The acquisition of P&O by Dubai Ports World step by step

The controversy continues on the acquisition of Peninsular & Oriental Steam Navigation by Dubai Ports World:

WASHINGTON – A New Jersey congressman said Saturday he wants to require that security officials at U.S. ports be American citizens to prevent overseas companies operating shipping facilities here from hiring foreigners in such sensitive positions.

Republican Frank A. LoBiondo, chairman of the Coast Guard and Maritime Transportation Subcommittee, cited “significant” security concerns over a $6.8 billion sale that gives a company in the United Arab Emirates control over operations at six major American ports.

LoBiondo said he wants the new mandatory citizenship requirements approved by Congress and President Bush before state-owned Dubai Ports World completes its pending purchase of London-based Peninsular and Oriental Steam Navigation Co.

The British company, the world’s fourth-largest ports company, runs major commercial operations at shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

The Bush administration earlier approved the deal, which has drawn escalating criticism by lawmakers who maintain the United Arab Emirates is not consistent in its support of U.S. terrorism-fighting efforts.

In the interest of putting a little more light on the subject I submit the following timeline:

January 10, 2006 DPW offers a bid for P&O.The previous bidder had been the Port Authority of Singapore, which has connections with the Chinese authorities. Whichever bidder prevailed a foreign operator would have control over port terminal operations in six American portsThis was not a new situation: the British company had controlled the terminal operations for many years.
January 26, 2006 After DPW ups the ante P&O management recommends acceptance of the offer.
February 12, 2006 The American press takes note of the acquisition. See also this interesting post on the change in Internet activity on subject.
February 13, 2006 P&O shareholders accept offer.
February 14, 2006 New York Senator Charles Schumer notices (apparently for first time) that New York port terminal operations are foreign-controlled.New York Post editorial condemns acquisition.
February 16, 2006 Seven U. S. Senators call for review of acquisition.
February 17, 2006 White House defends acquisition arrangement.Senators Menendez and Clinton announce plan to block sale.
February 18, 2006 First lawsuit to block acquisition filed.

To recap:

  1. The port operations in question had been controlled by foreign companies for many years.
  2. Government ownership in whole or part of large companies is a commonplace in most of the world. The United States is an outlier in this.
  3. Whichever bidder prevailed (or, in fact, no change of ownership took place) a foreign-owned company would control the port terminal operations in question.
  4. DPW is an international leader in port terminal operations.
  5. There is no comparable U. S.-owned company.
  6. Banning the operation of U. S. port terminal facilities by foreign-owned companies is flummery (not to mention paranoid and diseconomic).

I do think that there are legitimate security concerns whoever is responsible for port terminal operations: the terminal operator is in a distinctly advantageous position to evade security operations. Does DPW present a particular risk? I don’t see it.

In my view this situation should be managed not legislated. The risks should be identified and controls put in place to mitigate them. The controls should be reviewed systematically, thoroughly, and frequently to ensure their effectiveness.

This whole matter illustrates why we need more business managers in the Senate and many fewer lawyers and career politicians.

For sane analysis and commentary on the acquisition see this post at ‘Aqoul.

My previous post on this subject is here:

More on the Dubai Ports World acquisition of P&O

11 comments… add one
  • Flummery is a very good word.

  • Excellent work, excellent.

  • I find it interesting that last month in South Korea, the President, Roh Moo-hyun, attended a ribbon-cutting of a joint DP World/Pusan Newport Co. terminal project in Busan, South Korea, while here (conveniently after the thirty-day review period of the CFIUS decision expired) senators and reps on both sides of the aisle are wild-eyed and livid about the administration’s blessing of the pending deal between DP World and P&O, especially when the cameras and microphones are on.

    I think the CFIUS made the correct decision.

    I also think that it all adds up to a good example of elected officials taking advantage of a hot-button issue in an election year.

  • Alamed I think is correct.

    By the way Dave, may I take advantage of your timeline and expand on it (we proper citation). The historyof the deal goes back to Fall 2005, and has some interesting twists.

  • By the way Dave, may I take advantage of your timeline and expand on it (we proper citation). The historyof the deal goes back to Fall 2005, and has some interesting twists.

    Of course.

  • My colleague, Starling Hunter, has also been on top of this from the start. Here is his latest at Wizbang Bomb Squad.

  • Mario Badino Link

    You miss the real point : Islam is an ideology aimed at dominating the world.
    For the “true believers” the world is divided in two : Dar El Islam ( the house of the believers ) and Dar El Kufr ( the house of the infidels ). The FIRST duty of a believer is to conquer the land of the infidels and submit them.
    Submission comes in three choices, 1st is conversion, 2nd is dhimmitude, 3rd is death. Would the US have allowed a USSR owned company to run its ports? Well, what the US is doing now is by far worse.

    However, if to be rich is the main purpose in your life, under islamic rule you won’t find yourself restrained. There are no provisions in the Quran against being rich and wealth is indeed praised and recommended.

    Islam is like HIV : it takes a very long time for the infected host to recognize the lethal enemy and too often when he does it is too late. There is something in HIV that misleads the immune system into trusting the newcomer as family while in reality it is alien.

    Business is business. Goddamn who dares to say that DPW takeover of US ports is not business as usual. Never seen glittering Dubai’s streets?

    Best wishes.

  • Ed Stephens Link

    Dubai Ports World deal is far from the ‘secret’ behind the scenes netherworld being spewed from the Democrats rhetoric and their sudden concern for National Security. It is just the latest barrage of the do something disease aimed at the Administration and averting the eyes of citizens to their playbook of fear and intimidation rather than having a real concern for anyone but the power hungry elite’s that make up their party of no ideas other than to tear America down through division.

    Articles detailing the port sale from the BBC:
    P&O jumps on hope of bidding war 31 Oct 05 | Business
    http://news.bbc.co.uk/1/hi/business/4392472.stm
    P&O ‘preliminary’ takeover talks 30 Oct 05 | Business
    http://news.bbc.co.uk/1/hi/business/4390362.stm

    P&O agrees bid from Dubai Ports Tuesday, 29 November 2005
    http://news.bbc.co.uk/1/hi/business/4480542.stm

  • I dont agree with giving the bitches control of “our” ports. If it literally blows up in our faces it would be because of this decision.

  • I find it interesting that last month in South Korea, the President, Roh Moo-hyun, attended a ribbon-cutting of a joint DP World/Pusan Newport Co. terminal project in Busan, South Korea, while here (conveniently after the thirty-day review period of the CFIUS decision expired) senators and reps on both sides of the aisle are wild-eyed and livid about the administration’s blessing of the pending deal between DP World and P&O, especially when the cameras and microphones are on.

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