Credit...Nathalia Angarita for The New York Times
Panama Court Strikes Down Hong Kong Firm’s Canal Contract
President Trump has said he wants American control of the canal, putting the longtime ports operator, CK Hutchison, in the cross-hairs of the U.S.-China trade conflict.
by https://www.nytimes.com/by/alexandra-stevenson, https://www.nytimes.com/by/peter-eavis · NY TimesA top court in Panama has ruled that a lucrative port contract held by Hong Kong’s most famous tycoon is unconstitutional, setting the stage for a fresh round of geopolitical tension between the United States and China.
The decision against CK Hutchison, a sprawling conglomerate owned by Li Ka-shing, was issued in a short statement on Thursday night that sent the company’s Hong Kong-listed shares down by more than 4 percent.
The court said its ruling followed “extensive deliberation” after a lawsuit brought by the Panama government that claimed audit irregularities.
CK Hutchison has operated the Balboa and Cristobal ports at either end of the Panama Canal since 1997. Last year, President Trump accused China of controlling the canal, thrusting Mr. Li into the geopolitical spotlight. China’s government has in recent years asserted increasing political control over Hong Kong.
CK Hutchinson came back with a solution to what was fast becoming a liability: a deal to sell the two Panama ports as well as 40 others to a consortium of investors led by BlackRock, the world’s largest asset manager. It was not yet clear how the ruling on Thursday night would affect the deal.
Representatives for BlackRock and CK Hutchison did not immediately respond to requests for comment.
The canal handles an estimated 5 percent of the world’s seaborne trade.
The decision by Panama’s Supreme Court could, on the face of it, hand Mr. Trump a victory.
Mr. Trump has gone to extraordinary lengths to assert American power in Latin America. This month, he seized Nicolás Maduro, Venezuela’s autocratic leader, and imposed a blockade on tankers attempting to transport Venezuelan oil.
After CK Hutchison announced its deal to sell the ports last year, China held it up by subjecting it to regulatory review. Beijing has also moved to involve itself in the transaction.
Initially, CK Hutchison said it was selling the ports to a consortium made up of BlackRock and Terminal Investment Limited, a port operating company controlled by MSC, the Swiss shipping giant owned by the Aponte family.
Later, CK Hutchison announced that it was considering inviting another investor, from China, into the deal.
Chinese media reported that the investor was COSCO, the Chinese state-owned shipping behemoth. Analysts said CK Hutchison’s decision to bring in a Chinese company with close ties to the government was most likely a move to appease Beijing.
Jack Nicas contributed reporting from Mexico City.