(By Sun Meihxin, Edited by Zhang Guangkai)
Since announcing the sale of the Panama ports, Li Ka-shing and CK Hutchison Group have been embroiled in controversy over the deal but have not responded to the incident.
About a month later, on April 9 local time in Panama, CK Hutchison's subsidiary, Panama Ports Company (PPC), made a public response.
The content of this response mainly refutes the earlier accusations against PPC by Panama. Under pressure from the United States, the Panamanian Chief Prosecutor stated in March this year that PPC was suspected of violating regulations when it renewed its franchise rights in 2021, and subsequently conducted an audit of PPC.
PPC's response mainly addresses the accusations regarding the renewal approval process, the Panamanian government's claim that PPC underpaid by $300 million during the previous franchise period, as well as failing to share 10% of profits with the government as stipulated in the contract.
PPC stated that in 2005, the company signed an additional franchise agreement with the Panamanian government according to the law. According to this agreement, PPC needed to invest more than 1 billion Balboas (with a 1:1 exchange rate with USD). When PPC took over the franchise rights for the Balboa Port and Cristobal Port in 1997, it also paid an additional 102 million Balboas for infrastructure construction.
PPC stated that the company has cumulatively invested 1.695 billion Balboas to date, far exceeding the promised investment amount specified in the contract at the time of obtaining the franchise rights. This figure was also confirmed in the 2020 audit. The claim that the company did not pay $1.2 billion to the Panamanian government is also inconsistent with the facts.
At the same time, in terms of profit distribution, PPC has cumulatively paid 126 million Balboas, equivalent to $126 million, to the Panamanian government at a 10% ratio. The Panamanian government has not received any dividend payments from other port operators.
In terms of tax benefits, PPC stated that the tax exemptions obtained by the company are consistent with the exemption rights enjoyed by other operators running ports in Panama.
Meanwhile, during the franchise period, the company paid a total of 668 million Balboas to Panama and contributed at least 5.9 billion Balboas to the local economy through port operations.
PPC reiterated that the renewal of the franchise rights in 2021 fully complies with legal regulations and requirements.
From PPC's response, it can be seen that the company denies all accusations from Panama and states that many current claims do not conform to the legal relationship between PPC and Panama under the franchise rights and supplementary agreements.
It is worth noting that according to earlier reports, the transaction between CK Hutchison and BlackRock regarding the Panama ports would likely reach a final agreement by April 2. However, after the transaction news was released, CK Hutchison became embroiled in controversy, and the State Administration for Market Regulation stated at the end of March that it would review the transaction in accordance with the law.
To date, although April 2 has passed, there is no confirmation about whether the transaction will continue to move forward. According to the announcement by CK Hutchison on March 4, the exclusive negotiation period with BlackRock will last for 145 days.
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Original source: https://www.toutiao.com/article/7491611943845872162/
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