Coast Guard Warned Of Ports Deal Gaps

Assistant Homeland Security Secretary Stewart Baker briefs the Senate Homeland Security and Governmental Affairs Committee on Capitol Hill Monday, Feb. 27, 2006, on Dubai Ports World's purchase of Peninsular & Oriental Steam Navigation Company. Coast Guard Adm. Thomas Gilmour is at right. (AP Photo/Dennis Cook)
AP Photo/Dennis Cook
Citing broad gaps in U.S. intelligence, the Coast Guard cautioned the Bush administration that it was unable to determine whether a United Arab Emirates-owned company might support terrorist operations, a Senate panel said Monday.

The surprise disclosure came during a hearing on Dubai-owned DP World's plans to take over significant operations at six leading U.S. ports. The port operations are now handled by London-based Peninsular & Oriental Steam Navigation Company.

"There are many intelligence gaps, concerning the potential for DPW or P&O assets to support terrorist operations, that precludes an overall threat assessment of the potential" merger," an undated Coast Guard intelligence assessment says.

"The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities," the document says.

However, Coast Guard spokesman Commander Jeff Carter said in a statement that the Cost Guard's analysis of the port deal was taken out of context, reports CBS News correspondent Bob Orr.

"Upon subsequent and further review, the Coast Guard and the entire CFIUS panel believed that this transaction, when taking into account strong security assurances by DP World, does not compromise U.S. security," the statement said.

Sen. Susan Collins, chairman of the Senate Homeland Security committee, released an unclassified version of the document at a briefing Monday. With the deal under intense bipartisan criticism in Congress, the Bush administration agreed Sunday to DP World's request for a second review of the potential security risks related to its deal, CBS News correspondent Mark Knoller reports.

The document raised questions about the security of the companies' operations, the backgrounds of all personnel working for the companies, and whether other foreign countries influenced operations that affect security.

"This report suggests there were significant and troubling intelligence gaps," said Collins, R-Maine. "That language is very troubling to me."

Administration officials defended their decision not to trigger a 45-day review of national security implications of such a deal.

"In this case, the concerns that you're citing were addressed and resolved," Clay Lowry, the Treasury Department's assistant secretary for international affairs, told lawmakers.

The Coast Guard indicated to The Associated Press that it did not have serious reservations about the ports deal on Feb. 10, when the news organization first inquired about potential security concerns.

"Any time there's a new operator in a port our concern would be that that operator has complied with the ISPS (International Ship and Port Facility Security) code overseas, and we just want to take a look at their track record," Cmdr. Jeff Carter, a Coast Guard spokesman, said at the time. "And then we would look forward to working with them in the future ensuring they complied with all applicable regulations and international agreements."

The White House thinks the deal is fine as is, but spokesman Scott McClellan said Monday the new review was "a reasonable middle ground."

Senate Majority Leader Bill Frist, who helped negotiate the plan, quickly recommended that lawmakers wait for the outcome before acting on legislation to delay or block the deal. Frist, R-Tenn., said he expects oversight hearings to continue this week.

In six pages of legal documents sent Sunday to the White House, Dubai-based DP World offered to submit to a second, broader investigation of its plans to run shipping terminals in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

60 Minutes reports on holes in port security.
The Treasury Department, which governs the U.S. review panel, said it would accept DP World's extraordinary offer once the company formally filed its request for one. It said the same government panel will reconsider the deal that it earlier had agreed unanimously posed no national security concerns.

The administration hopes that the new review and the delay will help to calm the public, but members of Congress still want a voice in the process, reports CBS News senior White House correspondent Bill Plante.

Some senators, led by Charles Schumer, D-N.Y., said they still intend to introduce legislation Monday to block the deal pending the new review and to require congressional approval before DP World can conduct business in the United States. Under existing law, Congress effectively has no role considering deals.