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American Shipper

Chertoff defends DP World port sale as criticism mounts

Chertoff defends DP World port sale as criticism mounts

   Department of Homeland Security Secretary Michael Chertoff on national television Sunday defended the Bush administration’s decision to give the green light to Dubai’s port authority to acquire the U.S. operating rights and assets of British terminal operator P&O Ports, as the controversy over the sale threatens to erupt into a full-scale political battle and gain the attention of the American public.

   Over the weekend, Democratic Sens. Hillary Clinton of New York and Robert Menendez of New Jersey joined the growing chorus of bipartisan opposition to the sale in Congress. The senators, who represent the Port of New York-New Jersey, where P&O Ports operates a major terminal, said they would introduce a bill to prohibit companies owned or controlled by foreign governments from purchasing port operations in the United States.

   “We wouldn’t turn the border patrol or the customs service over to a foreign government, and we can’t afford to turn our ports over to one either,” Menendez said in a statement.

   He told the New York Times that the bill would give the president the authority to make exceptions.

   Critics of the $6.8 billion sale to Dubai Ports World point out that one of the hijackers on Sept. 11, 2001 was born in the United Arab Emirates, of which Dubai is a part, several traveled through the country and had money wired to them through banks there — evidence they say that the UAE cannot be trusted to operate sensitive port operations that are vulnerable to terrorist attack or as venues for smuggling a weapon of mass destruction into the country. Under the sale, DP World would acquire port facilities at a number of locations on the East and Gulf coasts, including major terminals in Philadelphia, Baltimore, Miami and New Orleans.

   “Nations with ties to terrorism should not be in control of the most vulnerable gateways to our nation, especially in a time of war,” Reps. Curt Weldon, R-Pa., and Robert Brady, D-Pa., said in a letter to President Bush. They asked the president to carefully check the inter-agency approval of the sale. The Committee for Financial Investment in the United States, led by the Treasury secretary, reviews foreign acquisitions and mergers to make sure they don’t endanger U.S. national security.

   Weldon and Brady said Congress will hold hearings to examine the CFIUS process, which many legislators have complained was done without transparency, so that the public understands the rationale for approving DP World’s acquisition.

   “It may be that the Department of the Treasury is not best suited to lead the CFIUS in a day and age when security trumps economic considerations,” they wrote.

   Pennsylvania Sen. Rick Santorum also asked the president late last week to stop the P&O-DP World transaction. Earlier several Democrats (Sens. Charles Schumer, N.Y.; Frank Lautenberg, N.J.; and Christopher Dodd, Conn.) and Republicans (Sens. Tom Colburn, Okla.; and Richard Shelby, Ala.; and Reps. Mark Foley, Fla.; Vito Fossella, N.Y.; Ileana Ros-Lehtinen; Peter King, N.Y.; and Christopher Shays, Conn.) asked the administration to more closely investigate the deal or block it.

   The Senate Banking Committee is scheduled to hold a hearing on the matter later this month.

   The Associated Press reported that Rep. Frank Lobiondo, chairman of the House Coast Guard and maritime transportation subcommittee, plans to introduce a bill to require security officials at U.S. ports be U.S. citizens.

   Local politicians are also voicing their concerns. Baltimore Mayor Martin O’Malley denounced the proposed sale to DP World at a news conference, calling it “outrageous” and “irresponsible,” according to the Baltimore Sun. O’Malley, who has criticized the Bush administration before for its homeland security efforts for urban areas, is running for governor of Maryland.

   O’Malley said he would try to rally opposition among U.S. mayors. He is co-chairman of the U.S. Conference of Mayors’ Task Force on Homeland Security.

   Members of the New York City Council have also criticized the sale, and the Port Authority of New York-New Jersey has asked the administration to explain its decision.

   The Bush administration conducted “a very disciplined” classified review of the proposed sale of port facilities and built in extra safeguards, Chertoff said Sunday on NBC’s Meet the Press.

   The Coast Guard and Customs and Border Protection agencies developed a series of conditions to address national security concerns that DP World agreed to follow in order to win approval of the deal, Chertoff said. DHS is also familiar with DP World because CBP works closely with the company in Dubai and other ports where U.S. officers are stationed as part of the Container Security Initiative, he said.

   “As you know, this is part of the balancing of security, which is our paramount concern, with the need to still maintain a real robust global trading environment.”

   As for charges that companies from the UAE pose a threat to the United States, Chertoff said, “That fact that there was somebody born in the United Arab Emirates or that some people went to the United Arab Emirates doesn’t mean that every company there is automatically guilty, or automatically has to be excluded from owning something here.

   “Richard Reid was British. He was going to blow up an airliner. We don’t say the British can’t buy companies here.”

   The sale was also discussed on CBS, ABC and CNN Sunday talk show programs, as well as on C-SPAN this morning.

   Schumer also enlisted some of the families of 9/11 victims who died in the World Trade Center attack to speak out against the deal Sunday.

      Meanwhile, Eller & Co. Inc. filed suit in Florida asking a judge to block the sale because it is being involuntarily dragged into the deal to work for DP World, according to the Associated Press. The company’s Miami subsidiary, Continental Stevedoring & Terminals Inc., handles cargo for P&O in Miami, and said it may seek more than $10 million in damages. It argued that the sale to DP World was prohibited under its partnership with P&O.

   Eller & Co. helped ignite the controversy by bringing the issue to the attention of Congress.

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