Lawsuits Filed to Stop Ports Takeover, Deal on Hold

Nearly a week after sparking a political firestorm, the United Arab Emirates-owned management company bidding to take over operations of 21 U.S. ports offered to delay part of its $6.8 billion deal.

The Teamsters on Friday held "Goodbye Dubai: Secure America's Ports" rallies at about 20 U.S. ports, including those in Miami, Baltimore, Boston, Houston, Newark, N.J., and Savanna, Ga. The Teamsters is the umbrella union organization whose members include thousands of American port workers.

"The public outcry to the sale of our port operations to a company owned by the United Arab Emirates has been deafening," Teamsters President Jimmy Hoffa wrote in a letter to President Bush. "At a time when we should be beefing up security at our ports, this proposed transaction would potentially leave our port gateways even more exposed and at greater risk of infiltration by those that would cause harm to the United States."

Many lawmakers and unions in Washington and around the states argue that allowing UAE-owned Dubai Ports World to buy the London-based Peninsular and Oriental Steam Navigation Co., which currently operates the port terminals in question, would threaten U.S. port security. Administration officials point out that DP World would not be in charge of security, just port operations. The U.S. Coast Guard and Customs are in charge of port security.

At first, it was reported that the deal involved only six ports but DP World's Web site says it involves 21 ports, from Portland, Me., to Corpus Christi, Texas.

To add to the growing chorus of criticism from nearly every hall but that of the White House, the ports themselves are now also getting involved.

The owner of Port Newark filed a lawsuit Friday, citing security concerns. The Port Authority of New York and New Jersey claims that the pending acquisition violates a 30-year lease that the authority and P&O signed in 2000.

The Port Authority lawsuit, filed in state Superior Court in Newark, asks for an order blocking the purchase and declaring that P&O has broken the lease by failing to obtain the authority's consent for the takeover.

In England, a U.S. company at the Port of Miami, Eller & Company Inc., filed a court petition Friday also seeking to block the sale. Eller asked the High Court in London, which must approve its purchase of London-based Peninsular & Oriental Steam Navigation Co., to stop the takeover. Miami-based Eller filed a similar lawsuit last week in a Florida court, alleging it will become an "involuntary partner" with Dubai's government and it may seek more than $10 million in damages.

As part of its coordinated effort with the White House, Dubai Ports World said it would agree not to exercise control or influence management over U.S. ports pending further discussions with the administration and Congress. It did not say how long it would wait for these discussions to be finished.

That gives the administration a little more breathing room to convince Congress why the deal is not a threat to national security.

"Our interest is to see that Congress is fully briefed," White House spokesman Scott McClellan said Friday. "We believe that the more information they have, the more supportive Congress will be."

While some lawmakers praised the delay, others said it is nothing more than smoke and mirrors, designed to smooth over the fact that the administration was blindsided by the huge amount of harsh criticism it has taken over the business transaction.

"This promise isn't worth the paper on which it is written. It is a smokescreen that changes none of the underlying facts. This merger has already been approved by the Bush administration. It is scheduled to close in less than a week, and once it does, Dubai Ports World will own operations at U.S. ports and can assume control of them at anytime without any ability for our government to stop it. Nothing that the company or the administration has announced changes that fact," said Sen. Robert Menendez, the Democrat from New Jersey who is co-sponsoring legislation to block the sale of operations at U.S. ports to companies owned by foreign governments.

"We can't rely on nonbinding promises from foreign governments to secure our ports. If the Bush administration will not stop this deal from closing, Congress must," he added.

Rep. Peter King of New York, chairman of the House Homeland Security Committee, described the offer as "definitely a positive step." A leading Republican critic of the deal, King said the president still must disclose new details about the administration's review and approval of the agreement last month.

Added Sen. Charles Schumer, D-N.Y.: "A small delay is an excellent idea and would give a chance for a solution amiable to all sides to follow. We hope the administration is serious about this suggestion."

Congressional leaders are discussing how to review the deal. House Speaker Dennis Hastert will meet with the House Republican leadership team next Tuesday to determine their next move, said Hastern spokesman Ron Bonjean.

A senior DP World executive, Edward H. Bilkey, said the company will otherwise move forward with its purchase of P&O, which operates in 18 countries. Although the company agreed to temporarily segregate the company's U.S. operations, Bilkey expressed bewilderment over the security concerns expressed in Congress.

"The reaction in the United States has occurred in no other country in the world," Bilkey said. "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure that they are addressed to the benefit of all parties."

The company, timing its announcement before financial markets opened in London, assured British shareholders they will be paid as previously planned.

"It is not only unreasonable but also impractical to suggest that the closing of this entire global transaction should be delayed," DP World said in a statement.

On Thursday, White House Deputy Chief of Staff Karl Rove told FOX News' Tony Snow that the Bush administration wants to make Congress is comfortable with the contract, even if it means the sale of P&O is slightly pushed back.

"Our interest is in making certain the members of Congress have full information about it, and that, we're convinced, will give them a level of comfort with this," Rove said, adding that regulatory rules abroad could also add a few days to a final sign off on the transaction.

President Bush said Americans shouldn't fret over the controversial ports deal involving that has taken Washington and state lawmakers by storm.

"People don't need to worry about security," Bush said Thursday. "We wouldn't go forward if we were concerned about the security of the United States of America."

UAE One Of the 'Best and Eager Partners in Safety'

At a Thursday briefing of the Senate Armed Services Committee, debate over the deal turned from whether it is a good idea to let a UAE-owned firm run freight terminals inside U.S. ports to whether the Bush administration conducted itself properly in approving the deal.

Democratic Sens. Hillary Rodham Clinton of New York and Carl Levin of Michigan, the vice chairman of the panel, alleged that officials in the 12-member U.S. Committee on Foreign Investment in the United States broke the law by not taking the full 45 days available to it to review the ports deal. They argued that the statute that defines the job of the panel requires a 45-day review. CFIUS approved the deal after 30 days.

"If you want the law changed — I don't care which administration you represent — if any administration wants the law changed, this or a previous one, come to Congress and change it but don't ignore it," Levin said.

But U.S. officials said they interpret the law differently, and the deal was carefully reviewed ever since it came into CFIUS' hands in November

"We're not aware of a single national security concern raised recently that was not part of" the three-month review of the deal, Deputy Treasury Secretary Robert Kimmitt said.

Added Deputy Defense Secretary Gordon England: "This review definitely was not cursory and it definitely was not casual. Rather, it was in-depth and comprehensive."

Sen. John Warner, R-Va., chairman of the committee, said he would put in a request to Attorney General Alberto Gonzales for an official interpretation of the statute.

Opponents point out that the Sept. 11 commission reported that the UAE backed the Taliban and allowed financial support for Al Qaeda through its banking system. Critics also suggest the UAE can't be trusted since two of the Sept. 11, 2001, hijackers were from the UAE.

On top of that, they note A.Q. Khan, the notorious Pakistani nuclear scientist, met with Iranian officials in the UAE and shipped some black market nuclear equipment through the Emirates.

In the other corner, administration officials point out that it was the UAE that captured Rahim Al Nashiri, the Al Qaeda mastermind of the 2000 USS Cole bombing, which killed 17 American sailors.

"There is no question that their performance has changed since 2001 in the War on Terror. They have been critical allies in Afghanistan. They have been critical allies in fighting the financial war against terror," said Frances Fragos Townsend, the president's chief homeland security and counterterrorism adviser.

Rove also called Dubai a "great military asset" and "vital to our security." He said as far as Dubai's cooperating with Customs and Border Protection and the Container Security Initiative, the UAE is one of the "best and eager partners in safety."

DP World is the seventh largest terminal operator in the world, running 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, those U.S. operations will 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.

The deal also 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.

Rove added that while DP World will take over P&O, virtually all the workers will continue to be U.S. citizens, with a few management positions held by British workers.

Former Republican National Committee Chairman Ed Gillespie said while ownership of the firm is changing at the top, the American employees will not change their allegiance.

"Just because someone works for Toyota or Honda in an American plant doesn't mean their loyalties are with Japan," he argued.

FOX News' Jim Angle and Sharon Kehnemui Liss and The Associated Press contributed to this story.