Panama's comptroller office to sue over renewal of CK Hutchison contract

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Panama's Comptroller General office will file a lawsuit against the officials who authorized the renewal of a 25-year port concession to a company led by CK Hutchison HKEX:1, the comptroller general said on Monday, as a key audit of the contract is expected to be completed soon.The contract to Panama Ports Company for the Balboa and Cristobal ports near the Panama Canal, in which Hong Kong-based CK Hutchison has a 90% stake, was renewed in 2021. The Panamanian government started the audit in January and in March a group led by U.S. investment firm BlackRock NYSE:BLK announced a deal to buy CK Hutchison's majority stake in a $22.8 billion global ports unit including the two ports in Panama, which is not yet final. The audit has so far determined that Panama "left $1.3 billion on the table," Comptroller General Anel Flores told reporters in a press conference, referring to tax incentives and benefits granted by the government in the contract.In February, Panama's Attorney General released a binding opinion finding that the port contract was unconstitutional. The Supreme Court will have the last word on that.Once finished, the audit results will be submitted to Panama's Maritime Authority, which oversees the ports, Flores said.The audit is seen as a possible roadblock in BlackRock's offer for CK Hutchison's port business, which has been criticized by China. If Panama's Comptroller General confirms irregularities in the concession renewal or the Supreme Court declares the contract to be unconstitutional, the concession could be revoked, lawyers and experts have said.Shares of CK Hutchison in Hong Kong dropped 2.6% on Tuesday, underperforming a 1.5% gain in the main Hang Seng Index HSI:HSI.The telecoms-to-retail conglomerate owned by Hong Kong tycoon Li Ka-shing has been caught in China's crosshairs in the highly politicized deal, and the firm did not sign a contract last week as scheduled to sell its two Panama port operations as part of the broader deal as a result.China's market regulator has said it will carry out an antitrust review on the Panama port deal, and Hong Kong leader John Lee on Tuesday reiterated comments about the deal having to comply with local laws and regulations. When asked if a deal without the Panama Ports would be a solution, BlackRock CEO Larry Fink told the Economic Club of New York on Monday the ports in question represent around 4...

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