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Port authority sues to stop acquisition

Chertoff: UAE's $100 million Katrina donation not a bribe
This P&O crane is at the Port of New Orleans, one of the six facilities affected by the takeover deal.



United Arab Emirates

NEW YORK (CNN) -- The Port Authority of New York and New Jersey filed a lawsuit Friday in a New Jersey civil court to prevent a deal that would transfer control of the Newark container terminal to a company owned by the United Arab Emirates.

The action -- filed against the Port Newark Container Terminal LLC and Peninsular & Oriental Steam Navigation Co. -- charges that the companies defaulted on their lease agreement with the port authority by failing to notify it of its deal with DP World.

DP World has been cleared to take over operations at six major U.S. seaports from P&O, which some lawmakers are criticizing as a threat to national security.

The legal action does not refer directly to the political dispute.

Instead, it charges that P&O, through its agreement with DP World, deprived the port authority of the "right to conduct a thorough review of its purchase," thereby violating certain "safeguards for the protection of persons and property" surrounding the facility.

P&O, a British company, has run facilities at the ports of New York; Baltimore, Maryland; Philadelphia, Pennsylvania; Miami, Florida; New Orleans, Louisiana; and Newark, New Jersey, for several years.

Its purchase by DP World has raised concerns among members of Congress from both parties, who cite ties between the UAE and its banking center in Dubai to the September 11, 2001, hijackers. (Watch: Can the UAE be trusted?)

Even the nation's charity has come under fire, as Department of Homeland Security Secretary Michael Chertoff was forced Friday to fend off accusations that a $100 million donation from the UAE to Hurricane Katrina victims was a bribe.

The week after Hurricane Katrina struck, the UAE joined about three dozen countries in offering cash and other aid to the United States.

The UAE was one of the most generous donors, joining Qatar, which donated $100 million; Saudi Arabia, which donated $255 million from its national oil company, Aramco; and Kuwait, which contributed $400 million in oil and $100 million in cash, according to the U.S. mission to the U.N. in Geneva, Switzerland.

Chertoff said the UAE's contribution had no bearing on the port deal's approval and called the mere suggestion a "denial of the facts to draw a connection."

New Jersey also filed a lawsuit Thursday in U.S. District Court, contending the lack of information regarding security arrangements provided by federal officials attached to the sale is a "threat to the state's homeland security." A similar lawsuit was filed in Miami earlier this week.

The latest legal move comes the day after DP World said it would delay taking over management of the six ports, while continuing with its takeover of P&O.

The White House hailed the delay and said it would use the time to better sell the deal to critics. (Watch how Republicans are jumping ship -- 2:34)

"We believe it would be helpful to have some additional time to brief Congress about the facts and about the safeguards that are in place," White House spokesman Scott McClellan told reporters. "We believe once Congress has a better understanding of the facts and the safeguards that are in place that they will be more comfortable with the transaction moving forward."

Some members of Congress have complained they were not adequately briefed on the deal before it was given the OK, and Chertoff said Friday that he, too, was left out of the loop until after the Committee on Foreign Investments in the United States approved the transaction.

An assistant Department of Homeland Security secretary sat on the panel but did not inform Chertoff of the deal, he said, because it raised no red flags. Customs and Border Protection officials have had previous dealings with DP World and have always found it "forthcoming and helpful," Chertoff said.

The committee is led by the Treasury Department and also includes representatives of the Defense, State and Commerce departments.

Administration officials say U.S. agencies such as the Coast Guard and Customs and Border Protection will be in charge of the security of the ports.

Chertoff insisted that the conditions of the deal would make UAE-operated U.S. ports safer than many others and said that if Customs or the Coast Guard is "unhappy or uncomfortable with how something is being run, forget the letter, forget the agreement. What they are going to say is 'Time out. Stop.' "

In explaining the delay Thursday, Ted Bilkey, chief operating officer of DP World, said in a statement: "We need to understand the concerns of the people in the U.S. who are worried about this transaction and make sure they are addressed to the benefit of all parties.

"Security is everybody's business."

The company said the delay would allow it to engage "in further consultations with the Bush administration and, as appropriate, congressional leadership and relevant port authorities to address concerns over future security arrangements." (Full story)

DP World's acquisition of P&O is scheduled to be completed March 2.

CNN's Jon Schienberg, Dana Bash, Jeanne Meserve and Andrea Koppel contributed to this report.

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