A Feb. 23 article incorrectly stated that Treasury Secretary John W. Snow said the following about the sale of a London-based port-management company to a government-owned United Arab Emirates firm: "I learned of this transaction probably the same way as members of the Senate did, by reading it in the newspapers." Snow said he learned about the sale only in recent days, but in the quotation he was referring to a different transaction.
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Republicans Split With Bush on Ports
In a bid to defuse the controversy, Bush has instructed aides to brief members of Congress on Dubai Ports World, its operations and the intelligence community's findings that the firm poses no risk to national security. The briefings began yesterday.
Some of the big names on K Street have joined the Dubai Ports World fight on the side of the United Arab Emirates-owned company.
These include former Senate majority leader Bob Dole (R-Kan.), and a Democratic power couple in Washington, former representative Tom Downey (D-N.Y) and Carol M. Browner, former head of the Environmental Protection Agency. Dole's law firm, Alston & Bird LLP, led the effort by Dubai Ports World to steer its proposed acquisition of Peninsular and Oriental Steam Navigation Co. through the U.S. government approval process.
A senior White House official, who discussed internal strategy under the condition of anonymity, said Bush realizes that Republicans are dug in and that he may have to compromise. "We are sensitive to the fact that people have taken firm positions," the official said. But that effort was complicated by the disclosure that Bush and Treasury Secretary John W. Snow were unaware until this week about the purchase agreement and the administration's approval of the transaction last month.
Snow, whose department chairs the secretive executive branch panel that reviewed the proposed sale, told reporters in Torrington, Conn., that "I learned of this transaction probably the same way as members of the Senate did, by reading it in the newspapers."
Scores of lawmakers have complained that the transaction was not sufficiently scrutinized. Some lawmakers said Snow's comments reinforced the image of a quick and easy approval process.
At the Treasury Department, the Committee on Foreign Investments in the United States (CFIUS), which includes Cabinet officials and White House aides, examines sales with potential national security risks and usually attracts little attention.
Administration officials did not consider the sale of port terminal management to a Middle Eastern company dangerous or potentially controversial, White House aides said. Foreign-owned companies including a Chinese operation have controlled terminals at various U.S. ports for years -- and lawmakers have rarely complained. The White House said intelligence officials reviewed the sale and raised no concerns.
In a private briefing for House aides late yesterday, administration officials from the departments of State, Defense, Treasury and Homeland Security said the CFIUS met only once during a 23-day review of the sale and that the few objections raised were quickly addressed.
A Homeland Security official, for instance, argued successfully that the UAE company should be required to open its books without the threat of subpoena, participants said. Dubai Ports World agreed. Administration officials said they were trying to get a copy of that agreement to provide to lawmakers. The Associated Press reported last night that the administration, before approving the ports deal, secretly required the firm to cooperate with future U.S. investigations.
Under a 1993 amendment to the law that helped create the review panel, a more rigorous 45-day investigation is automatically required if "the acquirer is controlled by or acting on behalf of a foreign government" and the acquisition "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."
Patrick Mulloy, a member of the government-appointed U.S.-China trade commission and a critic of the approval process, said that Treasury officials throughout the Clinton and Bush administrations have routinely ignored the 1993 language.
"The culture of the department is to oppose [the longer review] as an impediment to foreign investment," he said.
Joseph King, who headed the customs agency's anti-terrorism efforts under the Treasury Department and the new Department of Homeland Security, said national security fears are well grounded.
He said a company the size of Dubai Ports World would be able to get hundreds of visas to relocate managers and other employees to the United States. Using appeals to Muslim solidarity or threats of violence, al-Qaeda operatives could force low-level managers to provide some of those visas to al-Qaeda sympathizers, said King, who for years tracked similar efforts by organized crime to infiltrate ports in New York and New Jersey. Those sympathizers could obtain legitimate driver's licenses, work permits and mortgages that could then be used by terrorist operatives.
Dubai Ports World could also offer a simple conduit for wire transfers to terrorist operatives in the Middle East. Large wire transfers from individuals would quickly attract federal scrutiny, but such transfers, buried in the dozens of wire transfers a day from Dubai Ports World's operations in the United States to the Middle East would go undetected, King said.
But Robert C. Bonner, a former top U.S. customs official, said that the security concerns surrounding the purchase agreement have been "greatly exaggerated."
"The reality is the major terminal operators are all foreign-owned," Bonner said. "This one happens to be owned by Dubai, but Dubai . . . has been very supportive in the counterterrorism efforts."
Staff writers Jeffrey H. Birnbaum, Paul Blustein and Walter Pincus contributed to this report.