Author: Emily Green and Alida Moreno
PANAMA CITY, Feb 27 (Reuters) – Panamanian authorities raided the local port unit of Hong Kong-based CK Hutchison Holdings Ltd, the unit said on Friday, intensifying a disagreement over control of two key ports near the world’s strategic Panama Canal.
The search, conducted on Thursday, comes amid growing competition between the United States and China over global trade routes, exacerbating tensions between Washington and Beijing. It also embroils CK Hutchison’s Ports of Panama, which recently lost its contract to operate two terminals at either end of the canal, which carries about 5% of global maritime trade.
PPC said in a statement on Friday that the Panamanian government “acts in disregard of the rule of law, as demonstrated yesterday by the state’s latest steps to invade and seize PPC property,” adding that the company and investors reserve all applicable rights related to the issue.
Panamanian government officials did not immediately respond to a request for comment.
PPC charges illegal takeover
Panama’s government last month declared the company’s deal to control two canal ports invalid after a court ruling deemed the contracts unconstitutional.
On Friday, the PPC said it had repeatedly objected to what it called illegal takeovers of its ports and seizures of company property, including confidential and legally protected information.
Ignoring requests for safeguards to protect sensitive company data, authorities entered a private storage site without notice on Thursday and deleted material related to an ongoing legal case, according to the company. The company said this showed “the government undermined due process in its acquisition process.”
“The Republic of Panama has proven over the past year, and especially over the past week, that foreign investors cannot rely on the Panamanian State’s legal or contractual framework,” the PPC said.
Reuters reported the search on Thursday after a person familiar with the matter confirmed it. The sources declined to be named because the information has not yet been made public.
Sources said the raid on PPC was unrelated to the government’s decision to scrap a deal that gave the company control of the ports of Balboa and Cristobal.
“This is an independent investigation conducted exclusively by the Panamanian Public Ministry in accordance with its legal powers,” the Panamanian government said in a statement on Thursday, without disclosing which company was targeted.
Before the raid, Panamanian President José Raul Mulino said he did not know what Beijing might do if CK Hutchison loses the port.
