The opponents of the DP World purchase of terminal leases at six US ports owe Sen. Chuck Schumer a bottle of champagne. If not for the Herculean efforts of Sen. Schumer, Arabs would control several terminals at the ports in New York, New Jersey, New Orleans, Miami, Philadelphia and Baltimore. Without even having to get involved in a bidding war, some US based terminal operator is going to own the leases that DP World is giving up. By using a campaign of complete and total misinformation while under the influence of a jilted US terminal operator and fanning the flames of fear, Sen. Schumer has risen to the level of fairy godfather to the lucky winner of the Portgate Lotto.
The whole port issue was not about national security. At least it did not start out that way. Portgate started out as nothing more than a bitter falling out between P&O and Eller & Co. In 2005, Eller & Co.(1) claimed that P&O was trying to increase control of Continental Stevedoring and Terminals Inc., a subsidiary of Eller & Co. Once word got out the P&O and DP World were in negotiations, Eller started sowing seeds of “endangering port operations” and “national security implications” if the deal went through. Attorney and lobbyist Joe Muldoon began educating lawmakers about the negative implications of DP World buying out P&O in the latter part of January 2006. Another Eller representative, Attorney Michael Kreitzer, tried to educate CFIUS but the confidential nature of CFIUS prevented him from getting through the door.
Representatives of Eller & Co lobbied Democratic members of Congress, specifically Senators Schumer and Clinton and Rep. Bob Menendez. As anyone that has followed any tiny moment of the Portgate drama knows, Sen. Schumer ended up leading the charge against the deal. On February 13, 2006, Schumer issued the first of three press (2) releases about the “port takeover by UAE government-owned firm”. Each press release described the deal as “taking control of operations at six ports”. Schumer reported that the “Port Operator is responsible for securing cargo coming in and out of the port, the port facility itself and the hiring of security personnel.” He claimed that the deal was quietly cleared by a government panel without public scrutiny. The first press release featured Schumer’s concerns about “port operators controlling all cargo not set aside for DHS screening, which could be as much as 95% of cargo at each port, managing access to secure areas and background checking all personnel.” Schumer feared that since “only 5 percent of containers entering our ports are actually inspected” the chances of nuclear, chemical or biological material being delivered right to the ports’ doorstep were increased with UAE in the picture. Muldoon’s arguments (3)against the sale were essentially the same as those cited by Schumer’s press releases.
Once the deal was done, Eller & Co filed two lawsuits – one in London and one in Florida- to stop the sale. The lawsuit in London was filed on Feb. 24. Eller’s representatives cited “a number of grounds for its objection, including a ‘real prospect’ that US authorities would revoke their approval of the deal.” Duncan Roberston,(4) a London-based spokesman for Eller stated, “There is no point in the court approving something that next week might become illegal.” In its petition, Eller argued “There is a real prospect that the arrangement will lead to US port authorities revoking licenses and/or leases held by joint venture companies which will cause severe financial losses.” Paul Downes (5), a lawyer for Eller & Co told Britain’s High Court that “Eller would be affected because some companies have threatened to withdraw business from US ports that would be run by Dubai’s DP World if the deal goes through. He said it was not relevant to Eller’s case that the worries in the United States over the deal were justified or not.” Meanwhile in the USA, the 45 day extension offered by DP World to ease concerns was underway. Martin Moore, a lawyer for P&O said the hearing was “being used for collateral purposes to encourage opposition to the deal in the United States.”
The Florida suit cited Eller & Co being an “involuntary partner with Dubai’s government”. Eller’s subsidiary Continental Stevedoring and Terminals Inc. claimed that the sale was “prohibited under its partnership agreement” with P&O. The lawsuit said the deal “may endanger the national security of the United States.” The company also reported that it may seek more that $10 million in damages should the deal take place.
Attorney Muldoon confirmed that Schumer was ace in the hole for Eller & Co. In “Deal Gives Dubai Firm Control of 23 US Ports” in The Buffalo News (6) on 3/4/06, Muldoon stated “If this hadn’t been for Sen. Schumer this issue would never had gotten any traction”. Schumer said he sensed the public would be outraged if they knew about the deal and heard bipartisan objections. Schumer spokesman Israel Klein (7) said “Eller was really the canary in the mineshaft for many people on the Hill and in the media.” According to the Washington Post (8)on 2/26/06, “it was on Feb. 13 that the Dubai Ports World deal – after simmering unnoticed for months in the federal bureaucracy and the transportation trade press – started to boil, as a result of (Michael) Savage’s blustery on-air alarms and an event by Schumer at the New York harbor with families who lost loved ones on Sept. 11, 2001.”
According to media reports on Thursday and Friday, Eller & Co (9) said it was “considering an offer to buy out Peninsular & Oriental’s operations in Miami (10) and possibly at other ports.” Attorney Michael Kreitzer said “This wasn’t on our agenda and not something we had considered. But as Congress started to speak out and say there was a dearth of American companies doing this, we started talking to our board of directors about putting a proposal together. We could move very quickly, and we’re certainly reaching out to see if there is an opportunity for us.” What a great deal for Eller & Co!
Only time will tell if Sen. Schumer’s intervention and massive propaganda campaign will pay off in dividends for Eller & Co. Meanwhile, the Republicans who failed to separate fact from fiction are crossing their fingers that their random and rare display of backbone will help fill their campaign coffers. All this time we have been clamoring for the GOP Congress to stand up and take control, without any results. When they finally do stand up, it is only to place Sen. Schumer on their shoulders and carry him to across the finish line. When the time comes, I hope the GOP Congress has the backbone to investigate what influences advocated on behalf of Eller & Co. I guess that would be impossible because they would be investigating their selves.
(1) "Small Florida Firm Sowed Seed of Port Dispute" - Wall Street Journal. Feb. 28. page A3
(2)"Multi-Billion Dollar Company that Operates NYC Port to be Taken over by United Arab Emirates Government Owned Firm Today" - Press Release Sen. Chuck Schumer. Feb 13
(3)"UAE Terminal takeover extends to 21 ports" - UPI 2/23/06
(4)"US company files petition in London to block DP World takeover of P&O" -The Star Online AP World 2/25/06
(5)"Miami Co. Says Ports Deal Will Hurt Business" - Newsmax.com 2/28/06
(6)"Deal gives Dubai Firm control of 23 US ports" - Buffalo News 3/4/06
(7)"Miami firm behind Arab ports deal flap" - Middle East Times. 2/28/06
(8) "Bush's Response to the Ports Deal Faulted as Tardy" - Washington Post. Feb. 26
(9)"Bush: Ports Storm Sends Bad Message" - CBS News. 3/10/06
(10)"Arabs drop ports deal; S. Fla firm in running" - Miami Herald 3/10/06