DP World: Spotlight turns onto Dubai-based owners of P&O Ferries

DP World: Spotlight turns onto Dubai-based owners of P&O Ferries
The ferry company owner has been used as an example of post-Brexit trade wins by the British government

A sudden move to sack 800 staff from P&O Ferries has thrust its parent company, the Dubai-based DP World, into the spotlight.

After scenes of dock-side protests dominated news bulletins, No 10 has signalled it will weigh the legality of P&O’s approach to its staff, who were made redundant without notice, only to be replaced with other crew.

Such a step is tricky for officials, however. Relations between the British government and DP World have been very cordial to date.

The shipping and logistics giant operates ports around the globe, handling around 10 per cent of global shipping container traffic worldwide, according to a company presentation to investors dated April 2021. In March 2022, the company reported “record” earnings of $3.8 billion.

“While P&O Ferries and Ferrymasters have faced a particularly challenging time due to Covid-19, we continue to invest in the business as we believe it will emerge stronger from this crisis,” DP World said in an investor presentation in March 2021.

DP World is state-owned via its parent behemoth company Dubai World, to which it sold and then repurchased P&O for £322m in 2019. DP World returned to private ownership in 2020, when it was delisted from the Nasdaq Dubai exchange.

This holding company, Dubai World, is controlled by United Arab Emirates vice president and prime minister Sheikh Mohammed bin Rashid Al Maktoum. A shared passion for racing led the sheikh to form a bond with Queen Elizabeth over decades. The monarch has hosted the ruler of Dubai in her royal box at Ascot.

However, reports claimed the Queen distanced herself following the UK court judgement which described the sheikh as waging a “campaign of fear and intimidation” against his former wife, Princess Haya, and their two children.

DP World’s links to Britain have been used as an example of why closer trade ties with the Gulf are top priority for the UK government. The company’s name has been listed in a host of briefing notes for Britain’s leaders when they address stakeholders with examples of the ‘wins’ of post-Brexit trade policy.

The company’s investment in the Thames Freeport, in particular, some £300m to expand its berth capacity, has also been used to substantiate claims that the UK’s post-Brexit efforts to attract foreign investment is bearing fruit.

Britain has committed to trade discussions with the Gulf Cooperation Council (GCC) this year, too. This has been given renewed priority in Whitehall, after energy exporter Russia’s invasion of Ukraine.

The prime minister, Boris Johnson, and top officials underlined the need to prioritise GCC relations in order to reduce dependence on Russia, and keep the lights on in Britain, in visits to the UAE and Saudi Arabia this week.

Late last year, the chief executive of DP World, Sultan Ahmed bin Sulayem, shared a stage with chancellor Rishi Sunak at the Savoy Hotel in London. He was flown in for a photoshoot alongside Mr Sunak to mark the launch of Britain’s first post-Brexit freeport in September last year.

“DP World plans to be at the heart of Britain’s trading future and this investment shows that we have the ambition and the resources to boost growth, support businesses, create jobs and improve living standards,” said the sultan.

Mr Sunak’s interest in DP World’s ventures is long-standing. In his 2016 paper on freeports, he singled out the Jebel Ali Free Zone in UAE, operated by DP World, as an example of how a freeport policy could offer benefits to the UK.

The benefits of freeports in a developed economy such as the UK, with low tariffs on industrial inputs, have been challenged by economists.

Dubai World, owner of DP World, has spent a decade repaying creditors as part of a spider-web restructuring effort, after it scrambled to secure financing in 2009 following the global financial crisis. It made a final payment to its creditors for that tranche of borrowing in 2020.

Global lender of last resort, the International Monetary Fund (IMF), in its latest health-check of the UAE economy published last month, warned that state-owned enterprises such as Dubai World, which has billions in loans, are a significant risk to the overall financial stability of the country.

The Washington-based IMF also noted “data limitations” on the UAE’s contingent liabilities – financial risks which are effectively on the government’s balance sheet – such as the fiscal support state-owned enterprises like Dubai World may have had, or may need in the future.

DP World did not respond to The Independent’s request for comment.

On Thursday, a spokesperson for P&O Ferries said, in response to backlash over its decision to immediately make staff redundant over a video call, that the company had faced a “£100m loss year on year, which has been covered by our parent DP World”.

They added that without such changes, there would be “no future” for the ferry operator.

A government minister has suggested the company ought to return the £10m in government support it received to furlough 1,400 staff during the Covid-19 pandemic. The company also requested a £150m government bailout during this period.

On Friday, in a separate statement a P&O spokesperson said they hoped to have their services up and running within a couple of days, as it cost the ferry company “£1m a day for each day they are not moving”.