DPW Divestiture a Sucker Punch?
By SusanUnPC on March 10, 2006 at 2:55 PM in Current Affairs
Based on commenters’ speculations in the story below, “Dubai Ports Deal : CNN,” I did some checking. Lo and behold:
The Halliburton Connection . . . followed by the Carlyle Group connection (below the fold) . . .
Of note: James Baker, former Secretary of State under George I, is a senior partner at Baker Botts, among whose clients are the Saudi royal family and Halliburton. A diary at Daily Kos gets into the details of Baker’s connection to the DPW deal and to the Carlyle Group.
1) Thomas DeFrank, the veteran New York Daily News reporter with crampons firmly fixed to his White House sources (and who you often see on MSNBC’s Hardball), writes (via Contra Costa Times reprint):
The White House is quietly pushing a Dubai company to “significantly restructure” and partner up with a U.S. outfit to keep the port deal from sinking, sources told the New York Daily News on Friday. … [...]
One snag to such a deal may be that sources say the U.S. company best equipped to partner with DP World is Halliburton, once headed by Vice President Dick Cheney.
After undergoing so much scrutiny for its no-bid Iraq contract and the handling of some of its duties there, Halliburton may not be able to help DP World land the deal, a source admitted. [...]
… DP World will have to come up with a deal that will pass muster with Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee. [...]
[I]n addition to a rigorous investigation, it’s important to look at having an American company administer the contract, and DPW would have to be totally separated out from the U.S. company in terms of access to information that the company would have or could acquire,” King told the Daily News. …
2) Newsday, commenting that Sen. John Warner’s Senate floor statement was “vaguely worded,” reports that:
“The funny thing is that Halliburton may be the one American company with the capacity to do this,” said one congressional Republican, speaking earlier this week on condition of anonymity. “Problem is that the Democrats would probably complain that the Dubai deal was a big ruse to get Halliburton the contract.” Vice President Dick Cheney used to run Halliburton.
3) Corky Siemazko for the New York Daily News comments:
Congress may want American companies to operate the U.S. ports that Dubai has agreed to unload, but good luck finding them.
There’s only a handfull of home-grown outfits big enough to take over the six port operations. … the estimated $700 million price tag may be too steep for firms that specialize in running port terminals like Seattle-based SSA Marine or Maher Terminals Inc. in Elizabeth, N.J. – the largest container terminal operator in the Port of New York and New Jersey. [...]
[S]cratch Halliburton off the list. [Really, Corky? Really?]
Melissa Norcross, a spokeswoman for the controversial U.S. company once headed by Vice President Cheney, called suggestions circulating on the Hill that they might take over “false and baseless.” [Uh huh.]
Siemazko mentions other current U.S. port operators: “Maersk, which is Danish, or Han Jin, a South Korean company.” and “[a] Chinese firm, Hutchison, operates the two other major local port facilities – the New York Container Terminal on Staten Island and the Global Terminal in Bayonne, N.J.”
Below, more on the Halliburton possibilities, and another section on the Carlyle Group’s connections to the DPW deal and future participation in U.S. port administration …
The Halliburton Connection . . . continued . . .
4) Blogger Joe Gandelman of The Moderate Voice lists many of the rampant speculations behind yesterday’s DPW decision:
[S]ome continue to speculate it could mean another contract for Halliburton. Indeed, speculation now runs rampant on what was behind the proposal …
Gandelman then provides a rundown of blog statements from Andrew Sullivan (who decries Americans’ xenophobia) to Glenn Reynolds (“If Halliburton gets the deal, will people think the whole thing was a sucker-punch?”), all of the blog excerpts worth a read. Among them:
–James Joyner on Halliburton speculation: “Now that would be sweet! And here you thought Rove and Cheney were losing their touch!”
5) Time Magazine today discloses another already implemented foreign deal, and mentions Halliburton as a possible American firm to take over DPW’s divestiture:
Yet while one Dubai company may be giving up on U.S. ports, another one shows no signs of quitting the U.S.—or of giving up a contract with the Navy to provide shore services for vessels in the Middle East. The firm, Inchcape Shipping Services (ISS), is an old British company that last January was sold to a Dubai government investment vehicle for $285 million. ISS has more than 200 offices around the world and provides services to clients ranging from cruise ship operators to oil tankers to commercial cargo vessels. In the U.S., the company operates out of more than a dozen port cities, including Houston, Miami and New Orleans, arranging pilots, tugs, linesmen and stevedores, among other things. The firm is also a defense contractor which has long worked for Britain’s Royal Navy. And last June, the U.S. Navy signed on too, awarding ISS a $50 million contract to be the “husbanding agent” for vessels in most Southwest Asia ports, including those in the Middle East, according to an unclassified Navy logistics manual for the Fifth Fleet and a press release from ISS.
There are many more such speculative articles.
The Carlyle Group . . .
1a) Washington Business Journal headlines this story: “Carlyle Group explores acquisition of port operations,” a particularly helpful article on what’s coming next:
Private equity firm The Carlyle Group established a team to acquire public-purpose facilities such as ports a day after a United Arab Emirates company said it would transfer newly acquired operations at American ports to a U.S. organization.
D.C.-based Carlyle Group announced an eight-person team would invest in public-purpose infrastructure projects such as ports, transportation and water facilities, airports, bridges and stadiums. The team will begin work March 13. [...]
Rep. Duncan Hunter, R-Calif., and others in Congress are considering legislation that would block any foreign company from operating ports and other key U.S. infrastructure. If that legislation is approved, it could give The Carlyle Group and other private equity firms opportunities to buy foreign-owned operations at a discount.
The new public infrastructure investment group is co-headed by Robert Dove, former executive vice president at Bechtel Enterprises, and Barry Gold, former managing director and co-head of the structured finance group at Citigroup/Salomon Smith Barney.
“We are at a crossroads of the right market, right private equity firm and right team with complementary skills and experience,” Gold says in a statement. “As a U.S. firm with exceptional experience in government contracting, Carlyle is now well positioned to invest in U.S. and other infrastructure either alone or as part of a consortium.”
Carlyle’s infrastructure team will invest primarily in U.S. infrastructure in transactions ranging from $100 million to more than $1 billion. It will enter into public-private partnerships with federal, state and local governments by purchasing projects outright or through long-term concessions
2a) The Kansas City Star weighs in:
One potential private buyer would be Washington’s Carlyle Group, which bought the U.S. container shipping business of CSX Corp. in 2002 for $300 million, selling it two years later for $650 million. Also, the Dubai government has been an investor in Carlyle’s investment funds, and put $100 million into its latest, $7.85 billion buyout fund.
A source at Carlyle, however, said the firm probably would not be interested in P&O’s port operations, given the political scrutiny such a deal would invite.
3a) Rep. Dennis Kucinich (D-Oh) has introduced a “rarely used Congressional procedure called a Resolution of Inquiry to demand documents from the Administration about the security review of the port deal that would have allowed a United Arab Emirates (UAE) company to take control of six US ports …” The press release says:
Kucinich’s resolution requires the President, and the Secretary of Homeland Security, to turn over to Congress:
- All documents in their possession regarding the December 13, 2005, Coast Guard Intelligence Coordination Center document.
- All documents in their possession regarding discussions between the White House and Dubai Ports World relating to the Committee on Foreign Investment process for approving the acquisition.
- All documents in their possession regarding discussions between the White House and the Carlyle Group between October 1, 2005, and March 2, 2006.
Kucinich’s resolution is bound to go nowhere fast, but it is interesting.
Of note: Alice Albright, daughter of ex-Secretary of State Madeleine Albright, is connected to the Carlyle Group. Madeleine Albricht was hired by DPW, along with former Sen. Bob Dole, to lobby Congress on behalf of DPW, before yesterday’s announcement.
Also: The Albricht Group is allied in deals with the Carlyle Group, including the administration of $57 billion in unpaid Iraqi debts “now owed to the government of Kuwait [and] assigned to a foundation created and controlled by a consortium in which the key players are the Carlyle Group and the Albright Group, which is headed by another former Secretary of State, Madeleine Albright.” (DN!, Oct. 13, 2005) The Albright Group was brought in as “political cover” for the Carlyle Group deal.
And: “Also aiding the Dubai port company is the lobbying firm of Clinton’s former secretary of state, Madeleine Albright.” (WSWS.org – yes, it is from the World Socialist news site, but they do have good stories from time to time)
The Bush family’s own ties to the Emirates are longstanding and intimate. The Carlyle Group, the private equity firm that employed both Bush and his father, as well as a number of other former top Republican officials, has profited off of hundreds of millions of dollars in investments from a UAE state-owned investment firm. The president’s brother, Neil Bush, has forged his own lucrative connections with the UAE, making regular visits to Dubai and reportedly raising some $23 million in state investments for his educational software company, Ignite. …
Anyone think we’ll get to speak out on this before it goes down?
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