Attorney General of Panama Luis Carlos Gómez said on Wednesday that a decades-long contract awarded to Panama Ports Company (PPC), a subsidiary of Hong Kong-based Hutchison Port Holdings, to operate two ports in the Panama Canal is “unconstitutional,” local outlets reported.
Gómez formally suggested to the Panamanian Supreme Courts that it rule to declare the contract unconstitutional on the grounds that the decades-long agreement violates fundamental principles of the nation’s constitution and provides the company with “disproportionate rights” over the management of the two ports presently under its control.
Panama and PPC originally signed a deal in January 1997 that granted the company a 25-year concession to develop and administer two ports located in the provinces of Balboa and Cristóbal. Both ports are located at opposite ends of the Panama Canal.
The Panama Canal Authority renewed the concession for an additional 25 years in June 2021 per the terms of the original 1997 deal, which reportedly allowed it to be automatically renewed so long as the company complied with the agreed terms. As a result, PPC’s control of the two ports will run until 2047.
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Attorney General Gómez, in a 54-page report dated February 19 but publicly released Wednesday, considered that the 1997 deal violates 15 articles of the Panamanian constitution. Gómez argued that the agreement’s clauses disregard the public interest of the nation as established by its constitution and suppresses free competition.
Gómez further argued that the contract contains evidence of “fundamental breaches” of constitutional regulations and pointed out a possible lack of transparency in the negotiation, unequal competition, and damage to the interests of the Panamanian state.
Gómez issued the report in response to a lawsuit against the 1997 deal filed earlier in February by Panamanian lawyers Julio Macías and Norman Castro, who reportedly alleged the necessary prior consultation with Panamanian society before signing the deal was not carried out and that the Hong Kong-owned company was granted privileges and immunities, including tax-related ones, that stand in detriment of the public treasury.
The Panamanian Supreme Court reportedly established a ten-day period starting on Tuesday for the presentation of arguments by the interested parties.
According to the local newspaper La Estrella de Panama, PPC “earns millions in revenue” from leasing land and assets to other companies operating within the concession area in addition to the revenue obtained from administering the two ports.
In late January, local authorities launched an audit of Panama Ports Company. The Argentine outlet Infobae described the Hong Kong-owned company as an “example” of China’s presence in the trade route. Hong Kong belonged to the United Kingdom for decades until that country ceded it to China in July 1997. In 2020, China ended the “One Country, Two Systems” policy that prevented Beijing from imposing communist laws in the country through a “national security” law intended to suppress democratic protests.
La Estrella de Panama stated on Wednesday that, as part of the audit proceedings, Panamanian Comptroller General Anel Flores held a meeting with representatives of the Maritime Authority of Panama, where Flores indicated that despite the growth in container traffic in the country, the economic benefits for Panama resulting from this concession have been “minimal,” which he reportedly he described as a “colonial enclave that perpetuates economic inequalities.”
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The audit, which has not concluded at press time, occurs amid the ongoing debate initiated by President Donald Trump in December after he called for the United States to regain control of the Panama Canal, denouncing China’s alleged growing influence and control of the interoceanic trade route.
Last week, U.S. Federal Maritime Commission (FMC) Chairman Louis E. Sola claimed in an official statement that Panama Canal staff must go through Chinese security to get to their daily place of work. Sola stressed that China’s growing influence in the canal is “troubling and must be addressed.”
The statement was revised on Tuesday evening to remove a statement in which Sola asserted, “One example illustrating the unacceptable status quo is that mission critical ACP employees must pass through Chinese security to get to their daily place of work.” Sola called for President Trump to use a U.S. sovereign wealth fund to make investments in Panama to counter Chinese influence in the canal.
The Panama Canal Authority (ACP) refuted Chairman Sola’s claims in remarks shared with local outlets Monday and asserted that “no Canal worker, in charge of critical operations, goes through Chinese security to get to his or her daily workplace.”
ACP asked in its remarks if Sola’s mentions were related to “Building 1000,” a facility listed by the Authority’s website as the offices of the Cristóbal Harbor Controller. According to ACP, the mentioned building operates “since before the transfer of the Canal in 1999, without implying in any way interference or intervention with Canal operations.”
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
