Dubai firm formally submits to broader US security review

Investigation aims to quell fears of UAE takeover in major US ports.

port 88 (photo credit: )
port 88
(photo credit: )
A United Arab Emirates company is formally submitting itself to an unusual, broader security examination of its plans to assume significant operations at six major US ports, a business deal the company code-named "Project Thunder." The Bush administration said it will conduct a new, 45-day investigation of plans by Dubai-owned DP World to purchase London-based Peninsular & Oriental Steam Navigation Co. for $6.8 billion. The Project Thunder code name refers to a Dubai-controlled subsidiary, Thunder FZE, that is participating in the complex transaction, according to documents previously submitted to the Homeland Security Department. The new investigation, which could begin within days or weeks, is aimed at quieting the furor in Washington over the administration's earlier approval of the deal. The British company runs major port operations in New York City; Newark, New Jersey; Baltimore, Maryland; New Orleans, Louisiana; Miami, Florida; and Philadelphia, Pennsylvania. The Treasury Department, which governs the review panel, is expected to conduct another preliminary scrutiny that could take up to 30 days before opening its full, 45-day investigation. DP World and Treasury officials said the paperwork was submitted late Friday. The timelines are governed by US law, and lawyers for the company and administration wrestled to settle on procedures in the unprecedented request for such a security review. US lawmakers have criticized the earlier review as insufficient. They cite misgivings by the Coast Guard in December because broad gaps in US intelligence left it unable to determine whether DP World might support terror operations. The administration said those concerns ultimately were settled, and the Coast Guard has said it is now satisfied that the deal does not compromise security. Lawmakers devoted the week to congressional hearings that did little to calm tensions. In the House of Representatives, Republican Rep. Duncan Hunter, chairman of the Armed Services Committee, complained Thursday the new investigation would be "too little, too late." He pledged "to do everything I can to kill the deal." DP World offered this week to submit to the broader investigation by the US government panel that considers security risks of foreign companies buying or investing in American industry. The Treasury Department already has said it welcomed DP World's extraordinary offer. It said the same panel will reconsider the deal that it earlier unanimously agreed posed no national security concerns. Meanwhile, in London, a Miami-based business partner of Peninsular & Oriental asked Britain's Court of Appeal on Friday to consider blocking DP World's purchase of its rival. Eller & Company Inc. complained in court papers it will become an "involuntary partner" under the sale with Dubai's government. A British judge approved the sale this week but agreed to stay his ruling until the appeals court decides Monday whether to hear Eller's case. DP World's offer for an extended examination was unusual. The US review panel has conducted such full-blown investigations only 25 times among the 1,600 international deals it has reviewed, although the government confirmed this week it is conducting two other such investigations. On Tuesday, the panel opened an investigation into plans by Dubai International Capital LLC to buy a British precision-engineering company, Doncasters Group Ltd. The British outfit has plants in Georgia and Connecticut that make parts used in engines for military aircraft and tanks. The review panel also is investigating plans by an Israeli software company, Check Point Software Technologies Ltd., to purchase a smaller US rival. DP World previously said during the renewed scrutiny, or until May 1, Dubai executives would not control or influence company's business in the United States but said it was entitled to all profits during the period. President George W. Bush has defended his administration's earlier approval of the deal after a routine, 30-day review.