A subsidiary of a Hong Kong conglomerate, which is embroiled in U.S.-China tensions over its Panama Canal port assets has denied allegations that it had failed to pay about $1.2 billion to the Central American country.

The audit found “many breaches” of the concession awarded to a subsidiary of logistics giant CK Hutchison to operate the two ports and said Panama did not receive US$1.2 billion (S$1.6 billion) it was owed under the contract.

Auditors in Panama have reported that the Hong Kong-based owner of key Panama Canal ports has violated the terms of its contract. Comptroller-General Anel Flores announced on Monday that the audit had found “many breaches” of the concession awarded to Hong Kong-based logistics giant CK Hutchison to operate the Balboa and Cristobal ports,