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Napolitano: Dubai Ports World in Violation of American Law. "I think this is the death knell of this deal."

Reported by Marie Therese - March 1, 2006

This morning just after 6 o'clock, the FOX & Friends First trio - Steve Doocy, Alisyn Camerata and Judge Andrew Napolitano - started off FOX News coverage with their lead story, which we will be hearing about all day long, namely, that there's a serious flaw in the DPW ports deal. Seems the UAE-owned company honors the boycott of Israel which is against our laws. Oops! It will be fun to watch the FOX spinmeisters scrambling to sanitize this one!

As we all know, according to Attorney General Alberto Gonzales, Homeland Security Director Michael Chertoff, Treasury Secretary John Snow and Secretary of State Condoleezza Rice, the deal had been completely and thoroughly vetted and nothing of significance had come up. Everything was so routine that the big honchos left it to second-rung deputies to finalize the contract and chose not to inform the President.

Like a lot of the bosses I worked for before I went into business for myself, the Bush administration fat cats must spend most of their days practicing their golf putt, drinking martinis and looking good for the cameras while leaving all the real work to those underneath. I guess this is what happens when you vote in a bunch of corporate executives. The Peter Principle comes into play - they've all been promoted beyond their level of competence!

Steve Doocy led off with the "hard news", i.e. that according to Edward Bilkey, the COO of DPW, the United Arab Emirates "enforces a boycott of Israel." Alisyn Camerata explained to the viewers "that the U. S. has made it illegal to deal with any country that enforces a boycott of Israel." She continued, saying that we "also learned that any Israeli trying to disembark in Dubai cannot do so, even if they're an Israeli passport owner, so it makes it confusing. As we learn more about this Dubai Ports World, what does this mean? Our State Department doesn't allow us to do business with a country like this but nobody knew that that was part of this company's policy, so it's complicated for us now."

Judge Napolitano then delivered the zinger: "This means that the story has more legs than we thought. This means that it's going to be more difficult for the President to get this policy through because it is against the law. It is against American federal criminal law for us to enforce this boycott or in any way be perceived as endorsing this boycott against Israel. I think this is the death knell of this deal."

Camerata then correctly noted that now "the conversation has changed from safety and security, which was the number one concern a few days ago, to now just diplomacy and illegality, so that may trump all the other concerns about whether or not this DPW running the ports was operational or security based. Now, if it's illegal, it's illegal."

Napolitano summed it up well: "I think the President is going to come back to a can of worms on this, far worse than the one that he left when he went on his trip to Israel (sic)."

COMMENT

From the Bureau of Industry and Standards, U. S Department of Commerce website, Office of Antiboycott Compliance (OAC):

Antiboycott Laws:

During the mid-1970's the United States adopted two laws that seek to counteract the participation of U.S. citizens in other nation's economic boycotts or embargoes. These "antiboycott" laws are the 1977 amendments to the Export Administration Act (EAA) and the Ribicoff Amendment to the 1976 Tax Reform Act (TRA).

Objectives:

The antiboycott laws were adopted to encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy.

Primary Impact:

The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today. The antiboycott laws, however, apply to all boycotts imposed by foreign countries that are unsanctioned by the United States.

Who Is Covered by the Laws?

The antiboycott provisions of the Export Administration Regulations (EAR) apply to all "U.S. persons," defined to include individuals and companies located in the United States and their foreign affiliates. These persons are subject to the law when their activities relate to the sale, purchase, or transfer of goods or services (including information) within the United States or between the U.S. and a foreign country. This covers U.S. exports and imports, financing, forwarding and shipping, and certain other transactions that may take place wholly offshore.

Generally, the TRA applies to all U.S. taxpayers (and their related companies). The TRA's reporting requirements apply to taxpayers' "operations" in, with, or related to boycotting countries or their nationals. Its penalties apply to those taxpayers with foreign tax credit, foreign subsidiary deferral, FSC (Foreign Sales Corporation), and IC-DISC (Interest Charge-Domestic International Sales Corporation) benefits.

Apparently in 2001 the Bush administration knew that the United Arab Emirates, who owns and operates Dubai Ports World, actively supported the Arab League boycott of Israel:

From Chapter 6 of the 2001 OAC Report:

Prohibited boycott requests totaled 355 of the 1,482 boycott requests reported to OAC in FY 2001. A prohibited request is a request to take action prohibited by the EAR (e.g., a request to not use suppliers blacklisted by a boycotting country).

The United Arab Emirates was the leading country from which prohibited boycott requests originated with a total of 110 requests. The next three countries originating prohibited boycott requests were Syria (59), Saudi Arabia (52), and Bahrain (38).

Something odd seems to have happened between 2001 and 2003 in the way the Department of Commerce reported on antiboycott statistics. In fact, the whole report Bureau of Industry and Security Annual Report for FY 2003 looks more like a fancy sales brochure than an actual governmental report. Less facts and figures and more hype.

Here's the extent of what that report had to say about antiboycott provisions:

Antiboycott Compliance

The Office of Antiboycott Compliance (OAC) enforces the antiboycott provisions of the EAR, which are designed to encourage and, in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. Antiboycott violations can include furnishing boycott-related information, refusing to deal with blacklisted businesses, and discriminating based on religion or national origin. OAC also pursues criminal and administrative sanctions for violations of U.S. antiboycott laws and provides support to the State Department in connection with the U.S. Government's efforts to persuade Arab governments to end their boycott of Israel. Finally, OAC educates the public on U.S. antiboycott regulations and the importance of compliance with such laws and regulations.

******

Investigative Management System

Early in 2003, BIS implemented a case management system to track information related to commodities, persons, and organizations involved in BIS enforcement cases. The system also enables special agents to uncover links among investigations being conducted by the various field offices that might not otherwise be apparent. Due to the increased storage capacity of the new system, special agents are able to maintain an electronic case file that contains all the principal investigative material for the case and is available to agents in each field office. Ready access to this information will improve investigations, prevent duplication of effort, and provide a tool for managing the caseloads of the field agents.

Antiboycott Activity

During Fiscal Year 2003, seven companies agreed to pay civil penalties totaling $93,700 to settle allegations that they violated antiboycott regulations. In these cases, BIS found that the companies furnished business information for boycott reasons, violated an order issued under the EAR failing to report receipt of boycott requests, and failed to maintain records as required by U.S. antiboycott regulations. The seven companies sanctioned included two foreign subsidiaries of U.S. companies. These cases demonstrate that U.S. companies, wherever located, must comply with the antiboycott provisions of the EAR.

BIS also supports other federal agencies in the antiboycott effort. BIS participated in discussions with the State and Treasury Departments to discuss Treasury's removal of Iraq from the list of boycotting countries. Subsequent to those discussions, Treasury published a list of boycotting countries that did not include Iraq. BIS also provides information to the State Department regarding boycott requests imposed on U.S. companies. The State Department then uses this information in its discussions with other countries to counter the boycott of Israel. In addition, BIS shares information with the Commerce Department's International Trade Administration for use in advising industry on how to participate in trade opportunities in the Middle East without violating U.S. antiboycott laws.

********

Compliance with Antiboycott Regulations

During Fiscal Year 2003, BIS's Office of Antiboycott Compliance (OAC) responded to 1,172 requests from companies for guidance on compliance with the antiboycott regulations. During the same period, BIS officials made 14 public presentations on the antiboycott regulations to exporters, manufacturers, financial services institutions, freight forwarders, and attorneys involved in international trade. In addition, BIS provided extensive counseling to individual companies with specific boycott problems.

The first thing that struck me was how short and lacking in detail this report was compared to those issued in past years, which averaged 160 pages.

It looks to me as if, behind the scenes in the day-to-day operations of the Commerce Department, the bureaucrats have been quietly bypassing the provisions of the federal antiboycott legislation. What else could explain the lack of detail in the report of 2003? Gone are the statistical breakdowns by country, the detailed descriptions of operations, etc., etc. Even the names of specific countries that have offended the law are not mentioned.

If I am right, then the Bush administration, which is awash in oil money, has been speaking out of both sides of its mouth vis a vis the state of Israel. Have they been secretly permitting companies that support the boycott of Israel to do business with the United States while publicly affirming support of the Jewish state?

If so, then the approval of the DPW takeover deal would not be surprising. In fact, to the lower echelons of the government, it would have seemed routine and, therefore, they would not have considered it deserving of their bosses' approval.

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