Panamanian authorities on Thursday raided the offices of Panama Ports Company (PPC), a China-linked firm that until recently controlled two key ports at the Panama Canal, following a Supreme Court ruling that declared the company’s contracts unconstitutional.
Officials from the Prosecutor General’s Office carried out the raid as part of an investigation into allegations that PPC deliberately withheld operational and financial information from Panamanian authorities regarding its management of the canal ports.
PPC is a subsidiary of Hong Kong-based C.K. Hutchison Holdings, controlled by billionaire businessman Li Ka-shing. Since 1997, PPC had controlled the Balboa and Cristóbal ports at opposite ends of the Panama Canal, facilities that handle up to 40 percent of the canal’s total traffic.
The raid followed a lawsuit filed last year by Comptroller General Anel Flores. In January, Panama’s Supreme Court ruled that the contracts granting PPC control of the two ports were unconstitutional. The decision was based on audits and investigations by the Comptroller General’s Office and the Attorney General’s Office, which found multiple contract violations and irregularities in PPC’s management. According to Flores, the violations caused more than $1.2 billion in damages to Panama.
The ruling took effect Monday. Conservative President José Raúl Mulino immediately ordered the state’s temporary occupation of the two ports, transferring administrative and operational control to the government while new management agreements with private firms are negotiated.
Panamanian newspaper La Prensa reported that a team led by prosecutor Azael Samaniego raided three PPC offices located at the Terrazas de Albrook shopping mall in Panama City, with assistance from the Judicial Investigation Directorate of the National Police and Panama’s Maritime Authority (AMP).
Samaniego did not specify the alleged crime under investigation, stating only that there is an open criminal case under the Criminal Code and that seized documentation will remain under the custody of the Public Ministry. Unnamed sources told La Prensa that PPC is suspected of withholding information about its operations at the Balboa and Cristóbal ports.
The newspaper La Estrella de Panama reported that it observed officials removing boxes of documents from the offices and loading them into a pickup truck. The paper also said the raid is linked to allegations that PPC refused entry to government inspectors and never submitted full financial statements to Panamanian authorities. As a result, the Comptroller General’s Office relied only on estimates of revenue lost to the state.
“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 reported.
President Mulino said during a press conference that he had attempted to meet with PPC executives in New York and Washington but was repeatedly rebuffed.
“From several meetings with [PPC] senior executives, with the aim of finding a solution to this problem, the only thing we found was arrogance,” Mulino said.
Defending his administration’s actions, Mulino added, “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’s parent company, C.K. Hutchison Holdings, condemned the annulment of the contracts, calling the Supreme Court decision “unlawful” and warning that the government’s actions pose risks to port operations. The company said it is considering both domestic and international legal action against Panama.
China’s Foreign Ministry also weighed in. Spokeswoman Mao Ning said Beijing “will firmly protect the company’s legitimate and lawful rights and interests.”
To maintain operations during the transition period, the Panamanian government granted temporary administrative control of the Balboa port to APM Terminals, a subsidiary of Danish shipping giant Maersk, for 180 days. Temporary administration of the Cristóbal port was granted to TIL Panama, a subsidiary of the Geneva-based Mediterranean Shipping Company.
