Panama Removes Hong Kong Company’s Workers From Ports
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Panamanian authorities have taken control of two key ports, one at each end of the Panama Canal, removing employees of a Hong Kong conglomerate’s subsidiary and awarding temporary operating contracts to Denmark’s Maersk and Switzerland’s Mediterranean Shipping Co.
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The changes were finalized on Monday with the publication of a Supreme Court ruling in the official gazette. The move reverses concessions for the Balboa and Cristobal terminals held by Panama Ports Company, a unit of CK Hutchison Holdings. The Hong Kong company has managed the ports for nearly 30 years. It called the action unlawful and vowed to pursue national and international legal remedies.
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CK Hutchison said that authorities made a “direct physical entrance” to the ports on Monday, ousting staff who were threatened with criminal prosecution if they defied orders. Employees were told not to contact the company.
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“CKH considers the ruling, the executive decree, the purported termination of PPC’s concession, and the takeover of the terminals to be unlawful,” CK Hutchison said in a statement to the Hong Kong Stock Exchange. “The actions by the Panama State also raise serious risks to the operations, health and safety at the Balboa and Cristobal terminals.”
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Panama’s Supreme Court on Jan. 29 ruled the concessions unconstitutional, noting irregularities in a 25-year extension granted in 2021, according to an audit by the country’s comptroller. A new bidding process is expected in order to address past concessions condemned for a lack of competition.
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“These laws and acts under challenge relate to the concession contract between the State and Panama Ports Company S.A. for the development, construction, operation, administration, and management of the terminals at the ports of Balboa and Cristobal,” the court said.
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The Panama Maritime Authority (AMP) took possession to ensure uninterrupted service, according to Alberto Aleman Zubieta, head of the transition team. Temporary licenses for up to 18 months were issued to AMP Terminals Panama, a Maersk subsidiary, for Balboa, and TIL Panama, a subsidiary of MSC, for Cristobal.
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Panamanian President José Raúl Mulino called the new contracts “a legitimate tool that respects asset ownership.”
“Let me be clear, this does not imply an expropriation of those assets, but rather their use to ensure the operation of the ports until their real value is determined for the corresponding actions. I repeat, this is not an expropriation,” Mulino said in an address to the nation on Monday.
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He added the arrangement would hold while a new competitive concession framework is developed, “with the humility not to repeat the mistakes of the past.” Mulino said there would be no disruptions to port operations or employment.
The Panama Canal carries about 5 percent of worldwide maritime commerce. U.S. President Donald Trump has called for reducing Chinese influence there.
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CK Hutchison, which has ties to the Chinese Communist Party, has plans for a $23 billion sale of global ports, including the Panama assets, to a consortium led by BlackRock and MSC.
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CK Hutchison’s Hong Kong-listed shares fell 1.9 percent on Tuesday.
