February 24, 2006

Washington told to justify port deal in court

By Jon Hurdle

PHILADELPHIA (Reuters) - The Bush administration was
ordered by a U.S. federal judge on Friday to explain why it did
not give New Jersey officials documents and information
Washington had about a deal allowing an Arab company to take
over management of a container terminal in Newark.

U.S. District Court Judge Jose Linares signed an order
demanding to know why the government did not carry out a full
investigation into the change of ownership of the container
terminal at Port Newark.

The judge set a hearing for Wednesday and said in the order
he would issue a preliminary injunction blocking the deal,
pending a full investigation, unless he was satisfied with
Washington's answers.

The judge asked in the order that federal officials explain
why New Jersey officials were not given the same documents and
information that Washington used to approve the deal, under
which state-owned Dubai Ports World would take over management
from the British company P&O.

On Thursday, the State of New Jersey sued the federal
government to block the deal on the grounds it violated the
10th Amendment, which says states control anything not
explicitly mentioned in the U.S. Constitution.

Earlier, New Jersey Gov. Jon Corzine urged the governors of
states with ports affected by the deal -- Louisiana, New York,
Florida, Connecticut, Maryland and Pennsylvania -- to join the

Democrat Corzine issued the invitation in letters to each
governor, saying the lawsuit "will seek to enjoin this sale of
vital assets to a foreign nation without our states having had
the opportunity to determine the extent of the threat to the
safety of our citizens."

The latest developments came as a second lawsuit was filed
in New Jersey over the controversial deal.

The Port Authority of New York and New Jersey filed a
lawsuit on Friday to stop the change of management of its
container terminal at Port Newark in New Jersey.

The authority, jointly owned by the states of New York and
New Jersey, said the deal violates the terms of P&O's lease.

The transaction is part of a $6.85 billion deal under which
the United Arab Emirates company Dubai Ports World DPW would
manage terminals at six major U.S. ports.

The plan has sparked protests from federal and local
lawmakers and officials who fear the ports' security will be
hurt if they are managed by a company whose owner has been
accused of having links with terrorist groups.

The Port Authority said it has a right to review changes in
port management under the existing lease agreement. The
lawsuit, filed in the Superior Court in Newark, urged the court
to declare that the purchase of P&O requires consent of the
Port Authority under the lease, that the container terminal is
in breach of its lease, and that the lease is terminated.

The suit names P&O Ports North America, and Port Newark
Container Terminal LLC as defendants.

U.S. lawmakers opposed to the takeover have cited links
between UAE and al Qaeda but President George W. Bush has
defended the deal, calling the UAE an ally in his war on

"The Port Authority has been deprived of its right to
conduct a thorough review of the purchase ... of the identity,
qualifications, experience and reputation of the purchasers ...
and of the proposed impact that the change may have on the
control and ownership," the lawsuit said.