DHS Initially Objected to Ports Deal

Published February 26, 2006

| Associated Press

The Homeland Security Department objected at first to a United Arab Emirates company's taking over significant operations at six U.S. ports.

It was the lone protest among members of the government committee that eventually approved the deal without dissent.

The department's early objections were settled later in the government's review of the $6.8 billion deal after Dubai-owned DP World agreed to a series of security restrictions.

Senate Majority Leader Bill Frist and other congressional leaders, the company and Bush administration officials were working on a compromise intended to derail plans by Republicans and Democrats for legislation next week that would force a new investigation of security issues relating to the deal. Talks were to continue through the weekend.

"My comfort level is good, but I have 99 other United States senators who need the opportunity to ask their questions," Frist told reporters before speaking at a Republican dinner Saturday evening in Lexington, Ky.

"We're behind the president 100 percent," he added. "We believe the decision in all likelihood is absolutely the right one."

Under one proposal being discussed, DP World would seek new approval of the deal from the Committee on Foreign Investment in the United States, given the company's surprise decision Thursday to indefinitely postpone its takeover of U.S. port operations. Other proposals included a new, intensive 45-day review of the deal by the government — something the White House had refused to consider as recently as Friday.

Rep. Peter King, chairman of the House Homeland Security Committee, said discussions among congressional leaders centered on that issue. "It's my understanding that they are trying to build support for a deal involving a new 45-day investigation," he said.

Frist, R-Tenn., said that while legislation may not be necessary now, having "30 to 45 days" to step back and evaluate the deal still could be necessary.

"If there's some question about the diagnosis, then maybe we need to get a second opinion," said Frist, a former heart surgeon.

King, R-N.Y., said he would need to see all the details of a compromise before deciding if it met all of his concerns, or met the demands of the legislation he planned to offer.

Despite persistent criticism from Republicans and Democrats, the president has defended his administration's approval of the ports deal and threatened to veto any measures in Congress that would block it. The company's voluntary delay in taking over most operations at the six U.S. ports did little to quell a political furor or appease skeptical members of Congress that the deal does not pose any increased risks to the U.S. from terrorism. Republican House and Senate leaders are to meet Tuesday to discuss how to proceed.

The company declined Saturday to discuss any potential compromise that may be in the works.

A DP World executive said the company would agree to tougher security restrictions to win congressional support only if the same restrictions applied to all U.S. port operators. The company earlier had struck a more conciliatory stance, saying it would do whatever Bush asked to salvage the agreement.

"Security is everybody's business," senior vice president Michael Moore told The Associated Press. "We're going to have a very open mind to legitimate concerns. But anything we can do, any way to improve security, should apply to everybody equally."

The administration approved the ports deal on Jan. 17 after DP World agreed during secret negotiations to cooperate with law enforcement investigations in the future and make other concessions.

Some lawmakers have challenged the adequacy of a classified intelligence assessment crucial to assuring the administration that the deal was proper. The report was assembled during four weeks in November by analysts working for the director of national intelligence.

The report concluded that U.S. spy agencies were "unable to locate any derogatory information on the company," according to a person familiar with the document. This person spoke only on condition of anonymity because the report was classified.

Sen. Carl Levin, D-Mich., and others have complained that the intelligence report focused only on information the agencies collected about DP World and did not examine reported links between UAE government officials and Al-Qaeda leader Usama bin Laden before the Sept. 11 attacks.

The uproar over DP World has exposed how the government routinely approves deals involving national security without the input of senior administration officials or Congress.

President Bush, Homeland Security Secretary Michael Chertoff, Defense Secretary Donald H. Rumsfeld and even Treasury Secretary John Snow, who oversees the government committee that approved the deal, all say they did not know about the purchase until after it was finalized. The work was done mostly by assistant secretaries.

Snow now says he may consider changes in the approval process so lawmakers are better alerted after such deals get the go-ahead.

Stewart Baker, a senior Homeland Security official, said he was the sole representative on the Committee on Foreign Investment in the United States who objected to the ports deal. Baker said he later changed his vote after DP World agreed to the security conditions. Other officials confirmed Baker's account.

"We were not prepared to sign off on the deal without the successful negotiation of the assurances," Baker told the AP.

Officials from the White House, CIA, departments of State, Treasury, Justices, and others looked for guidance from Homeland Security because it is responsible for seaports. "We had the most obvious stake in the process," Baker said.

Baker acknowledged that a government audit of security practices at the U.S. ports in the takeover has not been completed as part of the deal. "We had the authority to do an audit earlier," Baker said.

The audit will help evaluate DP World's security programs to stop smuggling and detect illegal shipments of nuclear materials at its seaport operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The administration privately disclosed the status of the security audit to senators during meetings about improving reviews of future business deals involving foreign buyers. Officials did not suggest the audit's earlier completion would have affected the deal's approval.

New Jersey's Democratic governor, who is suing to block the deal, said in his party's weekly radio address on Saturday that the administration failed to properly investigate the UAE's record on terrorism.

"We were told that the president didn't know about the sale until after it was approved. For many Americans, regardless of party, this lack of disciplined review is unacceptable," Jon Corzine said.

A federal judge in New Jersey has ordered the government to file a written response to Corzine's suit by Monday and scheduled a hearing for Wednesday.

Bush's national security adviser, Stephen Hadley, said there was no going back on the deal.

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