The future of CK Hutchison's deal to sell two Panama ports—the Balboa and Cristóbal terminals—to a BlackRock-led consortium is in dire straits after Panama's top auditor revealed widespread contractual breaches and claimed the port operator owes the country hundreds of millions of dollars, reported Bloomberg. This comes shortly after Beijing launched an antitrust probe into the deal while trade war tensions between Washington and China intensified. At its core, the port sale revolves around President Trump's push to secure hemispheric defense by terminating Chinese control from critical parts of the canal. 

On Monday, Panama's Comptroller General, Anel Flores, told reporters that CK Hutchison's Panama Ports Company's (PPC) 2021 renewal of a 25-year port concession was plagued with procedural breaches.

Flores said PPC used tax breaks to evade $850 million in taxes out of the $1.3 billion owed over the first 25 years of the contract period.

Flores accused CK Hutchison of operating "shadow companies" to obscure revenue. He alleged that PPC still owed the Panamanian government $300 million. 

The timing of the audit is another hurdle to CK Hutchison's proposed $22.8 billion sale of 43 global ports to a BlackRock-led consortium, first announced in March. The deal was already delayed last week amid surging pressure from Beijing. 

For weeks, various Chinese media outlets called CK Hutchison's billionaire founder "spineless" and questioned which "side he should stand on." 

Flores warned BlackRock that acquiring the two ports stuck in legal disputes would inherit "breaches and nonpayment." 

Here's more from Bloomberg:

Flores said that he plans to file a criminal complaint with Panama's attorney general's office on Tuesday against the maritime authorities who granted the 2021 contract renewal and against executives of Panama Ports. He said that he will also inform Panama's Maritime Authority of the audit's results, and that agency will need to decide whether to rescind the contract.

BlackRock CEO Larry Fink was asked about the port deal at the Economic Club of New York on Monday. He said regulatory review for anti-competition of the deal could take nine months or more, but overall, he said he was optimistic the transaction would be approved. 

Fink acknowledged that Beijing could derail the deal, emphasizing that it is driven by commercial interests—not geopolitical considerations (Trump's hemispheric defense).

While the Panama port deal appears inevitably delayed, President Trump made the same move by extending the TikTok deadline by 75 days last week. These delayed deals are bargaining chips for Beijing and Trump in an escalating trade war. 

The question remains whether Flores' audit of PCC undermines the legitimacy of its 25-year port concession signed several years ago.