Feb. 27 (Bloomberg) -- The U.S. Coast Guard said questions about foreign influence, employees and operations made it impossible to assess the threat posed by a state-owned Dubai company's purchase of a firm that manages some terminal operations at six U.S. seaports.

``There are many intelligence gaps concerning the potential'' for assets owned by DP World or London-based Peninsular & Oriental Steam Navigation Co. ``to support terrorist operations,'' says a December intelligence assessment by the Coast Guard that was released at a hearing today of the Senate Homeland Security and Governmental Affairs Committee.

The document wasn't given to a Bush administration panel assessing the national security risks of the acquisition, but its concerns ``were addressed and resolved,'' Clay Lowery, an assistant secretary at the Treasury Department, said.

Committee Chairwoman Susan Collins of Maine was skeptical.

``This report suggests there were significant and troubling intelligence gaps,'' she told Lowery and Admiral Thomas Gilmour, an assistant commandant with the Coast Guard. ``I don't see how you were able to close those gaps so quickly.'' The administration panel approved the deal Jan. 23.

Gilmour said he'd have to discuss classified information to respond, and the committee went into closed session where he and other administration witnesses could more fully describe why they thought the DP deal didn't pose a threat.

`Truly Flawed'

After the 85-minute classified briefing, Collins, of Maine, said she was ``more convinced than ever that the process'' for reviewing the deal ``was truly flawed.'' Joseph Lieberman of Connecticut, the panel's senior Democrat, said that administration officials in the closed briefing portrayed the Coast Guard document as an ``early reaction to this deal.''

``There were too many questions we asked that are not yet answered,'' Lieberman said.

DP World yesterday bowed to demands from U.S. lawmakers for a 45-day review of its deal to take over port facilities at U.S. cities including Miami, Baltimore, Philadelphia, New Orleans, New York and Newark, New Jersey. The container terminals are among the 29 DP World is acquiring as part of its purchase of P&O.

Ally in Terror War

The acquisition has drawn criticism from U.S. lawmakers amid concern that giving control of some port facilities to DP World will threaten national security.

Dubai is one of seven sheikdoms that make up the United Arab Emirates, where two of the hijackers involved in the Sept. 11, 2001, attacks came from. Bush has defended the sale, saying the UAE has been a vital ally in the war against terrorism.

U.S. senators, returning today from a week-long recess, immediately introduced legislation designed to insure the review goes forward and that they have a role in assessing the results and deciding whether the deal should be approved.

DP World said it will ask a panel of administration officials known as the Committee on Foreign Investment in the United States to re-examine the deal. The sale originally was approved by the committee after a 30-day examination in which representatives of cabinet agencies and departments, including Homeland Security, concluded the deal satisfied U.S. requirements.

The company also agreed to ``separate'' the U.S. ports from the rest of the purchase, allowing P&O's North America-based executives to run the port operations. The review will begin March 2, the day DP World formally takes control of P&O, the company's chief executive, Mohammed Sharaf, said in a telephone interview yesterday in Dubai. P&O operates 29 port facilities around the world, including those in New York-Newark, Philadelphia, Baltimore, Miami and New Orleans.

Levin's Concerns

Senator Carl Levin, a Michigan Democrat, challenged these assurances at today's hearing. ``If this closing takes place, Dubai owns these facilities'' and Bush would have to go to court to undo the deal, Levin said.

Senate Majority Leader Bill Frist said Congress should hold off any action to block the deal until the review is completed. Republican leaders in the House are scheduled to meet tomorrow when they return from their recess.

House Majority Leader John Boehner believes Congress should have input into approval of foreign acquisitions when national security is at stake, Kevin Madden, a spokesman for the Ohio Republican, said today.

``Mr. Boehner believes that Congress has a role in this issue with regard to procedural review and oversight,'' Madden said. Any investigation by congressional committees into the DP World acquisition should focus on whether legislation is needed to boost Congress's role in the approval process, he said.

Senate Legislation

Lieberman and Collins said that the process for approving foreign acquisitions should be revamped so that the Homeland Security secretary, the director of national intelligence or the Defense secretary heads the review panel rather than the Treasury secretary. The process also would benefit from more congressional input, Collins said.

Senator Charles Schumer, a New York Democrat, introduced a bipartisan measure today that would require a 45-day review of the deal with 30 days thereafter for Congress to weigh the probe's results and disapprove the deal if necessary.

No Early Vote

Schumer said the measure wouldn't be brought to a vote pending results of the review. Cosponsors of the legislation include Republicans Norm Coleman of Minnesota, Olympia Snowe of Maine, Tom Coburn of Oklahoma and Democrats Hillary Clinton of New York, Robert Menendez of New Jersey and Jack Reed of Rhode Island.

The Schumer measure also would require Bush to put a hold on the acquisition and for administration officials to brief Congress on the review's findings. Currently, the administration alone determines whether the acquisition goes through.

Schumer said that, for the investigation ``to have real merit,'' the president should ``say he has an open mind.''

Collins, a co-sponsor of the Schumer measure, said she wouldn't press for a vote on it until the 45-day review is completed.

Clinton and Menendez also introduced a separate measure that would bar companies owned or controlled by foreign governments from acquiring U.S. port operations.

Senator Evan Bayh, an Indiana Democrat, plans to introduce a measure that would require the director of national intelligence to approve any sale reviewed by the administration panel. It would require the panel to take into consideration the country where the acquiring company is based and require the president to inform Congress about proposed foreign acquisitions.

To contact the reporter on this story: Jeff Bliss in Washington at jbliss@bloomberg.net;

Last Updated: February 27, 2006 19:01 EST