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Coast Guard questioned port deal

Officials say issue was addressed

WASHINGTON -- Citing broad gaps in US intelligence, the Coast Guard cautioned the Bush administration weeks ago that it could not determine whether a United Arab Emirates-based company seeking a stake in some US port operations might support terrorist operations.

The disclosure came during a hearing yesterday on Dubai-owned DP World's plans to assume significant operations at six leading US ports. It also clouded whether the Bush administration's agreement to conduct an unusual investigation into the pending takeover's security risks would allay lawmakers' concerns.

The administration said the Coast Guard's concerns were raised during its review of the deal, which it approved Jan. 17, and that all those questions were resolved. London-based Peninsular & Oriental Steam Navigation Co. now handles the port operations.

''There are many intelligence gaps, concerning the potential for DPW or P&O assets to support terrorist operations, that precludes an overall threat assessment" of the potential merger, an unclassified Coast Guard intelligence assessment said.

''The breadth of the intelligence gaps also infer potential unknown threats against a large number of potential vulnerabilities," said the half-page assessment. Officials said it was an unclassified excerpt from a larger document.

In a statement, the Coast Guard said that the concerns reflected in the excerpt ultimately were addressed and that other US intelligence agencies answered the questions it raised.

The Coast Guard assessment raised questions about the security of the companies' operations, the backgrounds of people working for the companies, and whether other foreign countries influenced operations that affect security.

''We were never told about this and have no information about it," Michael Moore, DP World's senior vice president, said of the excerpt. However, he said it shows that ''serious and probing" questions were asked and that the initial approval of the deal indicates those questions were answered.

Senator Susan Collins, Republican of Maine, chairwoman of the Senate Homeland Security Committee, released the excerpt at a briefing yesterday. The Bush administration agreed Sunday to DP World's request for a 45-day investigation of the potential security risks related to the deal.

Congressional leaders who brokered the arrangement for the investigation hoped it would defuse a bipartisan political uproar over port security and scuttle any push for legislation this week that would force such an investigation and could embarrass President Bush.

Senators introduced several bills yesterday anyway, even though Senate majority leader Bill Frist, Republican of Tennessee, told reporters in Detroit, ''I don't think it's necessary to legislate."

Criticism persisted from both Republicans and Democrats.

''This report suggests there were significant and troubling intelligence gaps," said Collins. ''That language is very troubling to me."

Appearing before the Collins committee, administration officials defended their decision not to trigger a 45-day review of national security implications of the business transaction following their initial review.

''In this case, the concerns that you're citing were addressed and resolved," Clay Lowery, the Treasury Department's assistant secretary for international affairs, told Collins. ''There were no national security concerns that were not addressed."

The Coast Guard indicated to the Associated Press that it did not have serious reservations about the ports deal on Feb. 10, when the news organization first inquired about potential security concerns.

Stewart Baker, an assistant secretary for the Homeland Security Department, told lawmakers that the excerpt was from an internal Coast Guard document that the interagency panel that reviews foreign investment deals did not see. However, Baker said, the Coast Guard had indicated to the panel that any concerns it had were resolved.

''I think it's a little unfair to judge this report by one paragraph that happens not to be classified," Baker said. ''This paragraph is not really representative of the entire report."

''I think the paragraph speaks for itself," Collins responded before adjourning the public hearing for a closed session to explore the issue further.

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