PANAMA CITY, April 8 (Reuters) -

Panama has opened an investigation into a contract granted

to Hong Kong-based CK Hutchison ( CKHUF ) for the operation of

two ports in the Central American country, Attorney General Luis

Carlos Gomez said on Tuesday.

Gomez made the announcement after Panama's comptroller

general criticized the contract, renewed in 2021, earlier this

week. Comptroller Anel Flores said Panama "left $1.3 billion on

the table," referring to tax incentives and benefits granted by

the government to CK Hutchison ( CKHUF ).

"This prosecutor's office is conducting an investigation

initiated 'ex officio' for the alleged commission of a crime

against public administration and other crimes against the

State," Gomez said in a letter sent to Flores on Tuesday.

The 25-year contract awarded to Panama Ports Company, in

which CK Hutchison ( CKHUF ) has a 90% stake, for the concession of the

Balboa and Cristobal ports has been under audit since January.

The audit is nearing completion, Flores said on Monday,

adding that a lawsuit would be filed against government

officials who authorized the contract. Since February, Panama's

Supreme Court has also discussed the concession.

The contract reviews are seen as possible roadblocks in a

key $22.8 billion deal announced in March by a group led by U.S.

investment firm BlackRock ( BLK ) to get access to CK

Hutchison's ( CKHUF ) port business in 23 countries, including the two

ports in Panama.

CK Hutchison ( CKHUF ) and BlackRock ( BLK ) did not immediately reply to

requests for comment. BlackRock ( BLK ) CEO Larry Fink, speaking earlier

this week at a conference in New York, said the deal was not

made for geopolitical reasons, but the company was aware that

China would review it as much as other jurisdictions.

Regulatory review of the deal could take nine more

months, Fink said, adding he was optimistic it would be

approved.

China's embassy in Panama said on Tuesday in a social media

post that it has and will continue respecting Panama's

sovereignty, and added that the relationship between the U.S.

and Panama should not be "excluding."

If irregularities in the concession renewal are confirmed by

Panama's government or the Supreme Court declares the contract

to be unconstitutional, the concession could be revoked, lawyers

and experts have said.