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US sought a safeguard in ports accord

Aides say Bush wasn't told of pact

WASHINGTON -- The Bush administration secretly required a company in the United Arab Emirates to cooperate with future US investigations before approving its takeover of operations at six American ports, according to documents. It chose not to impose other restrictions.

As part of the $6.8 billion purchase, state-owned Dubai Ports World agreed to reveal records on demand about ''foreign operational direction" of its business at US ports, the documents said. Those records broadly include details about the design, maintenance, or operation of ports and equipment.

The administration did not require Dubai Ports to keep copies of business records on US soil, where they would be subject to court orders. It also did not require the company to designate an American citizen to accommodate US government requests. Outside legal experts said such obligations are routinely attached to US approvals of foreign sales in other industries.

''They're not lax but they're not Draconian," said James Lewis, a former US official who worked on such agreements. If officials had predicted the firestorm of criticism over the deal, Lewis said, ''they might have made them sound harder."

The conditions involving the sale of Peninsular and Oriental Steam Navigation Co. in London were detailed in US documents marked ''confidential."

Such records are regularly guarded as trade secrets, and it is highly unusual for them to be made public.

The concessions, described by the Homeland Security Department as unprecedented among maritime companies, reflect the close relationship between the United States and the United Arab Emirates.

The reports about the negotiated conditions were made as the White House acknowledged that President Bush was unaware of the pending sale until the deal had already been approved by his administration. Dubai Port's top American executive, chief operating officer Edward H. Bilkey, said the company will do whatever the Bush administration asks to enhance shipping security and ensure the sale goes through. Bilkey said yesterday that he will work in Washington to persuade skeptical lawmakers they should endorse the deal; Senate oversight hearings already are scheduled.

''We're disappointed," Bikley said in an interview. ''We're going to do our best to persuade them that they jumped the gun. The UAE is a very solid friend, as President Bush has said."

Under the deal, the government asked Dubai Ports to operate American seaports with existing US managers ''to the extent possible."

It promised to take ''all reasonable steps" to assist the Homeland Security Department.

The administration required Dubai Ports to designate an executive to handle requests from the US government, but it did not specify this person's citizenship.

It said Dubai Ports must retain paperwork ''in the normal course of business," but did not specify a time period or require corporate records to be housed in the United States. Outside experts familiar with such agreements said such provisions are routine in other cases.

Bush faces a potential rebellion from leaders of his own party, as well as a fight from Democrats, over the sale. It puts Dubai Ports in charge of major terminal operations in New York, New Jersey, Baltimore, New Orleans, Miami, and Philadelphia.

Senate and House leaders urged the president to delay the takeover, which is set to be finalized in early March. The Senate majority leader, Bill Frist of Tennessee, said the deal raised ''serious questions regarding the safety and security of our homeland." In Saudi Arabia, Secretary of State Condoleezza Rice said the agreement was vetted. ''We have to maintain a principle that it doesn't matter where in the world one of these purchases is coming from," Rice said yesterday. She described the United Arab Emirates as ''a good partner in the war on terrorism."

Bush defended the agreement on Tuesday, but the White House said he did not know about it until recently.

The US approval of the sale to Dubai Ports was reported on Feb. 11.

At the White House, spokesman Scott McClellan said Bush learned about the deal ''over the last several days," as congressional criticism escalated. McClellan said it did not rise to the presidential level, but went through a government review and was determined not to pose a threat.

McClellan said Bush afterward asked the head of every US department involved in approving the sale whether there were security concerns. ''Each and every one expressed that they were comfortable with this transaction going forward," he said.

The Massachusetts Port Authority confirmed yesterday that Peninsula and Oriental Steam Navigation Co. does have an office at Black Falcon Cruise Terminal in South Boston.

At the terminal, the company contracts with individual cruise lines to load and unload cargo. The company also provides stevedores to unload cargo for shipping lines docked at non-Massport facilities in Boston.

A Massport aide said the company does not own or manage any terminals in the Port of Boston. It employs a staff of six at Black Falcon and has been in Boston since July 1999, when the company bought ITO New England.

Craig P. Coy, chief executive officer of Massport, said he hopes the debate over the Dubai purchase raises discussion about how all US ports are maintained, supported, and managed.

Asked whether he had any concern over safety at Massport facilities once the company changed hands, Coy said: ''I'll let the people in Washington and at the federal level determine that. It's not my call."

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