US ports sold to corrupted US insurer . . . UAE profits

The corrupted USA-based insurer is AIG.  UAE is going to realize a profit through their ownership of DP World, which currently holds the USA port operations contracts in question.

The sale from DP World to a US-based business - which was primarily "forced" by the enabling will of an unusually resistant Republican Congress to President Bush's desired deal - is reportedly worth over $1B.

The reason I specifically mention UAE in this diary is due to the evolving and swirling controversies related to their association with DP World when reports of this relatively silent deal came to light earlier in the year - it seemed a significant aspect of interest to many folks in the blogosphere at the time, so I desired to explicitly note their involvement within the context of this deal . . . and the resulting irony of their making a profit from the whole ports affair.

So, all that prior speculation and debate being kept in context, I suppose this might just come down to the following observation of Bush Republican politics:

Step 1: Create controversy
Step 2: . . .
Step 3: Profit

AIG, American International Group, is supposedly the tenth largest company in the USA.  They also happened to settle in a corruption investigation brought by then-NY Attorney General Eliot Spitzer earlier this year, for over 1.6 BILLION dollars.  Since Spitzer's allegations were made public, AIG supposedly turned out their Executives who were possibly related to, or responsible for, their found wrongdoings that led to the eventual settlement.  Some former employees are still being investigated aside from this particular case against AIG, actually.

You may recall that there was considerable debate on the prospect of a United Arab Emerates(UAE)-based company, Dubai Ports World (DP World or DPW), being granted the operations contracts by CFIUS and the US Treasury Department in November, 2005 for a handful of USA-based container ports.  Senator Chuck Schumer(D) was one of the first Legislators to make a stink about this in public, after being tipped off by concerned lobbyist Joe Muldoon, who supposedly wrote a white paper on his view of security implications concerning the DPW buyout of P&0 - the British firm which owned operations for the US ports in question.  Senator Schumer took it from there, to much outcry from various perspectives.

President Bush was all for this sale to a Dubai-owned company, supposedly espousing the need to deal more fairly in trade with "moderate Arab nations" to help find eventual success in his War On Terror - he even criticized those Legislators who might desire to scrutinize and/or not let the deal go through.

There were often-heated debates on all political sides concerning issues of:

• USA port security.
• UAE representation of DP World (and related implications) beyond the contract.
• Questions of relationships between UAE and/or DP World to BushCo and its elite friends.
• Whether BushCo-aligned businesses would make insider profits off the subsequent "forced" selloff of this contract to an USA-owned firm.
• Appointment of UAE-friendly people to Bush Administration posts, possibly meaning that the fix was in.
• etc.

Yet, the unmistakable conclusion to all that drama is that a UAE-owned corporation, DP World, has reportedly made a significant profit from a sale which Republican Legislators "forced" to happen, in a rare show of public defiance to President Bush . . . yet, this profit is only being realized now because the Bush Administation "decided" that the sale to DP World should happen in the first place.

Should speculation on behind-the-scenes contractual manipulations by BushCo lead us into tinfoil hat territory?  Or, maybe just a recognition of business the way we expect it from Bush Republicans: in one manner or another, Bush friends will come away from USA government-enabled deals making some money.

•  Xenophobic frenzy PLUS conspiracy theory!

  Oh goody!

  by gracchus on Mon Dec 11, 2006 at 11:48:59 PM PDT

  •  Surely

    though, I have no xenophobic intent to share from my side in this diary - I simply found the eventual sale from DP World to AIG rather interesting, considering the supposed "profit" being reported.

    Looking back at the range of prior speculation on the matter as it evolved was a fascinating refresher in the variety of perspectives so many in the blogosphere brought to this subject at the time.

    by wader on Mon Dec 11, 2006 at 11:53:01 PM PDT

    •  AIG hasn't made a profit yet

      It's just laid out a lot of money. It's probably a good deal in the long run for AIG, but whether it's a good deal immediatley, I don't know. The purchase price hasn't been disclosed, and I haven't looked at the financials of the ports in question.

      I think the Xenophobic frenzy over the ports was real not phony -- and very silly in my opinion -- and the Republicans went along because defending the sale looked politically impossible.

      A US buyer was pretty much necessary given the nationalistic frenzy, but there are no large US-based port operators left after Maersk bought Sealand some years ago. This left DP World to sell to a financial buyer, like AIG, which has a big asset management arm. My guess is that AIG offered the best price; dunno who else was at the table.

      by gracchus on Mon Dec 11, 2006 at 11:58:18 PM PDT

      •  There was certainly much political hay being made

        over this deal being approved by CFIUS and Treasury Secretary John Snow heading that same agency.  The approval process appeared - at least, from the 30K ft. level - rather insular to many folks who noted past deals that CFIUS approved and which also met with eventual, political disapproval (e.g., China's CNOOC buying UNOCAL).

        Hence, why I wondered about the eventual profit being realized here - it seems at first blush that DPW has "flipped" their purchase from only a year ago quite successfully.  Yet, this was oddly enabled by a quiet approval, odd "leakage" to Senator Schumer and a highly unusual, public spat between Congressional Republicans and the President.

        I'm offering minor political/business conspiracy thinking for the fun of it, but was most interested in portraying DPW's (and, in many eyes, UAE's) ironic profit in the context of the all that uproar.

        by wader on Tue Dec 12, 2006 at 12:24:53 AM PDT

        •  DPW didn't want to sell

          from what I've read...and it had a limited pool of buyers, given the necessity of finding an American purchaser, which almost certainly meant it got dicked around on the price by the potential U.S. purchasers. The fact that they didn't disclose price could mean that DP World is embarassed by how little it got....

          by gracchus on Tue Dec 12, 2006 at 12:35:03 AM PDT

          •  Correct, they were reported as being surprised

            at "having" to sell - even expressing such sentiments in reporting of this sale to AIG.

            The Financial Times notes:

            Dubai's DP World will make a substantial profit on the forced sale of its US assets . . .

            My emphasis.

            I'll be interested to see what is eventually reported, as we have no numbers to go on at this early juncture (as you have noted).

            by wader on Tue Dec 12, 2006 at 01:20:57 AM PDT

            •  Between the time DP World

              bought P&O and agreed on the sale of the U.S. ports, the Ontaria Teachers Pension Fund set a new, higher, benchmark for port assets in its purchase of terminals from Hong Kong's Orient Overseas Ltd. Lucky for them, but not really the stuff of conspiracy.

              by gracchus on Tue Dec 12, 2006 at 06:23:08 AM PDT

              •  And certainly

                sounds more of a deal-bolstering action than the ironic point I've attempted to offer in this diary, as well.

                As for any show of conspiracy in the DP World matter . . . I'd personally go out on a limb to speculate that this profit-based conclusion was rather simple to sell as a face-saving deal by BushCo when the original buyout approval went politically south . . . from easy knowledge of the relatively short list of operations contract buyer suspects at the time.  Whether AIG was specifically targeted at their early juncture of announcing a "future US buyer" or not does not actually matter in this scenario - it's simple business and an easy mark to offer for flipping.  DP World was never going to lose money on this deal after CFIUS and the Treasury approved.

                Further, expressing public disappointment with being pushed out of the USA ports deal says nothing about possible, relative satisfaction which DP World investors have gathered from profits of this final, "forced" sale.  That is, they don't appear to be clear losers here from a financial position (i.e, I am not sure what their forecasts happened to be for long-term profits under the original P&O buyout - may be interesting to research), except having been shown as gravely mistrusted by the USA public due to their UAE state ownership.

                That loud mistrust obviously sprung forth from a variety of analytical and not-so-analytical sources, the latter of which were ironically fomented by the Bush Administration's own policy and postures since 09/11/2001.

                by wader on Tue Dec 12, 2006 at 07:17:13 AM PDT

•  It's obviously not an area of my expertise

  but seeing what has occurred thus far intrigued me enough to write a blurb on the subject.

  It's late here, but I hope to respond to any comments, suggestions or flames in a reasonable timeframe.

  by wader on Mon Dec 11, 2006 at 11:50:25 PM PDT

•  aig is not

  a us co. i think. started in hong kong, the ceo who was involved in the recent scandel stepped down and is now trying to buy the new york times

  by mad cow on Tue Dec 12, 2006 at 02:32:25 AM PDT

  •  They're hq is NY

    And Warren Buffet apparently holds a big piece of AIG.

    They're no more "offshore" than Citicorp (not that that's any comfort).

    by dvx on Tue Dec 12, 2006 at 03:23:48 AM PDT

•  Still a playa?

  This article is from a year ago. I think recently ole Hank managed to slip the noose but I haven't found a link. Nuthin can help you like a guy in trouble ... right Karl?

  http://www.usatoday.com/...
  In turn, a shareholder group, the Teachers' Retirement System of Louisiana, amended its 3-year-old complaint against the company on May 17 to add detail to allegations that Greenberg and several other AIG executives and board directors unjustly enriched themselves.

  And last week, in yet another lawsuit, Ohio Attorney General Jim Petro sought to reverse Greenberg's gift — just days before his resignation — of 41.4 million AIG shares he owned to his wife, Corinne, 76. Acting on behalf of Ohio pension funds, the state official characterized the stock transfer as a fraudulent conveyance.

  Even those shares represent only a sliver of Greenberg's net worth. According to AIG's 2004 proxy statement, he also owns 8% of a private investment firm, Starr International, that holds 1.5 billion shares of AIG stock. Greenberg's stake was worth $1.5 billion at Friday's closing price. And he owns 16% of a private insurance brokerage, C.V. Starr, which holds another 47.3 million AIG shares. That stake is worth about $438.2 million.

  by Carbide Bit on Tue Dec 12, 2006 at 05:59:10 AM PDT

•  An interesting link.

  http://en.wikipedia.org/...

  Greenberg was both a social friend and client of Henry Kissinger, utilising his consultancy, Kissinger Associates, for advice and operations in a number of countries, particularly in Asia. In 1987 he appointed Kissinger as chairman of AIG's International Advisory Board.

  Mr. Greenberg is Honorary Vice Chairman and Director of the Council on Foreign Relations and a member of David Rockefeller's Trilateral Commission. In the 1980s, his extensive foreign connections prompted the Reagan administration to offer him a job as Deputy Director of the CIA, which he declined.

  by Carbide Bit on Tue Dec 12, 2006 at 06:11:02 AM PDT