Bush gives no-bid contract for port security to Hong Kong company


One of Americans’ favorite beach destinations, the Bahamas, is getting a new U.S. arrival – sophisticated equipment to detect radioactive materials in shipping cargo. But U.S. customs agents won’t be on site to supervise the machine’s use as a nuclear safeguard for the American shoreline that is just 65 miles away from Freeport. Under an unusual arrangement, a Hong Kong company will help operate the detector.

The Bush administration says it is finalizing a no-bid contract with Hutchison Whampoa Ltd. It acknowledged the deal is the first time a foreign company will be involved in running a radiation detector at an overseas port without American customs agents present.

The administration is negotiating a second no-bid contract for a Philippine company to install radiation detectors in its home country, according to documents obtained by The Associated Press. At dozens of other overseas ports, foreign governments are primarily responsible for scanning cargo.

While President Bush recently reassured Congress that foreigners would not manage security at U.S. ports, the Hutchison deal in the Bahamas illustrates how the administration is relying on foreign companies at overseas ports to safeguard cargo headed to the United States.

Hutchison Whampoa is the world’s largest ports operator and among the industry’s most-respected companies. It was an early adopter of U.S. anti-terror measures. But its billionaire chairman, Li Ka-Shing, also has substantial business ties to China’s government that have raised U.S. concerns over the years.

“Li Ka-Shing is pretty close to a lot of senior leaders of the Chinese government and the Chinese Communist Party,” said Larry M. Wortzel, head of a U.S. government commission that studies China security and economic issues. But Wortzel said Hutchison operates independently from Beijing, and he described Li as “a very legitimate international businessman.”

“One can conceive legitimate security concerns and would hope either the Homeland Security Department or the intelligence services of the United States work very hard to satisfy those concerns,” Wortzel said.

Three years ago, the Bush administration effectively blocked a Hutchison subsidiary from buying part of a bankrupt U.S. telecommunications company, Global Crossing Ltd., on national security grounds.

And a U.S. military intelligence report, once marked “secret,” cited Hutchison in 1999 as a potential risk for smuggling arms and other prohibited materials into the United States from the Bahamas.

Hutchison’s port operations in the Bahamas and Panama “could provide a conduit for illegal shipments of technology or prohibited items from the West to the PRC (People’s Republic of China), or facilitate the movement of arms and other prohibited items into the Americas,” the now-declassified assessment said.

The CIA currently has no security concerns about Hutchison’s port operations, and the Bush administration believes the pending deal with the foreign company would be safe, officials said.

Supervised by Bahamian customs officials, Hutchison employees will drive the towering, truck-like radiation scanner that moves slowly over large cargo containers and scans them for radiation that might be emitted by plutonium or a radiological weapon.

Any positive reading would set off alarms monitored simultaneously by Bahamian customs inspectors at Freeport and by U.S. Customs and Border Protection officials working at an anti-terrorism center 800 miles away in northern Virginia. Any alarm would prompt a closer inspection of the cargo, and there are multiple layers of security to prevent tampering, officials said.

“The equipment operates itself,” said Bryan Wilkes, a spokesman for the U.S. National Nuclear Security Administration, the agency negotiating the contract. “It’s not going to be someone standing at the controls pressing buttons and flipping switches.”

Hutchison’s ports subsidiary said in a statement Friday from its headquarters in Hong Kong it was confident that Bahamian customs inspectors will notify U.S. authorities whenever it is appropriate.

The administration is finalizing the contract amid a national debate over maritime security sparked by the furor over now-abandoned plans by Dubai-owned DP World to take over significant operations at major U.S. ports.

A lawmaker who opposed the DP World deal expressed concern about the Bahamas deal, and did some security experts. They questioned whether the U.S. should pay a foreign company with ties to China to keep radioactive material out of the United States.

“Giving a no-bid contract to a foreign company to carry out the most sensitive security screening for radioactive materials at ports abroad raises many questions,” said Sen. Charles Schumer, D-N.Y.

A low-paid employee with access to the screening equipment could frustrate international security by studying how the equipment works and which materials set off its alarms, warned a retired U.S. Customs investigator who specialized in smuggling cases.

“Money buys a lot of things,” Robert Sheridan said. “The fact that foreign workers would have access to how the United States screens various containers for nuclear material and how this technology scrutinizes the containers _ all those things allow someone with a nefarious intention to thwart the screening.”

The Hutchison deal in the Bahamas was flagged in a report in October by ATS Worldwide Services, a Florida firm that identifies potential risks for private-sector and government clients. Company officials said they shared the report with some officials in Congress, the military and law enforcement.

Other experts discounted concerns. They cited Hutchison’s reputation as a leading ports company and said the United States inevitably must rely for some security on large commercial operators in the global maritime industry.

“We must not allow an unwarranted fear of foreign ownership or involvement in offshore operations to impair our ability to protect against nuclear weapons being smuggled into this country,” said Sen. Norm Coleman, R-Minn., a member of the Senate Homeland Security and Governmental Affairs Committee. “We must work with these foreign companies.”

A former Coast Guard commander, Stephen Flynn, said foreign companies sometimes prove more trustworthy _ and susceptible to U.S. influence _ than governments.

“It’s a very fragile system,” Flynn said. Foreign companies “recognize the U.S. has the capacity and willingness to exercise a kill switch if something goes wrong.”

A spokesman for Hutchison’s ports subsidiary, Anthony Tam, said the company “is a strong supporter in port security initiatives.”

“In the case of the Bahamas, our local personnel are working alongside with U.S. customs officials to identify and inspect U.S.-bound containers that could be carrying radioactive materials,” Tam said.

However, there are no U.S. customs agents checking any cargo containers at the Hutchison port in Freeport. Under the contract, no U.S. officials would be stationed permanently in the Bahamas with the radiation scanner.

Hutchison operates the sprawling Freeport Container Port on Grand Bahama Island. Its subsidiary, Hutchison Port Holdings, has operations in more than 20 countries but none in the United States.

Contract documents obtained by AP indicate Hutchison will be paid roughly $6 million. The contract is for one year with options for three years.

The National Nuclear Security Administration, which is an Energy Department agency tasked with strengthening nuclear security worldwide, is negotiating the Bahamas contract under a $121 million program it calls the “second line of defense.” Wilkes, the NNSA spokesman, said the Bahamian government dictated that the U.S. give the contract to Hutchison.

“It’s their country, their port. The driver of the mobile carrier is the contractor selected by their government. We had no say or no choice,” he said. “We are fortunate to have allies who are signing these agreements with us.”

Some security experts said that is a weak explanation in the Bahamas, with its close reliance on the United States. The administration could insist that the Bahamas permit U.S. Customs agents to operate at the port, said Albert Santoli, an expert on national security issues in Asia and the Pacific.

“Why would they not accept that?” said Santoli, a former national security aide to Rep. Dana Rohrabacher, R-Calif. “There is an interest in the Bahamas and every other country in the region to make sure the U.S. stays safe and strong. That’s how this should be negotiated.”

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Associated Press writers Bill Foreman in Hong Kong and Jim Gomez in Manila contributed to this story.

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On the Net:

CIA World Factbook on The Bahamas: http://www.cia.gov/cia/publications/factbook/geos/bf.html

© 2006 The Associated Press

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