In a labyrinthine transaction, the United States Department of Homeland Security (DHS) paid the President of China’s son, Hu Haifeng, to provide port security for Los Angeles. The transaction began with the Department of Homeland Security’s Federal Emergency Management Agency granting funding to Los Angeles through the Port Security Grant Program. Los Angeles Harbor Department then contracted with Duly Research. Duly research then enlisted China’s Nuctech. If you follow the money, DHS employed an individual with very close ties to China’s communist regime to provide a mobile scanning unit for the port. Government Security News (GSN) reported that while George Cummings, the Director of Homeland Security with the Port of Los Angeles, claimed to have “no heartburn” over the contract in fall 2008, by February 2009 the Port planned to cancel the agreement due to contract default.

The GSN article raised several thought-provoking questions about the exchange of money. It is not clear whether Nuctech was able to outbid other companies due to government subsidies and was in fact engaged in dumping; or whether Nuctech engaged in reverse engineering and China will be able to gain access to images from the device. Equally disconcerting is the recent allegations of graft involving Nuctech in Namibia.  Meanwhile, Hu Haifeng, Jintao’s son, has been promoted to Communist Party Secretary of Tsinghua Holdings.

Judicial Watch originally solicited records from the Port of Los Angeles and the Department of Homeland Security (DHS). DHS fielded the request to a component not responsible for the contract resulting in a “no records” response. Judicial Watch then submitted the request to Federal Emergency Management Agency (FEMA), the grantor of funding. FEMA proceeded to lose the request and prolonged its response over 6 months to finally declare that it did not have responsive records. Rather than allaying concerns about the contract, FEMA’s response has provoked suspicions and the matter is under appeal. The documents obtained from the Port of Los Angeles further stoke these suspicions.

An unresolved concern relates to the purpose of the machine. GSN notes that George Cummings, the Director of Port Homeland Security, acknowledges the potential of the machine to capture and transmit images, but discards the concern by indicating the machine will be used for insignificant scans of groceries. Two problems arise with Cummings’ disregard: current use of the machine may not reflect future use and the contract itself indicates the machine will be used to combat terrorism. While Cummings and the Port have stated the machine is intended for grocery scans, they upgraded their purchase order by $398,901.25 in March 2008 to include items that “address needs and requirements with direct operational function in the Port’s efforts to combat terrorism.”  The Port specified “boom angles” to detect “false walls, hidden compartments and small objects near walls or larger items of cargo in subject vehicles or containers.”  By buying such applications, it would appear that there is a concern about sabotage, smuggling, or terrorism in containers, even the food ones.

A second area of concern with the contract is the qualification and preference given by the small and local business program. With one breath, the Port of Los Angeles claims that the requirements do not provide for Buy American (federal trade and acquisition agreements on certain purchases that requires a product to be made and sold in the United States), and in the next breath, they provide small and local business preference. The preference allows a bid to be considered at 10% less than its cost for competitive purposes. While Duly Research is a small and local business in California, the entire liability for its product lies with Chinese firm, Nuctech. Clause 14 of the General Conditions for the Small and Local Business Program requires that liability remain with the contractor to save the city of Los Angeles. The bid includes a letter from Nuctech to the City of Los Angeles in which it refers to Clause 14 and states that “Nuctech shall, at all times, relieve, protect, save harmless, and fully indemnify the City of Los Angeles.” The situation raises the issue of whether the Small and Local Business Program preference was justified. It would appear that Nuctech simply used Duly’s name and small and local business status to enter its product as a bid.

While it is obvious that the government too quickly negated “heart burn,” the problem with government “heart burn” is that the government does not learn from the experiences. Recall that during the 1990s the Clinton Administration was aware that Hutchison Whampoa had ties to China’s regime and its involvement with the Panama Canal could pose a security risk for the United States, but did not act upon such information. Several years later, the Whampoa debacle was out of mind and the US once again treaded dangerous ground intermingling US security issues with Chinese involvement.  As we know from the these incidents, the US can at times be a slow learner from its mistakes and may once again crave Chinese involvement despite the upset it will necessarily cause.

www.judicialwatch.org/foiablog/2009/sep/made-china-port-la-security