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Dubai Ports World / Isthimar
Last Updated: October 10, 2008

Dubai Ports World and Istithmar are two major holdings of the government of Dubai, one of the seven United Arab Emirates. DP World’s 2006 purchase of a British company that operated several U.S. ports caused a major public and Congressional outcry because, among other terrorism-related concerns, the UAE had been a travel and financing hub for September 11 hijackers. The outcry forced Dubai to sell off its American ports, but Dubai government-held corporations still hold millions of dollars in Pentagon contracts.

The names and relationships of companies within Dubai are confusing and interconnected. All, however, fall under the control of the country’s rulers. The Corporate Office (TCO) and Dubai World are arms of the Dubai government that oversee its portfolios. Their holdings include Istithmar and Dubai Ports World, two companies which happen to have the same chairman, Sultan Ahmad Bin Sulayem.

Since 2000, Dubai-owned Inchcape Shipping Services has won over $60 million in contracts with the Army, Navy, Air Force, Coast Guard, and Department of Homeland Security. In 2002, U.S. authorities captured Abd al-Rahim al-Nashiri, the alleged mastermind of the bombing of the USS Cole in 2000, in the United Arab Emirates, and since then, the Navy has stepped up its contracting procedures for ship husbanding. (Ship husbanding agents help ships re-stock while in port, handle scheduling and provide security.) Still, much of Inchcape’s work involves ship husbanding, and the company knows Navy ship schedules weeks in advance. Inchcape also provides “force protection” and is partnering with Kellogg Brown and Root—a one-time subsidiary of Halliburton, where Vice President Dick Cheney formerly served as CEO—to assist the military with “training exercises.”

The Inchcape contracts never caused much of a stir, especially compared to the Dubai Ports World debacle. When in 2006 Dubai tried to buy P&O, a British company that operated U.S. ports, including the Port of New York and New Jersey, the deal dominated the news for weeks.

John Snow, who as Treasury Secretary was extremely influential in whether the deal was approved by the U.S., had business dealings just a few years earlier that exposed his own conflicts of interest, as well as those of President Bush.

In December 2002, while Snow was CEO at transportation conglomerate CSX, the company sold a shipping line to The Carlyle Group, a major U.S. equity firm with long ties to the Bush family. (George H.W. Bush worked as an advisor until October 2003 and kept his stock afterward.) Under Carlyle, the subsidiary picked up $100 million in federal contracts. A year later, Carlyle sold the subsidiary to Castle Harlan—where current President George W. Bush once sat on the board of directors—for double what it had paid CSX. (CSX is consistently one of the top GOP campaign donors in the transportation industry, donating more than $1 million to Republican candidates in 2002 alone.)

Carlyle also received a $100 million investment from Dubai Investment Corp. shortly before the controversy erupted in early 2006.

In early January 2003, President Bush nominated John Snow for Treasury Secretary, and the Senate unanimously approved him three weeks later. Snow kept 250,000 shares of CSX stock.

In February 2005, two years after Snow left CSX, the company sold its port holdings to Dubai Ports World. That summer, David Sanborn, vice president for shipping at a CSX subsidiary, joined DP World. In 2005, Dubai invested $100 million in Carlyle.

In November 2005, British port company P&O agreed to be purchased by Dubai. The deal caught the attention of the U.S. media in February 2006, and most of the public opposed it. Congress began writing legislation to block the deal, and several Congressmen wrote a letter to Treasury reminding Snow that his department had previously complained about UAE stymieing the investigation of Osama Bin Laden’s finances. Sen. Carl Levin (D-MI) told the AP that UAE had been a “consistent counterterrorism problem.”

Two September 11th hijackers called UAE home, and many hijackers traveled through the country on their way to attack the United States. Several of them transferred money through UAE, and some experts believe Al Qaeda might doing so still. UAE’s own ports are known to have served as a stop for stolen nuclear secrets sold by a Pakistani scientist to Iran.

Bush feigned ignorance, saying he didn’t know about deal until it had been approved. Nonetheless, he quickly became defiant, threatening to use a veto for the first time in his six years in office to push through the $6.8 billion deal.

In addition to the financial ties the Bush family has to the UAE via the Carlyle Group, President Bush’s brother Neil signed up a Dubai business partner for his software company only one month after the September 11th attacks. (The partnership of Bush’s Ignite! company with Dubai’s Trans-Data Systems allows Bush to sell his software in the UAE.)  

Treasury Secretary Snow, whose former company had sold a major subsidiary to Dubai just a year earlier, had more power than anyone other than President Bush to approve the deal. He was the head of the Committee on Foreign Investment in the United States (CFIUS), a cross-agency federal panel charged with screening foreign companies trying to take over domestic firms with influence on U.S. homeland security. As Snow was about to announce his decision to approve the Dubai Ports deal, Bush nominated Dubai Ports World Vice President David Sanborn to be Maritime Administrator. Bush and Snow lost the fight: The House voted to block the sale, DP World agreed to sell off all of P&O’s U.S. operations upon purchase, and Sanborn withdrew his nomination.

In September 2007, Dubai bought a fifth of NASDAQ’s stock as well as NASDAQ’s 28 percent stake the London Stock Exchange, and the government of Abu Dhabi, another Emirate, bought a 7.5 percent stake in The Carlyle Group. DP World sold the operations at the six U.S. ports to AIG Global Investment Group for an undisclosed price.

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International Finance | Terror Funding | 9/11 | Homeland Security | Defense | Energy

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