requested from CK Hutchison.
In February, Panama’s Attorney General released a binding opinion finding that the port contract was unconstitutional. Panama’s Supreme Court will have the last word on that.
If the Comptroller General finds irregularities in the concession renewal or the Supreme Court declares the contract to be unconstitutional, the concession could be revoked, complicating the BlackRock-CK Hutchison deal and possibly creating grounds for international arbitration, lawyers and experts have said.
WOULD THE DEAL EASE TRUMP’S PRESSURE?
U.S. President Donald Trump has celebrated the BlackRock-CK Hutchison deal, while China and pro-Beijing voices have criticized it, thrusting the firms involved and the Panamanian ports into the fray of the U.S.-China trade war.
