Pro-Beijing Paper Blasts Panama’s Ruling Against CK Hutchison
(Bloomberg) — A pro-Beijing newspaper criticized Panama’s supreme court’s decision to invalidate CK Hutchison Holdings Ltd.’s contract to operate two ports, accusing the ruling of bowing to U.S. pressure and urging Hong Kong companies to halt investments in the region.
According to commentary published in Ta Kung Pao on Saturday, the decision shows Panama’s lack of judicial independence and its willingness to use legal mechanisms to meet US demands. The two ports are owned by CK Hutchison’s 43 global facilities China Cosco Shipping Corp., Italian billionaire Gianluigi Aponte’s Terminal Investment Ltd. and U.S. investment firm BlackRock Inc.
“Hong Kong businesses need to take necessary risk precautions, avoid going there and avoid investing unnecessarily,” the newspaper said. The report stated that Panama should immediately correct the “wrong decision” and compensate the companies for their losses, and warned that failure to do so would damage the economic and commercial ties between the country and China and damage the trust between Chinese companies.
The article reflects Beijing’s displeasure with the decision, which US Secretary of State Marco Rubio praised as a positive development. Rising tensions between Washington and Beijing over the strategic Panama Canal could further complicate the port sale by billionaire Li Ka-shing’s CK Hutchison. The transaction, announced in March last year, has become one of the tycoon’s most geopolitically fraught deals, despite the potential to generate more than $19 billion in cash if completed.
CK Hutchison invited state-owned Cosco into its acquisition consortium last year after BlackRock’s involvement in the deal angered China; China has accused China of bowing to US pressure, which is undermining its global trade and shipping goals. President Donald Trump has cast the sale of Panama’s ports as a win for U.S. influence on the waterway.
To advance talks and reduce regulatory risks, the parties involved considered splitting the assets into separate parcels with different ownership structures and allowing Cosco to take larger stakes in ports in more China-friendly regions, people familiar with the matter have previously said.
Ta Kung Pao commented, “It is clear to everyone that this ‘decision’ hides ulterior motives.” The newspaper noted that CK Hutchison’s invitation for Cosco to join the buyers was seen by Panama as “an opportunity to curry favor” with the United States, which often uses national security as an excuse to undermine Chinese investment in the canal.
The newspaper also criticized Panama for holding joint military exercises with the United States, withdrawing from China’s Belt and Road efforts, and turning a blind eye to the destruction of a monument built by the local Chinese community to commemorate the friendship between the two countries.
The newspaper, which had previously called on China to block the port sale on national security and antitrust grounds before Cosco joined the talks, said the decision poses significant risks to normal commercial activities around the world and should serve as a warning to global investors.
Before Cosco joined the acquisition consortium, China promised to launch an investigation into the deal and told state-owned enterprises to stop cooperating with the Li family. Efforts by Li’s second son, Richard, to expand his insurance business to the mainland have stalled amid political tensions.
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