Doubts About Dubai Ports World Divestiture Raise Troubling Questions

Doubts About Dubai Ports World Divestiture Raise Troubling Questions

"Congressional action blocking this deal is the only true assurance we have that this deal is dead"}

March 14, 2006

(Washington, DC) -- Rep. Wasserman Schultz responded forcefully to media reports showing internal P&O e-mails written since DPW's divestiture announcement last week, that indicate that DPW had no immediate plans to sell its interests at Port of Miami.

"It appears that the divestiture announcement from DPW last week may have been nothing more than a diversion designed to deflect attention away from this outsourcing of American port security," said Rep. Wasserman Schultz. "Congressional action blocking this deal is the only true assurance we have that this deal is dead."

Recent media reports, as well as statements by Senate Majority Leader Bill Frist indicate that Dubai Ports World may not divest itself from their newly acquired U.S. port operations, something that Senator Frist indicated he would be O.K. with.

This only strengthens the case for Congressional action, placing the Clinton/Menendez/Nelson port security bill in the Senate and the Wasserman Schultz/Poe House companion bill (HR 4842) front and center.

What we know:

DPW paid roughly $700 million for U.S. Port operations of P&O… news reports have indicated that this premium price was paid largely because DPW wanted access to the Asian operations of P&O and they were up against another bidder, PSA for these operations.

* The Dubai-owned company that promised to surrender its U.S. port operations has no immediate plans to sell its U.S. subsidiary's interests at Miami's seaport, a senior executive wrote Monday in a private e-mail to business associates. (AP, 3/13/06 story by Ted Bridis)

* Sunday, on ABC's "This Week" Senate Majority Leader Bill Frist said: "If everything that the president, the administration has said, and that is that there is absolutely no threatening or jeopardy to our security and safety of the American people ... I don't see how the deal would have to be canceled," Frist said on ABC's "This Week." (AP, 3/12/06 story by Hope Yen)

* DP World said the divestiture was "based on an understanding that DP World will not suffer economic loss." Some analysts have suggested finding a U.S. buyer willing to pay the $700 million that DP World wants might be difficult. (AP, 3/12/06 story by Hope Yen)

* Officials at Eller & Company Inc. have told our office that they estimate the value of the U.S. port operations of P&O to be worth roughly $200 million, making a buyer for the U.S. operations of P&O unlikely at the price tag of $700 million.

Rep. Wasserman Schultz's legislation (HR 4842) would protect our ports in this and future deals:

* Would ban all future sales of major port operations to entities of foreign governments.
* Would be retroactive to October 1, 2005, thus reversing the sale of P&O to DPW.
* Would require the President to report to Congress about existing foreign government operations at U.S. ports.
* Would require that in CFIUS cases where a 45-day review is warranted, Congress be notified, affected state and local officials be notified and that there would be a public comment period.

"What is clear is that President Bush and at a minimum, the Republican leadership in the Senate, want to push ahead with the DPW deal, despite the overwhelming and justified uproar over the DPW purchase of P&O," said Rep. Wasserman Schultz.

http://www.house.gov/apps/list/press/fl20_schultz/DPWdivestiture.html