The ports controversy involving a United Arab Emirates company took a new twist Monday, as Britain’s High Court heard testimony for and against the proposed acquisition by the company of a British firm that now has the contracts to manage large parts of operations at six U.S. seaports.
The hearing follows a Bush administration announcement Sunday that it will accept an offer by Dubai Ports World to submit to a second — and broader — U.S. review of potential security risks. The plan averts what could have been a showdown in Congress.
In London, the High Court must approve the $6.8 billion takeover of London-based Peninsular & Oriental Steam Navigation Co. for the deal to go ahead.
Monday’s hearing had been expected to provide a routine rubber stamp, but Miami-based Eller & Co. filed an appeal Friday to deny approval. Eller’s grounds included a “real prospect” that U.S. authorities would revoke their approval of the deal.
Martin Moore, a lawyer for P&O, said Eller’s case was “woefully thin” and the court should sanction the deal as quickly as possible.
DP World, which is owned by the Dubai government, won the support of the P&O board after a bidding war for the 165-year-old P&O.
Eller, which provides stevedoring services to 90 percent of cruise ships at the port of Miami, is also arguing that the deal breaches its joint venture contract with P&O and puts its business in jeopardy.
Eller has filed a similar lawsuit in a Florida state court.
Prompt review
In Washington on Sunday, the Treasury Department said in a statement it will promptly begin the review once the company formally files a request for one. It said the same government panel that earlier investigated the deal but found no reason for national security concerns will reconsider it.
In six pages of documents sent earlier in the day to the White House, Dubai Ports 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 Monday 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.
U.K., U.S. citizens to be in charge
DP World said a London-based executive who is a British citizen would have authority over the company’s operations at ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.
Also, an American citizen would serve as the chief security officer during the period of review, the company said.
“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.
The company said its proposals would remain in effect until May 1 or the conclusion of the review, whichever comes first.
A leading senator said DP World sent the offer to the White House and members of Congress on Sunday.
Warner praises company
Sen. John Warner, chairman of the Senate Armed Services Committee, praised the company for its “excellent record” on port security and international operations. Supporters of the deal have said the Emirates is an important U.S. military ally in the Middle East and in the fight against terrorism.
Warner, a Virginia Republican, told NBC’s “” he had a copy of an agreement that was being sent to the Bush administration and members of Congress by Dubai Ports World and P&O.
“And this is a copy of the agreement which is now being delivered to the administration and to members of Congress, and it really spells out unequivocally the willingness of this company to give every means of support to help work this thing out,” Warner said.
Later, in an interview with The Associated Press, Warner said the White House was studying the company’s request. Lawyers were discussing the proposal with the Treasury Department, which runs the secretive committee that considers security risks of foreign companies buying or investing in American industry.
“They have to have an opportunity to examine it,” Warner said.
For critics, ‘devil is in the details’
A chief critic of the deal, Rep. Peter King, said the proposal appears to offer the more intensive investigation that many lawmakers had sought. King, chairman of the House Homeland Security Committee, said he believed the offer should be enough to put off an immediate vote in Congress that might have blocked the ports deal.
“If it is what it appears to be, to me there’s no need at this time to go forward” with emergency legislation, said King, R-N.Y. “Obviously we have to hold it in reserve and see what happens.”
Another critic, Sen. Charles Schumer, D-N.Y., said DP World’s willingness to submit to a lengthier review was “certainly a significant step forward, but the devil is in the details.”
“If the report is completed and kept secret and only given to the president, who has already come out for the deal, it will not reassure Americans,” Schumer said.
He said if lawmakers are allowed to examine security concerns and give their approval, then “I don’t see any need for legislation or further conflict.”
Liability questions
DP World would retain its right to sue if the deal is halted after the review, said one person familiar with the proposal. This person spoke on condition of anonymity because the company’s offer was not yet formally accepted.
Asked whether the company faces liability from shareholders, Warner said: “I don’t want to go all the way down that road.”
The company’s offer was aimed at quelling opposition in Congress. Lawmakers have threatened to introduce legislation this week that would force a new investigation of security issues relating to the deal.
Senate Majority Leader Bill Frist, R-Tenn., presented such a proposal to the company and the administration late Friday. All parties, including House Speaker Dennis Hastert’s office, have held talks since then.
DP World said Robert Woods, a British citizen, would have authority over the U.S. ports during the review. Woods is the chief executive of Peninsular & Oriental Steam Navigation Co.
Ties to Sept. 11 attacks
Critics of the deal have cited the Emirates’ history as an operational and financial base for the hijackers who attacked New York and Washington on Sept. 11, 2001. Furthermore, the U.S. raised concerns with the Emirates several years ago about possible ties between officials and Osama bin Laden, according to the report by the independent commission that investigated the attacks.
Also, the Emirates was one of only three countries that recognized the Taliban government in Afghanistan before its 2001 overthrow by U.S.-led forces.
Before announcement of DP World’s offer, Bush’s national security adviser said the White House supported efforts to delay the ports takeover as long as it did not derail the deal.
“What the Congress and the companies are able to work out, we’ll support and cooperate with so long as it does not involve a summary decision by the Congress that blocks this transaction,” he told CNN’s ‘Late Edition.”