Senate Holds Hearings on Dubai Port Deal

KWAME HOLMAN:

This afternoon members of the Senate Commerce Committee heard for the first time from an executive of Dubai Ports World, the Arab state-owned company at the center of a political storm.

EDWARD BILKEY:

DP World welcomes the opportunity to get the truth out so that Congress and the public can better understand the facts surrounding our acquisition of P&O Ports North America Inc.

KWAME HOLMAN:

Chief operating officer Edward Bilkey acknowledged the furor surrounding the deal under which his company would take over operations at six major U.S. ports scheduled to be finalized on Thursday but he said there were several myths that needed to be dispelled.

EDWARD BILKEY:

First we are not acquiring or taking over U.S. ports as some people have claimed. Rather, we act as an operator who has a lease to operate a particular terminal within a port.

Second, this transaction does not involve an outsourcing of U.S. security, as some have alleged. Suffice it to say that security's a layered approach of the U.S. Customs and Border Protection and Coast Guard taking leading roles, followed by local police and harbor police. A terminal operator is one piece of a complex picture.

Third, DP World did not obtain U.S. government approval of its acquisition of P&O Ports North America — as some people have stated — secretly, in the dead of the night, or without adequate review.

KWAME HOLMAN:

The state-run DP World based in the United Arab Emirates acquired the British firm, P&O, in a $6.8 billion deal. Though the Bush administration reviewed and approved the sale on Jan.17, members of Congress were not formally notified.

When the transaction gained prominence recently, members of both parties questioned the way the deal was approved and whether it would pose a greater risk of a terrorist attack.

Today DP World's Bilkey sought to allay those fears by citing his company's decision to allow the Bush administration to initiate a 45-day investigation into the deal's potential security risks.

EDWARD BILKEY:

We stated that we would abide by the outcome of that review.

KWAME HOLMAN:

But some committee members opposed to the deal pointed to what they called the flawed initial review process. Maine Republican Olympia Snowe wondered why some national security concerns never reached cabinet officials.

SEN. OLYMPIA SNOWE:

It never rose to the highest levels of decision-making and leadership, whether it was the secretary of homeland security, whether it was the secretary of defense, whether it was the secretary of the treasury, whether it was the director of national intelligence.

KWAME HOLMAN:

North Dakota Democrat Byron Dorgan said another review was not even necessary.

SEN. BYRON DORGAN:

Just say no; the sooner we say it, the better. It doesn't take 45 days. It shouldn't take 45 minutes, Mr. Chairman.

KWAME HOLMAN:

But DP's Bilkey argued it was too late to start his company's acquisition of the port operator, P&O.

EDWARD BILKEY:

We are not in a position now to stop this. In actual fact, by March 15, we have to mail checks worth $6.8 million plus to the present shareholders, billion dollars, there's a slight change, thank you, Rob, to the shareholders.

KWAME HOLMAN:

Earlier in the day, Bush administration officials were questioned closely about the port's transaction at two other Senate hearings.

Members of the Appropriations Committee pressed Homeland Security Secretary Michael Chertoff about the Coast Guard document written in December. In it, questions were raised about whether there were intelligence gaps relating to the deal that made it difficult to assess possible threats to national security. Maryland Democrat Barbara Mikulski.

SEN. BARBARA MIKULSKI:

On the reports Baltimore is one of the six ports affected in this Dubai deal. So we're pretty much on the edge of our chair wondering what it means in terms of port security. Were you aware of the Coast Guard yellow flashing lights that they raised?

MICHAEL CHERTOFF:

Well, I've read the Coast Guard memo, including the classified.

SEN. BARBARA MIKULSKI:

When did you read it?

MICHAEL CHERTOFF:

I read it about a week ago and I will tell you I must respectfully disagree with your characterization. I don't see it as a flashing light. I've seen countless intelligence reports – you've got to let me finish – I've seen countless intelligence reports that quite properly conclude by analyzing what is known and then indicating that there are things that are not known.

The piece of this report which was not widely reported yesterday but was finally declassified, is the Coast Guard's conclusion in this report, which was an early report, that DP World's acquisition of P&O in and of itself does not pose a significant threat to U.S. assets in U.S. ports.

KWAME HOLMAN:

At the Armed Services Committee, the witness was National Intelligence Director John Negroponte.

JOHN NEGROPONTE:

We assessed that the threat to U.S. national security posed by DP World to be low. In other words, we didn't see any red flags come up during the course of our inquiry.

KWAME HOLMAN:

The administration's fresh 45-day review of the deal's potential security risks has yet to begin.