Mar 1, 2006- Calling for Investigation into the Dubai Deal to Manage U.S. Ports

HON. MARCY KAPTUR
 OF OHIO
IN THE HOUSE OF REPRESENTATIVES
WEDNESDAY, MARCH 1, 2006

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Ms. KAPTUR. Mr. Speaker, my Special Order this evening concerns the proposedacquisition of Dubai Ports World of the leasing contracts for several major U.S. ports onthe east coast. And in relation to that, I have sent letters to the TreasuryInspector General and to the committee of jurisdiction here in the House, theGovernment Reform Committee, asking both those entities to review any conflict ofinterest regarding the participation of the U.S. Secretary of the Treasury,John Snow, who chairs the Committee on Foreign Investment, the group whichapproved the recent contract with Dubai Ports World. I will place these twoletters of request in the RECORD.

The letters ask the committee and the Inspector General to determine whetherappropriate processes were followed, conflicts of interests explored, andwhether or not American companies were solicited during that process. TheTreasury agreement itself raises serious ethical questions regarding thosedirectly responsible for this decision. In particular, given that Dubai PortsWorld acquired CSX World Terminals in 2004 for $1.15 billion, a company ofwhich Secretary of the Treasury John Snow was chair prior to coming to theadministration, and this should raise serious questions both about theacquisition of the CSX port operations and the recent awarding of thiscontract.

As chair of the U.S. Treasury Committee on Foreign Investment, SecretarySnow and the Treasury Department had the lead authority in approving the Dubai transaction.Secretary Snow holds a deferred compensation package and a special retirementpension from his days as CEO of CSX Corporation. In 2004 CSX World Terminalswas acquired by Dubai Ports World, the successful bidder on this contract. Butgiven that Secretary Snow had previously disclosed a deferred compensationpackage with CSX valued at between $5 million and $25 million and $33.2 millionfrom a special retirement pension, one would expect that any financial benefitfrom the sale of CSX World Terminals to Dubai Ports World, including any stockholdings, would have been revealed, especially if there might be any residualfrom subsequent actions such as these.

The President's assertion that he had polled his Cabinet Secretaries on the Dubai deal causes concern for me that at least one,Secretary Snow, should have removed himself from the decision, given hisbusiness connections to CSX and Dubai.

On 9/11, two members of the hijack team that simultaneously downed the Twin Towersin New York City and killed hundreds ofAmericans at the Pentagon were from the United Arab Emirates. And as the9/11 Commission reported, those same terrorists laundered much of the money fortheir operation through the United Arab Emirates-controlled banks.

We should ask instead of developing our own companies to manage our own U.S. operations,why should we settle for the revolving door that has skilled people move fromone company to another, creating a pea-in-the-shell game that leaves the publicwondering who is in charge and does anyone care? And, importantly, is America forsale at any price?

Secretary of the Treasury John Snow was CEO of CSX just about a year beforeCSX sold some of its international operations to Dubai Ports World. Was thisbillion-dollar deal done totally after he left, or was it already in the workswhile he served as CEO of that company? Why is it that no one at Treasury saidthat Secretary Snow recused himself from this transaction until they werecalled about it? Secretary Snow himself claimed not to have known about thedeal. How can someone not know about a deal from which they should recusethemselves?

The White House has appointed David Sanborn as the new administrator of theMaritime Administration. He worked as Dubai Ports World director of operationsin Europe and Latin America until he was appointed to the post in January, thesame month the Treasury Department's Committee on Foreign Investment in the United Statesapproved the Dubai Ports World takeover. David Sanborn also previously workedfor the CSX Corporation. The revolving door brings him back to a highgovernment position. Some Senators have vowed to block Sanborn's nominationunless he testifies before the Commerce Committee.

CNN has reported that the UnitedArab Emirates is a major investor in theCarlyle Group, the private equity investment firm where President Bush's fatheronce served as senior adviser and is a who's who of former high-levelgovernment officials. Just last year, Dubai International Capital, agovernment-backed buyout firm, invested $8 billion in the Carlyle fund.

Another Bush family connection, the President's brother Neil Bush, hasreportedly received funding for his educational software company from the United Arab Emiratesinvestors.

And why did George Bush, Sr. accept a $1 million donation to his library in Texas from the United Arab Emirates?

The material previously referred to is as follows:

CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVES,

Washington, DC, February 23, 2006.
Hon. TOM DAVIS,
Chairman, Committee on Government Reform, Rayburn HOB, Washington, DC.
Hon. HENRY WAXMAN,
Ranking Member, Committee on Government Reform, Rayburn HOB, Washington, DC.

DEAR CHAIRMAN DAVIS AND RANKING MEMBER WAXMAN: The recentannouncement of a contract being awarded by the U.S. Committee on ForeignInvestment in the UnitedStates to Dubai Ports World following itspurchase of London-based Peninsular and Oriental Steam Navigation Co. is amatter of paramount concern that should be investigated in the nationalinterest.

It raises concerns of national security as the operator will be a foreigninterest, most particularly an undemocratic nation from the MiddleEast that cannot assure infiltrators will not breach security. Weknow less than 2% of container cargo is inspected today despite Congressionalefforts to upgrade the current system. Iran'sgrowing ties with Chinawhich ships the majority of its cargo through the Dubai/CSX hub terminal in Singaporecomplicates the situation.

In addition, the Treasury agreement raises serious ethical questionsregarding those directly responsible for this decision. In particular, giventhat Dubai Ports World acquired CSX World Terminals in 2004 for $1.15 billion,a company of which Secretary of the Treasury John Snow was Chairman prior tocoming to the Administration should raise questions about both the acquisitionof the CSX port operations and the recent awarding of the contract. SecretarySnow now chairs the Committee on Foreign Investments in the United States, the very group whichapproved this contract with Dubai Ports World.

For these reasons, I respectfully urge the Government Reform Committee toconduct an investigation and a series of hearings to learn more about thesematters to determine whether appropriate processes were followed, conflicts ofinterest explored, and whether or not American companies were solicited in thisprocess.

This deal is not in our national interest most especially during a time ofwar. Foreign management of key U.S.assets endangers the public and our communities in an era where terrorists seekto infiltrate. I hope you will agree with me that a thorough investigation iswarranted.

Sincerely,

Marcy Kaptur,
Member of Congress.

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CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVES,

Washington, DC, February 23, 2006.
Mr. HAROLD DAMELIN,
Inspector General, Department of the Treasury, Washington, DC.

DEAR MR. DAMELIN: The recent announcement of a contract being awardedby the U.S. Committee on Foreign Investment in the United States to Dubai Ports Worldfollowing its purchase of London-based Peninsular and Oriental Steam NavigationCo. is a matter of paramount concern that should be investigated in thenational interest.

I respectfully request that your office conduct an investigation in to thedeliberations by the U.S. Committee on Foreign Investment with particularrespect to the legislative requirements established by the Byrd Amendment thatrequires an investigation in cases where: (1) the acquirer is controlled by oracting on behalf of a foreign government (as is the case in this instance);and, (2) the acquisition ``could result in control of a person engaged ininterstate commerce in the U.S. that could affect the national security of theU.S.'' While the Committee's role may have been only to review this particularforeign applicant, I believe it is also important to know what specific actionwas taken to solicit an American contractor for the management of these severalstrategic ports, or if there had been consideration given to several differentAmerican contractors for each or several of these ports, and who wasresponsible for this solicitation. Certainly one could reasonably assume thatthis is an issue that should have been reviewed by the Committee in itsevaluation of national security concerns.

Furthermore, it has been noted that the Secretary of the Treasury serves asChairman of the U.S. Committee on Foreign Investment. In this case, SecretaryJohn Snow had previously served as the Chairman of CSX Corporation, which atthe time of his service owned CSX World Terminals. Subsequently CSX WorldTerminals was acquired by Dubai Ports World, the successful bidder on thiscontract. Given that Sec. Snow had previously disclosed a deferred compensationpackage with CSX valued at between $5 and $25 million and $33.2 million from aspecial retirement pension, one would expect that any financial benefit fromthe sale of CSX World Terminals to Dubai Ports World, including any stockholdings, would have been revealed, especially if there might be any residualfrom subsequent actions such as these. I ask that you review this matter todetermine if there may have been any conflict of interest in Secretary Snowhaving presided over the decision, and whether or not he should have recusedhimself from the proceeding.

I look forward to your response to this request.

Sincerely,

Marcy Kaptur,
Member of Congress.

END