Bush: DP World Deal, What Was Left Out and Why?

A new government agency created in October reviewed the DP World deal, a senior administration official told FOX News, but documents surfaced late Wednesday that showed approval of the transaction excluded some routine requirements.
Last Monday, the U.S. Committee on Foreign Investments in the United States (CFIUS) signed off on the deal for DP World to purchase the London-based Peninsular and Oriental Steam Navigation Co., which operates terminals in the major U.S. ports of Baltimore, Miami, New Jersey, New Orleans, New York and Philadelphia.
The deal required the UAE-owned DP World to cooperate with future U.S. investigations, according to documents obtained by The Associated Press. To win permission of the $6.8 billion purchase, DP World had to agree to reveal records on demand about "foreign operational direction" of its business at U.S. ports. Those records broadly include details about the design, maintenance or operation of ports and equipment.
The government asked DP World to operate American seaports with existing U.S. managers "to the extent possible."
However, the papers show CFIUS did not require DP World to keep copies of business records on U.S. soil, where they would be subject to orders by American courts.
"There is a very serious question as to why the records are not going to be maintained on American soil subject to American jurisdiction," said Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee and a leading critic of the sale.
A senior U.S. official said the Bush administration considers shipping manifests less sensitive.
Another detail revealed in the documents shows the administration required DP World to designate an executive to handle requests from the U.S. government, but it did not specify citizenship of that individual. Several of the company's top executives are Americans while others are Arab, Dutch and Indian.
Administration: We Won't Outsource Security
Administration officials say the company has made available sensitive trade secrets, documents and other concessions as part of the deal.
DP World promised to take "all reasonable steps" to assist the Department of Homeland Security in any security questions that arose, and pledged to continue participating in security programs to stop smuggling and detect illegal shipments of nuclear materials.
Secretary of State Condoleezza Rice, on her way from Riyadh to Beirut Thursday, said while scrutiny has increased over who America deals with since the Sept. 11, 2001, attacks, the system is not set up to prevent a country in the Middle East from doing business with the United States. Rice repeated that the deal was thoroughly vetted and the UAE is a strong ally in the War on Terror.
Frances Fragos Townsend, assistant to the president for homeland security, told FOX News that not one federal agency raised an objection to the deal when it was going through the review process, therefore, it is not unusual for the president to not know about such deals until it was complete.
"Rarely do these wind up on the president's desk and that's only after there has been an investigation and there is some disagreement," Townsend said. "This didn't get there because none of the agencies who reviewed it had any objection and any security concerns the Department of Homeland Security addressed in a security agreement with DP world.
She stressed that the United States is not outsourcing port security, only some port operations.
"Port security will continue to be in the very capable hands of the Coast Guard, and Customs and Border Patrol," Townsend said. "This is really a commercial deal. There are commercial deals in U.S. ports around the country with other companies, other foreign companies and we address those commercial concerns and the security arrangements because we continue to control security. Security arrangements in U.S. ports won't change regardless of whether this deal goes through or not."
DHS issued a release of port security activities it conducts independently of terminal operators that noted that funding for port security has increased by more than 700 percent since September 11, 2001, from $259 million in 2001 to about $1.6 billion in fiscal year 2005.
But Congress is still fuming about the still-emerging details of the deal.
"Current law dealing with approval of foreign investment needs to be revised. Right now, it's a 12-member committee headed by the Treasury secretary," said Sen. Susan Collins, R-Maine, chairwoman of the Senate Homeland Security and Governmental Affairs Committee, adding, "Congress is really cut out of the loop."
Others contend that the review process at the administration level was incomplete, especially because the panel did not use the entire 45 days allotted to review the sale.
"Outsourcing the ownership of this critical homeland security priority to Dubai Ports World without a thorough review makes no sense at all," added Sen. Patty Murray, D-Wash.
On Thursday, Rep. Bennie Thompson, D-Miss., the ranking Democrat on the House Homeland Security Committee, wrote to the Government Accountability Office asking it to look into the decision-making process of CFIUS, which Thompson claimed suffered from conflicts of interest and a lax view of what a national security threat is.
"The GAO found that the Department of Treasury, which chairs CFUIS, has a limited view of the definition of a national security threat. For example, sales that threaten critical infrastructure protection, including port security, may not be considered a national security threat. In the Department of Treasury's view, a national security threat does not exist unless threatening intelligence is reported about the parties involved or an acquisition affects export-control technologies or classified contracts," Thompson wrote to GAO Comptroller General David Walker.
The vice chairman pointed to the prior relationship between Treasury Secretary John Snow and DP World, which bought port operations previously owned by CSX Corporatin, of which Snow used to be CEO.
"I would like the GAO's investigation to answer the following questions 1) Did the Secretary of Treasury recuse himself from the review of this sale? If not, what role did he have in the review?" Thompson wrote.
The deal also stinks to several lawmakers who say the UAE's past linkages to the Sept. 11, 2001, hijackers and other international relationships are suspect.
Critics argue the UAE was an important transfer point for shipments of smuggled nuclear components sent to Iran, North Korea and Libya by a Pakistani scientist. The UAE also refuses to recognize Israel and considers the Taliban the rightful government in Afghanistan.
"The wisdom of the American people should be taken into account here. ... It is not as I have seen reported in some corners some form of Islamophobia. That entire description would indicate some sort of irrational fear," said Rep. J.D. Hayworth, R-Ariz.
"The bottom line is this: When in doubt, cut it out," Hayworth said.
"In regards to selling American ports to the United Arab Emirates, not just NO, but HELL NO!" Rep Sue Myrick, R-N.C., wrote to Bush in a letter posted on her Web site.
'The UAE is a Very Solid Friend'
Officials counter that the U.S.-UAE alliance goes far deeper than this port deal as part of ongoing reforms in the intelligence services. DHS argued that the UAE gives U.S. and coalition forces "unprecedented access" to its ports and territory, overflight clearances and other logistical assistance.
DHS also submitted that the UAE has frozen accounts of suspected groups linked to terrorists and has enacted aggressive anti-money laundering and counter-terrorist financing laws. The country allows Customs and Border Protection agents in its ports in Dubai, where they inspect cargo departing for the United States.
Former Central Command chief Tommy Franks told FOX News that not only is the UAE a great ally in the War on Terror, but more American Navy ships are in Dubai's port than any other in the world. He also said the port is run in excellent fashion.
Sen. Joseph Biden, D-Del., agreed that the U.S.-UAE relationship is a decent one but added, "They have been an ally but just as the Colombian government has been an ally with us in terms of fighting narcotics. We wouldn't put the Colombian government in charge of a border control spot. They are an ally, they should be treated fairly. [But] it looks like commerce has been put in front of security."
He added: "If the president pushes this, the Congress will stop it."
Many lawmakers say they have enough support to override a presidential veto, which Bush has promised if a bill passes trying to halt the deal.
DP World is the seventh largest terminal operator in the world, operating 23 facilities in 13 countries. It has terminal contracts in countries that are allies of the United States, including Germany, Australia, India and South Korea as well as nations such as China, Saudi Arabia and Venezuela.
If it does win U.S. approval for the deal, the company will own the contracts for terminals now run in the United States by P&O.
Outside of cruise ship terminals in those ports, operations include two of the 14 terminals in Baltimore's port, one of three terminals in the Miami port, one of five terminals in Newark, two of five terminals in New Orleans, one of five terminals in Philadelphia. DHS officials also note that the deal lets DP World run four of 12 terminals in Houston and allows it to be involved in stevedoring for all five terminals in Norfolk, though DP World would not manage any specific terminal.
The company's retiring chief operating officer, American Edward H. Bilkey, said the company will do whatever the Bush administration asks to enhance shipping security and ensure the sale goes through. Bilkey said Wednesday he will work in Washington to persuade skeptical lawmakers they should endorse the deal; Senate oversight hearings already are scheduled.
"We're disappointed," Bilkey told the AP in an interview. "We're going to do our best to persuade them that they jumped the gun. The UAE is a very solid friend, as President Bush has said."