In his introduction to a February 22 report on the ports controversy, NBC's Nightly News anchor Brian Williams described Dubai Ports World (DPW) as “a company from the United Arab Emirates” (UAE). But in leaving out the key fact that DPW is owned by the government of Dubai, a member state of the UAE -- rather than simply based in the UAE -- Williams obscured the source of the controversy surrounding the Bush administration's approval of a deal that would grant the company control of six U.S. ports. Indeed, critics of the deal have noted that because the company is state-owned, the law requires the administration to conduct a more thorough investigation of the sale than the review that was carried out.

In his subsequent report, NBC News chief White House correspondent David Gregory indicated that “a country with terror links” would manage the ports, and not merely a company, but at no point noted the legal significance of this. Moreover, he reported a claim advanced by administration officials that critics of the deal “were unfairly discriminating against a Middle Eastern country, given that the ports were previously run by a British company.” But Gregory failed to note that this argument conflates the two companies, ignoring a key distinction -- the prior owner was not controlled by a foreign government, British or otherwise.

Further, CNN reporters and anchors continued to refer to DPW as “Arab-controlled” and “Dubai-based,” without noting that it is owned by the government of a foreign nation.

Last week, DPW acquired British company Peninsular and Oriental Steam Navigation Co. (P & O), which currently manages six U.S. ports in Baltimore, Miami, New Jersey, New Orleans, New York, and Philadelphia. Until its acquisition by the state-owned UAE company, P & O was a publicly traded corporation listed on the London Stock Exchange.

The fact that a foreign government owns the acquiring company is crucial because U.S. law mandates additional investigation in such cases if the acquisition might affect national security. Prior to the administration's approval, the DPW transaction was examined by the Treasury Department's 12-member Committee on Foreign Investments in the United States (CFIUS). CFIUS reportedly conducted a 23-day review before signing off on the deal. A bipartisan group of lawmakers, however, has claimed that an additional review should have been undertaken. In a February 16 letter to Treasury Secretary John W. Snow, these seven members of Congress cited a provision in the National Defense Authorization Act of Fiscal Year 1993, which amended the Exon-Florio provision* to require an additional 45-day investigation if “the acquirer is controlled by or acting on behalf of a foreign government” and the acquisition “could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S.” These lawmakers have requested that the administration conduct this additional 45-day review before completing the transfer. Others have specifically criticized CFIUS for not carrying out the full investigation before approving the transaction. In a February 22 letter to Snow, Sen. John Kerry (D-MA) accused CFIUS of having apparently approved the sale “as expeditiously as possible, without even using the additional 45 day investigation process that was clearly warranted under the circumstances.”

Further, in an October 2005 report examining the implementation of Exon-Florio, the Government Accountability Office (GAO) criticized CFIUS' narrow interpretation of what constitutes a national security threat and warned that this standard “may be limiting the Committee's analyses of proposed and completed foreign acquisitions.” According to the GAO, the CFIUS has reviewed 470 pending acquisitions since 1997, but has executed a full investigation in only eight cases.

But despite the fact that DPW's government-ownership is highly relevant to this controversy, Williams told NBC viewers only that the company is “from the United Arab Emirates.”

In his report, Gregory referred to “a country with terror links” managing the ports and noted the bipartisan call for a 45-day investigation. But he failed to explain the connection between the UAE government's ownership of the company and this demand, completely ignoring the lawmakers' claim that the investigation should have been triggered originally. Nonetheless, he repeated the administration's claim that criticism of the deal somehow represents a double standard.

From the February 22 edition of NBC's Nightly News:

WILLIAMS: And now to the political fracas that has bubbled up over a deal that would allow a company from the United Arab Emirates to run cargo operations at those U.S. ports. President Bush is standing by this decision, brushing aside objections by Democrats and Republicans in Congress that this deal could raise the risk of terrorism. The story from NBC News chief White House correspondent David Gregory.

GREGORY: The White House revealed today that the president only learned of the port deal after the fact from news reports, leaving him flat-footed as the rebellion within his own party grew. The White House spokesman said this transaction didn't raise any red flags.

SCOTT McCLELLAN (White House press secretary) [video clip]: If there'd been objections raised and there'd been an extended review process, then it would have gone to the president.

GREGORY: But critics say the investigation wasn't thorough.

REP. PETER KING (R-NY) [video clip]: As far as terrorist connections, as far as corruption, as far as any type of links to Al Qaeda, none of that was examined other than to see if there was anything already on file.

GREGORY: Republicans and Democrats are calling for a 45-day investigation into the company, Dubai Ports, before the nearly $7 billion deal goes through next week. For its part, Dubai Ports has hired former Senator Bob Dole [R-KS] to help lobby Congress on its behalf. All the political fallout has raised questions about how a president defined by 9-11 --

BUSH [video clip]: 9-11 changed my thinking, so my focus is there.

GREGORY: -- could allow a country with terror links to manage U.S. seaports. Two 9-11 hijackers were UAE citizens, and money for the plot went through UAE banks. Today, the White House stepped up its damage control, saying administration officials have already begun to brief Congress, something they say should have been done earlier. Port security will remain under U.S. Customs and Coast Guard control, and officials suggested critics were unfairly discriminating against a Middle Eastern country given the ports were previously run by a British company.

Media Matters for America previously noted that reporters and anchors on the February 22 edition of CNN's American Morning repeatedly described DPW as a “Dubai-based company.” Later that day on CNN's Paula Zahn Now, host Paula Zahn continued this pattern. She referred to DPW as an “Arab company”, but at no point in her substantial coverage of the story did she inform viewers that the UAE controlled the company:

ZAHN: And we start with the nationwide furor over the government's decision to let an Arab company manage six major ports here in this country. They are in New York, Newark, Baltimore, New Orleans, Miami, and Philadelphia -- and furor is still the right word tonight.

Further, on the February 23 edition of CNN's American Morning, CNN national correspondent Kelly Wallace, chief national correspondent John King and anchors Soledad O'Brien and Miles O'Brien repeatedly failed to describe the company as state-owned:

WALLACE: Key senators will be debating today a controversial port agreement. The Senate Armed Services Committee will hold hearings on the deal in which a Dubai-based company will take over six American ports. Several lawmakers have criticized the plan, citing potential security concerns, though administration officials say security of the ports will remain with the United States.

[...]

S. O'BRIEN: Ahead this morning, we're going to talk more about port security. We're going to hear from some of the folks who actually work at the ports. Some of them are absolutely outraged about this new move that would hand over control of the ports to a Dubai-based company. We'll talk about that this morning.

[...]

M. O'BRIEN: CNN “Security Watch” time: President Bush on the defensive, battling attacks on that deal that would let an Arab controlled company manage six major U.S. seaports. Here's our chief national correspondent John King.

[...]

KING: How then did it come to this? The president at war with his party and at odds with public opinion, defending a deal to allow an Arab company to manage six major U.S. ports.

[...]

S. O'BRIEN: You can hear the president wrapping up a cabinet meeting and then taking a few questions. Most recently, there, he was talking about this controversy over this transaction, the ports that would now be managed by a company based out of the United Arab Emirates. The president saying that the transaction had been scrutinized and approved, and that the deal would not go forward, in fact, if he felt that there was any concerns about security.

*CORRECTION: The original version of this item stated incorrectly that “a 1993 amendment known as the Exon-Florio provision ... requires an additional 45-day investigation if 'the acquirer is controlled by or acting on behalf of a foreign government' and the acquisition 'could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S.' ” In fact, this requirement was established by the "Byrd amendment" [Section 2170(b)] to the National Defense Authorization Act for Fiscal Year 1993. The amendment modified a 1988 law known as the Exon-Florio provision.