Friday, February 24, 2006

Homeland Security Secretary Michael Chertoff was not aware a Dubai-owned company was seeking to operate terminals in six U.S. ports and that his agency was leading the review until after the deal’s approval, an administration official said yesterday.

Mr. Chertoff’s spokesman, Russ Knocke, told The Washington Times the issue rose no higher than the department’s assistant secretary for policy, Stewart Baker.

“[Chertoff] was not briefed up to this until after this story started appearing in the newspapers,” Mr. Knocke said.

Mr. Chertoff is the third Cabinet official to acknowledge he did not know his agency had signed off on the plan as a member of the interagency Committee on Foreign Investments in the United States (CFIUS). Both Defense Secretary Donald H. Rumsfeld and Treasury Secretary John W. Snow have publicly said they were unaware of the deal.

But Mr. Chertoff’s exclusion is more noteworthy because his department headed the CFIUS review and is in charge of security at all U.S. ports.

Mr. Knocke said the reason Mr. Chertoff was not informed was because CFIUS canvassed scores of government agencies and none objected to Dubai Ports World’s (DPW) bid to buy terminal operations on national security grounds.

If there had been an objection, the committee would have conducted a more extensive 45-day investigation and notified Cabinet secretaries. The 12-member committee, which includes six Cabinet secretaries, on Jan. 17 approved the company buying a British firm that runs terminals at the ports.

The exclusion of top Cabinet secretaries such as Mr. Chertoff in the DPW review and the failure to notify President Bush of its approval has helped fuel a firestorm of protest from Republicans and Democrats. Legislators say the Bush administration failed to adequately investigate the company.

DPW is owned by the United Arab Emirates, which today is a strong U.S. ally in the war on terror, but which in the past had ties to Osama bin Laden and the Taliban, and whose banks were used by the September 11 hijackers.

A defense official said at the Pentagon the issue rose no higher than Beth McCormick, who heads the Defense Technology Security Administration. She coordinated a review with 17 separate offices and agencies, and then signed off as the secretary’s representative to CFIUS, the source said.

The fact the issue did not reach Mr. Rumsfeld until after the fact has some policy-makers rethinking the process. The official said the decision-making needs to be opened up to public-affairs specialists who might have detected a political firestorm ahead.

“We need to bring people in with a broader perspective,” said the defense official, who asked not to be named. “The best decisions, if you can’t communicate it, you can be stopped from doing things that are right. No one is second-guessing the decision.”

Treasury spokesman Tony Fratto said the review of DPW at Treasury went no higher than Clay Lowery, assistant secretary for international affairs.

A State Department official told The Times that Secretary of State Condoleezza Rice likewise was not briefed on the ports issue until after the fact. A spokesman in Washington did not reply to a request to supply the name of the State official who approved the sale.

“This is a fairly routine matter,” said the State Department official. “It wasn’t a contentious process. Secretaries get involved at an earlier stage only if there is a divergence of opinion.”

CFIUS conducted just one meeting on the DPW question last fall. Mr. Lowery could not recall yesterday who attended the meeting. He told the Senate Armed Services Committee that Mr. Chertoff did not attend.

Mr. Lowery also said he did not know if National Security Adviser Stephen J. Hadley was notified of the review. He said a notification e-mail was sent to the White House

CFIUS is made up of 12 senior government officials. Six are Cabinet secretaries: Treasury, State, Defense, Homeland Security, Commerce and Justice. Another five seats are held by White House officials. A 12th seat goes to the U.S. Trade Representative.

The White House yesterday did not respond to a request from The Times for the names of the officials who approved the sale.

A number of Democrats and Republicans have asked why the more extensive investigation was not triggered, given UAE’s past ties to terror financing. A senior administration official, who asked not to be named, said lower-level bureaucrats involved in the review should have sensed the political reality: turning over ports to an Arab-owned company would create political problems in an election year.

A White House official said CFIUS handled 65 cases last year, and has handled as many as 295 in one year alone.

“If the president were burdened in particular with what are frequent routine business matters, that would take …” The official stopped and did not complete the sentence.

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