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Port firm wants security review

Mon., Feb. 27, 2006, midnight

WASHINGTON – The Bush administration said Sunday it will accept an extraordinary offer by a United Arab Emirates-based company to submit to a second – and broader – U.S. review of potential security risks in its deal to take over significant operations at six leading American ports. The plan averts an impending political showdown.

The U.S. Treasury Department said in a statement it will begin the review promptly once the company formally files a request for one. It said the same government panel that earlier investigated the deal and found no reason for national security concerns will reconsider it.

In six pages of documents sent earlier Sunday to the White House, Dubai-based DP World asked for a 45-day investigation of plans to run shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The announcement means the White House likely won’t face a revolt by fellow Republicans when lawmakers return today from a weeklong break. A united Republican Party can assert that its leaders – both in Congress and at the White House – have taken additional steps to protect national security.

In a statement Sunday, Senate Majority Leader Bill Frist, R-Tenn., said he will recommend that the Senate wait for results of the broader review before acting on legislation to delay or block the deal. Frist also said he anticipates oversight hearings to continue to examine the agreement and its implications on maritime security.

DP World’s offer is highly unusual. The secretive U.S. committee that considers security risks of foreign companies buying or investing in American industry has conducted such broader investigations only about two dozen times among the more than 1,500 international deals it has reviewed.

DP World said that during the renewed scrutiny, or until May 1, a London-based executive who is a British citizen will have authority over the company’s U.S. operations. It pledged that Dubai executives will not control or influence company business in the United States but said it is entitled to all profits during the period. It also said it will appoint an American to be its chief security officer in the United States.

“We hope that voluntarily agreeing to further scrutiny demonstrates our commitment to our long-standing relationship with the United States,” said Edward H. Bilkey, the company’s chief operating officer.

President Bush forcefully has defended his administration’s earlier approval of DP World’s proposal to buy London-based Peninsular & Oriental Steam Navigation Co. It was not immediately clear whether the re-examination by U.S. officials will produce a different outcome.

“We’re satisfied that there has been a complete review of the deal,” Frances Fragos Townsend, the White House homeland security adviser, said on “Fox News Sunday.”

In the administration’s earlier review, completed Jan. 17, DP World agreed to cooperate with law enforcement investigations and disclose records on demand about “foreign operational direction” of its business.

The U.S. review committee unanimously approved the deal after a regular 30-day review, during which U.S. intelligence agencies reported that they had found no derogatory information about DP World in their files.

As part of that review, the administration 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. It also did not require the company to designate an American citizen to accommodate U.S. government requests for information or assistance.

In the legal papers sent to the White House, DP World said it will abide by the outcome of the lengthier review but indicated it could sue if the results are any different. The administration could seek additional security measures beyond the terms already negotiated.

A chief critic of the ports deal, Rep. Peter King, R-N.Y., said the company appears to have invited the more thorough investigation sought by many lawmakers. King, chairman of the House Homeland Security Committee, said the company’s request should be enough to delay any immediate effort in Congress to block the deal.

Another critic, Sen. Charles Schumer, D-N.Y., said that while DP World’s willingness to submit to the new review is “certainly a significant step forward,” he still plans to introduce legislation today to ensure a thorough investigation is done.


 

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