Pro-Beijing Paper Blasts Panama’s Ruling Against CK Hutchison

(Bloomberg) -- A pro-Beijing newspaper has slammed a decision by Panama’s top court to void CK Hutchison Holdings Ltd.’s contract to operate two ports, accusing the ruling of kowtowing to US pressure and urging Hong Kong businesses to halt investment in the region. 

The ruling shows Panama’s lack of judicial independence and its willingness to use legal mechanisms to accommodate US demands, according to the commentary published in Ta Kung Pao on Saturday. The two ports are part of CK Hutchison’s proposed sale of 43 global facilities to a consortium comprising China Cosco Shipping Corp., Italian billionaire Gianluigi Aponte’s Terminal Investment Ltd. and US investment firm BlackRock Inc.

“Hong Kong businesses should take necessary risk precautions, avoid going there and refrain from investing unless necessary,” the newspaper said. It added that Panama should immediately correct the “erroneous ruling” and compensate companies for their losses, cautioning that failure to do so would damage economic and trade ties between the country and China, and erode confidence among Chinese enterprises.

The article reflects Beijing’s displeasure over the ruling, which US Secretary of State Marco Rubio has praised as a positive development. Rising tensions between Washington and Beijing over the strategic Panama Canal could further complicate the ports 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 the buying consortium last year after BlackRock’s involvement in the deal angered China, which denounced it as bowing to US pressure that undermines its global trade and shipping ambitions. President Donald Trump has cast the sale of the Panama ports as a win for US influence in the waterway.

To move talks forward and reduce regulatory risks, the parties involved have considered splitting the assets into separate parcels with different ownership structures, allowing Cosco to take larger stakes in ports located in more China-friendly regions, people familiar with the matter have said earlier. 

“It’s clear to everyone that this ‘ruling’ hides ulterior motives,” Ta Kung Pao said in the commentary. CK Hutchison’s invitation for Cosco to join the buyers was seen by Panama as “an opportunity to curry favor” from the US, who frequently uses national security as a pretext to undermine Chinese investment in the canal, the paper said. 

The paper also criticized Panama for holding joint military exercises with the US, withdrawing from China’s Belt and Road efforts and condoning the demolition of a monument built by the local Chinese community to commemorate friendship between the two countries. 

The paper, which previously called on China to block the ports sale on national security and antitrust grounds before Cosco entered the talks, said the ruling poses significant risks to normal business operations worldwide and should serve as a warning to global investors.

Before Cosco joined the buying consortium, China vowed to launch investigations into the deal and told state-owned enterprises to halt collaboration with the Li family. Li’s second son Richard’s efforts to expand his insurance business into the mainland stalled amid the political tensions. 

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