McLean's - American Shipper

TRANSPORT / PORTSsurances that they had received from DPWorld, including mandatory participationin a container inspection program in Dubaiand a supply chain security best practicesprogram, both managed by U.S. Customsand Border Protection.It took a few more days for officials toreveal that DP World also committed to allowU.S. law enforcement agencies to collectcompany records without a subpoena anduse the information to screen or investigateDP World employees working in the UnitedStates. DP World also promised to maintainP&O’s existing security policies and proceduresand operate the domestic facilities withthe current U.S. management structure.The assurances did not assuage an increasinglyhostile Congress about the sale.DP World Chief Operating Officer EdwardBilkey tried to explain at several hearingsthat his company was a good corporatecitizen that met all U.S. and internationalmaritime security regulations.“You may feel, Mr. Bilkey, that there isno risk. But I don’t care what you say, I’mgoing to protect my family, my constituents,my country and my state as much as I can.And your assurances are nice to hear, butthat’s not enough for me,” said Sen. FrankLautenberg, D-N.J.The fallout from the port controversyalso claimed the nomination of DavidSanborn, a DP World executive who Bushhad nominated to be maritime administrator.Senators put his nomination on hold,questioning whether he would favor DPWorld in his regulatory role and perhapsoverlook security concerns.DP World’s announcement March 2that it would go ahead with its scheduledcontract closing with P&O, but defer takingoperational control of the U.S. portion ofthe business to provide a cooling off periodin the United States, did little to quell thefirestorm against the sale, as did news twodays later that the company would resubmitits application for a security review of itsacquisition. While trying to show its willingnessto compromise, DP World also madeclear that it considered the original approvalvalid and that it would seek to be indemnifiedif it was forced to divest.Days before the scheduled closing date,Eller filed suit in Britain to stop the transaction.It argued that port authorities wereconsidering revoking P&O’s leases, andthat P&O shareholders were not given theopportunity to approve the restructured dealfor hands-off control of U.S. operations. Ellersaid Continental Stevedoring & Terminal Inc.did not give its consent for P&O to transferits interest in Miami to DP World, and arguedit would suffer millions of dollars in lossesit its joint lease was terminated.Bush’s comments that he still felt the approvaldecision was correct and statementsby administration officials that the extratime would be used to educate the Congressabout the merits of the sale further inflamedlawmakers, who concluded that the secondreview was nothing more than a rubber stampand that officials did not intend to open upnew lines of inquiry about DP World andthe United Arab Emirates.Senators wanted to know if the originalsecurity clearance panel had consideredquestions such as whether Al Qaeda hasany financial links to the company, whetherthe company had connections to nuclearsmuggling, and if contingency plans werein place if a coup toppled the pro-Americangovernments in the UAE.On March 2, Rep. Duncan Hunter, R-Calif.,issued a list of incidents in which nuclear andchemical components were smuggled throughthe UAE, including a case in 2003 in whichDubai Customs allegedly ignored CBP pleasto stop an illegal shipment of nuclear switchesfrom the United States to Pakistan.A British court on March 3 dismissedAmericans hold key DP World postsWASHINGTONPartially lost in all the commotion abouta foreign government-owned companyacquiring the right to operate portions ofseveral U.S. ports is the fact that Americansaccount for a sizable portion of the managementteam at Dubai Ports World.The international port operator agreedto pay $6.8 billion to acquire its Britishrival, Peninsular & Oriental Steam NavigationCo., but U.S. politicians rushed toblock the takeover on the grounds thatforeign managers from DP World mightbe more inclined to aid or ignore terroristswho want to use the port as a basefor attacking the United States.But the Dubai Port Authority and itsinternational port division have a historyof hiring top talent from around the world,enabling the company to become one of thebiggest and best-run global port operatorsin a short period of time. The companyhas had a pipeline to the old Sea-LandServices carrier group that was bought byDanish container line Maersk from CSXCorp. in 1999.In fact, Sea-Land Service operatedthe Port of Jebel Ali for 10 years untilthe Dubai Port Authority had developedthe expertise to manage operations on itsown in 1988.DP World’s chief operating officer isEdward “Ted” Bilkey, who previouslyserved as president of Norton Lilly & Co.,a Mobile, Ala.-based shipping agency. Healso served as vice president of MaherTerminals, which operates a major terminalat Port Elizabeth, N.J. In the late1980s until the mid-1990s, Bilkey servedas executive director of the Dubai PortsAuthority and Jebel Ali Free Zone.Bilkey is scheduled to retire soon andtaking his place will be Anil Wats, managingdirector Asia and Australia. Wats spent21 years at Sea-Land Service, rising tochief executive of Middle East business.After Sea-Land was bought by Maersk,Wats was chief executive of parent companyA.P. Moller Maersk in Indonesia.General Counsel George Dalton previouslyworked at CSX World Terminals,the international port arm of Jacksonville,Fla.-based railroad CSX. Dubai Ports Internationalbought CSX World Terminalsand its nine facilities in January 2005 toform DP World. Before that he worked ascounsel for Sea-Land and was a partnerin the New York City maritime law firmof Kirlin, Campbell & Keating.The head of business development forDP World is Matt Leach, who also joinedthe company when it absorbed CSX WorldTerminals. At CSX he was vice presidentof operations and development, where heled the company’s expansion into Korea,China and Venezuela. Leach joined Sea-Land Service in 1995.Michael Moore, DP World’s commercialdirector, joined the company aftersix years at Maersk. He started out atSea-Land Service in 1984.Meanwhile, the most prominent DPWorld executive in the news is DavidSanborn, who President Bush nominatedin January to head the U.S. MaritimeAdministration. Sanborn’s nomination isbeing held up by Congress until the disputewith the White House about the port saleis resolved.Sanborn was director of operationsfor Europe and Latin America. Prior tothis, Sanborn served as French carrierCMA-CGM’s senior vice president NorthAmerica service delivery. He also servedas vice president for network operationsat APL, and earlier as director of operationsat Sea-Land Service. He is a retiredlieutenant in the U.S. Naval Reserve andholds a bachelor’s degree from the U.S.Merchant Marine Academy.80 AMERICAN SHIPPER: APRIL 2006