Homeland Security Watch

News and analysis of critical issues in homeland security

March 14, 2006

WSJ details last-minute DP World security promises

Filed under: Port and Maritime Security — by Christian Beckner on March 14, 2006

The Wall Street Journal has a piece today that reveals a last-minute offer by Dubai Ports World to make significant new security investments to save the deal:

The four-page offer, titled “Proposed Solution to the DP World Issue,” promised to give the Department of Homeland Security nearly complete say over the company’s U.S. corporate affairs and to install “state-of-the-art radiation-detection and gamma-ray inspection devices” at company expense at all current and future DP World-managed ports overseas. Experts estimate that step alone could have cost DP World as much as $100 million, though some ports where DP World operates already have some radiation-detection devices….

The March 7 offer, on the other hand, went beyond what was put forward in January. “DP World undertakes to perform extraordinary structural and corporate governance measures to ensure that the security and financial concerns of Congress and the American people are met,” the document said, adding that “no other port operator in the United States or indeed the world” has agreed to similar steps. Among the highlights, DP World said that its U.S. subsidiary — now managed by a British citizen — would in the future be directed only by an American or British citizen. It offered to give the Department of Homeland Security the right to disapprove its choice of chief executive, board members, security officials and “all senior officers,” and promised that a “supermajority” of its board of directors would be U.S. citizens. The company promised to maintain all records relating to its security operations on U.S. soil, and turn over such records as requested to the U.S. government.

These stipulations essentially address the threat-related concerns that I raised in my early posts on the deal. It’s a moot point now, but with these stipulations and investment promises in place, I have to believe that this acquisition would have been a net positive for U.S. homeland security. Instead, the American company that buys out DP World’s U.S. assets is likely to have a weaker balance sheet and be much more short-term focused than DP World. Will it make these same security investments that DP World promised? I hope so, but I doubt it.

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