NBC News and news services
updated 2/27/2006 1:29:18 AM ET 2006-02-27T06:29:18

A United Arab Emirates-based company said Sunday it has agreed to seek a broader U.S. review of the security risks from its deal to take over major operations at six American ports.

In addition to the request for a 45-day examination, DP World is promising to create a U.S. subsidiary that would operate independently of executives in Dubai until May.

The moves are an effort to avert a damaging showdown between President Bush and Congress over the fate of DP World’s $6.8 billion takeover.

Last week, the company at the center of the ports controversy volunteered to postpone its management of operations at six major seaports, but eight Republican and Democratic senators said they plan to push emergency legislation next week to require congressional approval of the contract.

The legislation, proposed on Friday, would:

  • Require that President Bush place a stay on Dubai Ports World's management of the ports, which had been handled by London-based P&O ports, a company recently acquired by Dubai Port World.
  • Require the Treasury’s Committee on Foreign Investment in the United States to begin a 45-day investigation on the port deal's potential impact on national security.
  • Require Homeland Security and the Treasury to prepare a report and brief members of Congress on their findings.
  • Upon receiving the report, Congress would have the authority to disapprove the management contract within 30 days.

Bipartisan expression
The legislation was outlined in a statement by Sen. Charles Schumer, D-N.Y., who said he was being joined by Republican Sens. Susan Collins, Norm Coleman and Olympia Snowe, and Democrats Hillary Clinton, Harry Reid and Robert Menendez.

Schumer and other Democrats dismissed Dubai Ports World’s move to delay the management transfer. “A simple cooling-off period will not allay our concerns,” he said.

Menendez, D-N.J., said the company’s offer “isn't worth the paper on which it is written.” “If the Bush administration will not stop this deal from closing, Congress must,” he said.

Clinton, D-N.Y., urged Bush to conduct a broader review of potential terrorism risks.

But some Republicans were more receptive. 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 details about the administration’s review and approval of the agreement last month.

White House press secretary Scott McClellan said the delay “would be helpful to have some additional time to brief Congress about the facts and about the safeguards that are in place."

Asked how long the delay would last, McClellan said, “It’s not up to us. It’s up to the company to make that decision.”

White House helped with delay
As part of its new offer, coordinated 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.

The announcement late Thursday effectively leaves existing American and British executives in charge of the company’s seaport operations in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

A senior Dubai Ports executive, Edward Bilkey, said the company will otherwise move forward with its $6.8 billion purchase of Peninsular & Oriental Steam Navigation Co., which operates in 18 countries. Although Dubai Ports 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,” Dubai Ports said in a statement.

Meanwhile, the owner of Port Newark filed a lawsuit in New Jersey to block the sale of P&O to Dubai Ports, citing security concerns. The Port Authority of New York and New Jersey said the deal violates a 30-year lease signed with the authority in 2000.

The lawsuit, filed Friday in state Superior Court in Newark, asked a judge to block the sale on the grounds that any such deal required the authority’s consent.

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.

Bush: Security not a concern
Angry Republicans and Democrats have expressed unease over what they describe as inconsistent support against terrorism by the United Arab Emirates.

Bush has threatened to veto any legislation to block the deal and forcefully defended the small but wealthy federation in the Persian Gulf as a vital ally.

“People don’t need to worry about security,” Bush said Thursday. “This wouldn’t be going forward if we weren’t certain that our ports would be secure. The more people learn about the transaction that has been scrutinized and approved by my government, the more they’ll be comforted that our ports will be secure.”

The White House noted the United Arab Emirates contributed $100 million to help victims of Hurricane Katrina just weeks before Dubai Ports sought approval for its business deal. It said the money was nearly four times as much as the administration received from all other countries combined, and said there was no connection between the money and the pending deal.

The Associated Press contributed to this report.


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