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A Zim vessel laden with cargo.

(Update, Wednesday, August 20: here’s a full list of the Zim Piraeus’ cargo.)

Palestinian solidarity activists have blocked the Zim Piraeus ship from mooring and offloading its cargo at the Port of Oakland, California for over four days. But what’s on the Israeli vessel? What was it supposed to deliver to northern California?

It’s hard to say. I couldn’t find a any bills of lading for the Zim Piraeus’s August 16 scheduled stop in Oakland. These records may not exist until the ship actually docks and unloads. But I did find a lot of records that describe what Zim’s other ships normally deliver to Oakland.

The last Zim ship to moor at northern California’s biggest seaport was the Zim Savannah. It arrived on August 2 carrying, among other things:

1. Equipment for the McGinnis Geothermal Power Plant. The McGinnis Plant is being built in Nevada by a company called Ormat Technologies. Ormat is headquartered in Nevada, but as the company explained in its 2013 annual report: “The majority of our senior management and all of our production and manufacturing facilities are located in Israel.”

2. Marble slabs from Italy, likely to be used outfitting homes, hotels, and downtown offices with counters and floors. In fact, stone and tile seems to be a big commodity carried by Zim into the Port of Oakland.

3. French and Greek olives, Spanish almonds and artichokes, Egyptian lemongrass, and Argentinian rice.

4. The Zim Savannah also contained lots of other Israeli-manufactured goods and materials like solar water heaters built by Magen Eco-Energy, Ltd., Irrigation Equipment manufactured by Naandan Jain Ltd., polyethelene sheets from the Kibbutz Einat, pallets of magnesium chloride flakes, and thousands of kilograms of potassium phosphate mined near the city of Beersheba, Israel, being shipped to a fertilizer company in Missouri.

But Zim Lines also ships personal effects and records, and last November, when the Zim New York docked in Oakland it offloaded a case of what appears to have been materials of the World Zionist Organization. These materials were headed to the Pacific Southwest Region offices of the United Synagogue of Conservative Judaism. Check out the bill of lading for yourself.

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Potential contractor to complete Phase 2 of Oakland’s DAC surveillance system, URS Corp is the largest nuclear weapons contractor for the United States. The company is so integrally involved that it’s “federal” web page includes a picture of a nuclear missile-armed submarine.

In March of 2013 the city of Oakland signed a contract with Science Applications International Corporation (SAIC) for design and construction of the first of two phases of a city-wide surveillance system called the Domain Awareness Center, or DAC. The basic infrastructure to link up cameras and sensors with servers running powerful software, hosted in several command rooms at the Port and in the city’s Emergency Operations Center, is now mostly complete. Oakland’s DAC surveillance system is not yet fully up and running, however, until Phase 2 work is completed. In July of 2013, against an outpouring of public protest against building the surveillance system, the Oakland city council approved a contract modification for SAIC to complete Phase 2.

Recently, however, the Oakland city council learned that its prime contractor for the project is involved in the U.S. nuclear weapons program, a fact that violates Measure T, a city voter proposition that makes Oakland a nuclear free zone. Measure T and Ordinance No. 11062 C.M.S. bar any contractor that is involved in nuclear weapons work from doing business with Oakland, and SAIC’s contributions to nuclear weapons are well-documented.

Oakland paused work on the project, and in October the city council authorized its administration to drop SAIC and return to the original pool of vendors who responded to the city’s first request for proposals (RFP) issued one year ago. The original pool of vendors who expressed interest in bidding on the surveillance project included 25 corporations, so surely another with a clean record could be found?

It appears, however, that SAIC’s ties to nuclear weapons aren’t unusual inside the industry that sells mass surveillance systems. Many of the contractors that specialize in building giant surveillance systems like the DAC also have nuclear weapons and other arms manufacturing contracts with the Pentagon. Mass surveillance and nuclear weapons appear to go hand in hand in the thinking of the executives who run these companies.

For example, engineers with URS Corp responded to Oakland’s original RFP for the DAC. URS Corp is a prime contractor for theU.S.nuclear weapons research, design and testing laboratories at Los Alamos, New Mexico and Livermore, California. URS is part of two for-profit limited liability corporations that manage theU.S.nuclear weapons labs for the National Nuclear Security Administration. URS also operates the salt mines in southern New Mexico where deadly radioactive waste from theU.S.nuclear weapons programs is buried.

Schneider Electric also responded to the original RFP and appears to be in the running to get the DAC Phase 2 contract. But again, like URS and SAIC, Schneider Electric has ties to nuclear weapons. In marketing materials Schneider lists Los Alamos National Laboratory, the nuclear weapons facility managed by URS, as one of its clients. Schneider Electric also lists the Pentagon, Lockheed Martin, and Wright Patterson Air Force Base as clients. Lockheed Martin has long been one of the prime nuclear weapons contractors for the United States government. Wright Patterson Air Force Base hosts several units that research and deploy nuclear weapons. Schneider Electric’s Pelco subsidiary has installed surveillance systems at the Navy’s Kings Bay Strategic Weapons Facility, a port that harbors nuclear armed submarines.

kratos

Marketing materials created by Kratos Defense and Security Solutions, Inc., another potential contractor that might build Phase 2 of Oakland’s Domain Awareness Center.

Another company in Oakland’s vendor pool that is being considered for Phase 2 of the DAC is Kratos Defense. Very much like SAIC, Kratos is another San Diego-headquartered arms merchant that thrives on Pentagon and Department of Homeland Security (DHS) contracts. In their most recent report to shareholders, Kratos’ executives straightforwardly describe their company as “a specialized security technology business,” whose “principal products and services are related to Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance (“C5ISR”).” Kratos’ major business segments include “Electronic Warfare/Attack,” drones, known in industry-speak as “Unmanned Aerial Vehicles,” and “Missile Range Operations.”

And Kratos has direct links to nuclear weapons too. Kratos designed, built, and manages a security system for the National Nuclear Security Administration’s use at the Nevada Test Site, a testing ground for nuclear weapons that in recent years has been considered as the site of a possible radioactive waste dump. Last year Kratos won a multi-million dollar contract from the U.S. Strategic Command (STRATCOM) to provide “worldwide Radio Frequency (RF) interference geolocation services” for the Pentagon’s use. Among other things, STRATCOM commands the nuclear weapons forces deployed by the Air Force and Navy, and Kratos’ contract relates to this nuclear mission.

The list of potential Oakland DAC contractors includes still more companies deeply involved in weapons manufacturing, including nuclear weapons.

Two representatives from Unicom Global attended the Port of Oakland’s October 22, 2013 pre-proposal meeting for the DAC. Unicom Global is owned by Beverly Hills entrepreneur Corry Hong, formerly a lead guitarist in a South Korean rock band who became a software designer after immigrating to the US. Unicom is a holding company owns several major federal technology contractors including GTSI. GTSI was suspended from doing business with the federal government in 2010 due to accusations the company was scamming the Department of Homeland Security. Hong and Unicom bought GTSI last year, and since then GTSI and Unicom have regained considerable business with the military and DHS.

Unicom’s GTSI has even contracted with the National Nuclear Security Administration. A 2009 brochure from GTSI that is available on Unicom’s web site discusses one such contract in which GTSI provided the U.S. nuclear weapons laboratories with “classified removable electronic media,” or CREMs. CREMs are storage devices which have been used to save nuclear weapons design information and testing data.

Oakland’s list of potential DAC Phase 2 contractors just keeps turning up companies with links to nuclear weapons. G4S Technology, part of the security company G4S, also responded to Oakland’s DAC RFP and attended to the mandatory pre-proposal contractor meetings. G4S Government Solutions has the prime contracts to guard most of the U.S. nuclear weapons complex across four states. G4S mercenaries are stationed at the Y-12 National Security Complex and Oak Ridge National Laboratory in Tennessee, the Savannah River Site in South Carolina, the Nevada Test Site, the Sandia National laboratory Tonopah Test Range, also in Nevada, and the Hanford Site in Washington state.

So can Oakland actually pick a contractor to complete its mass surveillance system who doesn’t violate the city’s anti-nuclear ordinance? Perhaps a more important question is the one being asked by a growing coalition of residents opposed to the project: should Oakland even build the DAC?

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Screenshot from SAIC’s jobs web site. SAIC develops surveillance technologies for many branches of the federal government, as well as local governments and police agencies.

In 1988 the Oakland city council passed the nation’s most ambitious anti-nuclear ordinance, banning any and all activities that would advance the development and deployment of nuclear weapons. It was a big deal, not like the previous mostly symbolic ordinances passed by other towns and cities far from the nation’s nuclear labs and military bases.

The city of Oakland lies just south of Berkeley where in the 1940s and 1950s much weapons research was conducted. Weapons and components were transported through Oakland’s Port and across roads and highways and rail road routes traversing the city. Atomic weapons that later decimated the environments of South Pacific islands, causing cancers among islanders and destroying their homes were shipped through Oakland. In the 1960s Berkeley’s research was consolidated at Lawrence Livermore Laboratory in southern Alameda County, but for decades Oakland was host to nuclear weapons contractors and federal offices involved in the design and deployment atomic weapons. (In fact this is true today, the subject of a future blog post perhaps.) The Navy sought to home port a nuclear-armed squadron in the Bay Area in the 1980s, and Oakland’s anti-nuclear ordinance was a direct effort to resist the further nuclearization of the region.

In 1990 a federal judge appointed by Ronald Reagan slapped down most of Oakland’s anti-nuclear law, calling it unconstitutional and claiming that it interfered with national security. However, one portion of the anti-nuclear ordinance stayed on the books. Oakland would continue to refuse to enter into contracts or otherwise spend city funds on work done by corporations involved in the US nuclear weapons program.

Both the spirit and letter of this law were thrown out three years ago when the Oakland city council summarily agreed to the massive port-city surveillance system called the Domain Awareness Center. The contractor building Oakland’s camera and sensor network is Science Applications International, a giant military-industrial corporation that has helped the US Defense Department develop, build, and deploy nuclear weapons, among many other killing technologies.

And the Oakland contract with SAIC would seem to violate the spirit of another city of Oakland resolution, the anti-SB 1070 law that was passed in 2010 to oppose Arizona’s anti-immigrant law. Oakland’s anti-SB 1070 resolution requires the city to boycott Arizona, and companies with headquarters in Arizona, due to the state’s racist and militarized immigration policies. SAIC has a major office in Arizona and has helped the federal government build a massive border wall and surveillance system.

USMexBorderFence_4

A portion of the gigantic wall built by SAIC along the US-Mexico border, a portion of which spans Arizona.

SAIC’s anti-immigrant technologies probably don’t violate Oakland’s anti-SB 1070 ordinance because the company’s contracts are with the federal government, and not the state of Arizona. SAIC is headquartered in Virginia, and only has branch offices in Arizona. Nevertheless, SAIC is perhaps the single largest provider of border surveillance technology to the government. SAIC has multiple offices in Arizona where its assists the Department of Homeland Security in its historically unprecedented effort to wall off the US-Mexico border and deport millions of human beings.

On SAIC’s web site the company proudly advertises the 60-mile border wall it helped build for the Department of Homeland Security in Arizona.

SAIC has developed the major surveillance, biometric, and alarm systems used by the DHS along the US-Mexico border throughout Texas, Arizona, New Mexico, and California. SAIC claims to have executed at least $200 million in border security contracts in the last five years, work that includes developing the “Integrated Wide-Area Surveillance System,” or IWASS, which we are told, in promotional material on the company’s web site: “safeguards the homeland through an intelligence-based operational solution for border security.”

InterrogationSAICJob

Screenshot taken from SAIC’s jobs web site. SAIC is hiring interrogation trainers to teach US military personnel how to interrogate captives and prisoners. The work is carried out at Fort Huachuca, an Arizona military base where SAIC also assists in drone training and operations.

SAIC has dozens of job openings at its Arizona offices currently. The company is hiring biometric technicians to develop camera-linked computer systems capable of discerning identity from facial recognition and body shapes. These technologies could someday be incorporated into Oakland’s Domain Awareness Center system, according to discussion between SAIC and city officials.

At its Fort Huachuca office SAIC is hiring staff for its “human intelligence” program, a major military contract to train interrogators and spies within the US military. SAIC is deeply integrated into the US military’s espionage and surveillance activities. Arizona is one of the major locations where SAIC and the Army develop these technologies.

Fort Huachuca, located in southern Arizona near the Mexico border, was founded in 1877 by the US Army during their war of extermination against the Apache nation, and other southwestern Indians. For Huachuca grew afterward as an outpost against Mexico from which the United States had seized a quarter of North America.

Today the desert outpost is also one of the US military’s major drone warfare bases. SAIC is one of the main contractors providing technology and training for Army and Navy drone weapons systems at Fort Huachuca, and drone surveillance systems based at Fort Huachuca are reportedly used in border patrol operations, but mostly in overseas theaters of war. As the LA Times reported in 2011, SAIC employees are part of the “kill chain” in drone warfare, carrying out crucial roles in the drone missions employed by the Obama administration to kill thousands in the Middle East and Central Asia. Just last month the military re-upped SAIC’s drone contract to assist Army personnel in operating and maintaining the new weapons.

SAICDroneOperatorJob

Screenshot of SAIC’s jobs web site, advertising employment opportunities for drone operators. SAIC’s staff are in the “kill chain” of the US military’s controversial drone warfare programs.

SAIC’s nuclear weapons contracts are too numerous to try to list. SAIC has contracted with the US nuclear weapons complex since the mid-1980s. SAIC has taken billions in payments from the US Department of Energy and the National Nuclear Security Administration to conduct studies and carry out contract work for nuclear weapons development as well as lead up the government’s site planning and environmental compliance efforts at the major weapons labs in New Mexico and California. One of SAIC’s latest nuclear weapons-related contracts is a $228 million work order with Sandia National Laboratories in Albuquerque, New Mexico. In addition to designing and testing nuclear weapons, Sandia also develops weapons and surveillance technologies for the CIA, NSA, and other federal spy agencies.

SAIC also serves the military branches that deploy nuclear weapons. For example, in 2009 SAIC was paid $10 million to help the Air Force reorganize its nuclear weapons command structure.

In February of this year the main airport of Puerto Rico was privatized under a deal that allows a New York private equity group to take control the facility for 40 years. The firm is called Highstar Capital, and their link to Oakland is through the city’s port. In 2009 the Port of Oakland awarded Highstar a lucrative concession to take over the Outer Harbor Terminal for 50 years. Concessions are a form of privatization in which the underlying ownership of a public asset remains legally with a public authority, municipality, or the state, but control over the asset’s revenues, capital investments, and operations is effectively handed over to a private company.

A map of Ports America's terminal leases and concessions. The company, owned by Highstar Capital, is the largest operator of port infrastructure in the U.S.

A map of Ports America’s terminal leases and concessions. The company, owned by Highstar Capital, is the largest operator of port infrastructure in the U.S.

Highstar runs the Oakland port berths through Ports America, a terminal operator the firm purchased in 2007. The Oakland deal gives Highstar a monopoly over a major terminal at the Port in exchange for lease payments made to the Port of Oakland.

Highstar also controls a marine terminal in the Port of Baltimore under a virtually identical 50-year privatization deal. Ports America is the largest terminal operator in the United States, leasing more waterfront facilities than any other company under more traditional lease agreements that usually only extend three to seven years. In California alone, Ports America operates facilities at the ports of Concord, Long Beach, Los Angeles, Port Hueneme, Sacramento, San Deigo, and Stockton, in addition to its privatized Oakland property.

The Concord operation focuses on shipping military goods and ammunition overseas. Several of Ports America’s other operations handle similar military cargoes. The company’s major port operations pass through millions of containers every year with products bound for U.S. and overseas markets.

This is partly why Highstar, through Ports America, controls such a vast swath of the U.S. maritime acreage. Back in 2006 P&O Ports, an independent company, operated most of these marine terminals, but P&O was bought that year by Dubai Ports World, an aggressively expanding terminal operator based in the United Arab Emirates. Various members of the U.S. Congress objected to a company from a Arab nation taking over a good chunk of the U.S. port infrastructure. Behind the scenes Highstar, which was then still a subsidiary of the AIG insurance company, maneuvered to purchase P&O Ports from Dubai Ports World.

Highstar is among a growing number of infrastructure privatization funds focusing on U.S. public assets. These companies utilize their access to cheap debt, their considerable equity (much of it sourced from wealthy individuals and institutional investors like pensions), and their political connections, to take control of highways, bridges, ports, railroads, and other goods.

Highstar is also one of the biggest owners of oil and gas pipelines in North America. And in addition to its ownership stake in Puerto Rico’s Luis Muñoz Marin Airport, Highstar also owns the London City Airport in the U.K.

Wayne Berman, lobbyist, Highstar "adviser," current Blackstone government relations director.

Wayne Berman, lobbyist, Highstar “adviser,” current Blackstone government relations director.

Integral to Highstar’s business strategy is the cultivation of friends in high places, and influence in the halls of government. The company’s executives have never been shy about showering money on political campaigns, and buying the most connected lobbyists to push their interests. Highstar executives have spent over $900,000 to fund the campaigns of federal candidates and the Republican Party since 1990, with most of this spending concentrated in the mid to latter 2000s.

Highstar has spent $3.8 million over the past decade lobbying Congress. Most of this money was used to obtain the services of Wayne Berman, a Republican Party fundraiser who has been on the inside of numerous GOP presidential administrations.

Berman is a super-lobbyist who raises millions of dollars for conservative candidates. Individually Berman has contributed over $800,000 to federal elections campaigns since 1990. Berman is directly employed by Highstar as a “senior advisor.” Currently he is the in-house lobbyist for another private equity group Blackstone, but he remains in the employ of Highstar also.

Workers and community members at the gate of Terminal 59, Port of Oakland, leased by SSA (a subsidiary of Carrix, Inc.).

A coalition of port workers, including members of the unions SEIU 1021 and Unite HERE, and Oakland residents with the Coalition to Stop Goldman Sachs, plus organizers with Occupy Oakland, picketed the Port of Oakland yesterday.

The picket line was “informational” only. Union leaders did not intend to ask other workers, including ILWU longshoremen to not cross the line, a move that would have disrupted a shift and brought operations to a halt. ILWU’s rank and file pride themselves on their solidarity with other unions and routinely do not cross picket lines. Instead, the workers and Oakland residents marching at the port, wanted to make a show of strength, demonstrating their ability to effectively shut a maritime terminal down if they feel the need to do so. They passed out information about their struggle against the Port’s management, and against the financial corporations they say profit from the Port’s current positions in labor negotiations.

SEIU 1021’s port chapter is currently negotiating (along with three other unions) for a new contract that would include a 5 percent cost of living increase. The port’s management has countered that they will give no such increase, and furthermore that they seek increased employee contributions into their pensions. Port management hope to free up more revenue for increased capital investments that will benefit marine terminal operators, shipping companies, and real estate investors.

The Coalition to Stop Goldman Sachs enacting a skit that explains how the interest rate swap has harmed the city’s finances, one of several reasons why city services have been cut in recent years.

Also present at the informational picket were members of the Coalition to Stop Goldman Sachs, a community group that is pressuring city leaders and the bank to terminate a costly interest rate swap that has cost Oakland upwards of $20 million due to the divergence of interest rates following the financial crisis in 2008.

Labor and the community have united around the port because both share an analysis of the major financial corporations that profit from the port’s debt, capital investments, and the trade that flows through the busy maritime and air terminals. Goldman Sachs was specifically singled out because the company owns a stake in the marine terminal operator SSA. SSA’s terminal at the port, Berths 57-59 were the site of the picket.

The Oakland International Container Terminal, operated by SSA. SSA is owned by Carrix, Inc., a Seattle-based corporation. Goldman Sachs owns 49 percent of Carrix.

Goldman Sachs has multiple longstanding interests in the Port of Oakland’s finances and business operations. Goldman Sachs is a party to at least three major areas of Port business.

First and foremost is Goldman’s role as an underwriter or dealer for the Port’s various debt offerings. No other financial company is as important as Goldman Sachs for the Port’s numerous and complex bond and commercial paper deals.

Goldman Sachs also holds a financial interest in the Port’s day-to-day operations. Through several Goldman Sachs investment funds the bank holds ownership stakes in major shipping and logistics corporations that lease Port facilities, or otherwise conduct business through the Port of Oakland.

Finally, Goldman Sachs has attempted to involve itself in the Port’s real estate development activities by teaming up with developers who hold options on waterfront real estate.

Debt

Goldman Sachs is among a handful of financial companies pre-qualified by the Port of Oakland to deal its commercial paper. This image is taken from a recent Port of Oakland board meeting agenda.

For several decades now Goldman Sachs has routinely been selected, along with a handful of other privileged banks, to serve as a pre-qualified dealer for various types of debt offerings issued by the Port. For the Port’s Capital Improvement Program, Goldman Sachs has been selected to underwrite or deal in multiple major debt offerings.

For example, in 2000 Goldman Sachs led a syndicate of investment banks to underwrite $400 million in bonds to finance major expansion at the Oakland Airport.

In 2002 Goldman Sachs again led an offering of $620 million in bonds to finance aviation capital projects, as well as construction of new shipping terminals, intermodal facilities, and dredging at the Port. Goldman Sachs remains one of the Port’s key dealers for commercial paper today.

The bank makes millions off this business by re-selling the Port’s commercial paper to investors in the open market at higher prices, as well as by charging a dealer’s fee.

Senior level executives who have worked for both the Port and Goldman Sachs at different times strengthen the bank’s close business relationship with the Port. The Port’s current CFO, Sara Lee, is a former Goldman Sachs vice president who led the bank’s public sector and infrastructure finance group. This group has its offices in Goldman Sachs’ San Francisco branch headquarters at 555 California Street.

When the Port of Oakland hired Lee an official press release explained her familiarity with the Port’s finances: “the Port of Oakland was one of Lee’s first clients upon joining Goldman Sachs and she has participated in virtually every Port of Oakland bond issuance since.”

“Having served as the Port’s senior banker for more than ten years,” added the Port’s executive director Omar Benjamin, “Sara has a solid understanding of our organization and business lines. She thinks strategically and will be of great help to us as we move forward.”

Other Friends in High Places

Goldman Sachs has tended to appoint politically connected individuals to lead its public sector and infrastructure finance group and other divisions. Among its recent senior executives in California were Kathleen Brown and Jeffrey Holt.

Kathleen Brown

Kathleen Brown, the sister of current California Governor Jerry Brown, was State Treasurer from 1991 to 1995, overseeing California’s finances that are a source of immense profits for the investment banking sector. In 2001 she joined Goldman Sachs, working in its San Francisco office as a private wealth adviser. From 2003 to 2011 Brown headed Goldman Sachs’ public finance and infrastructure finance group in California. During this same period (1999-2007) Jerry Brown was the Mayor of Oakland and had considerable influence over the operations of the Port through his appointments and policies.

Upon her brother’s election to the governor’s office she was transferred to Chicago to avoid the “perception of a conflict of interest,” as one Goldman spokesperson said at the time.

Jeffrey Holt worked in the San Francisco offices of Goldman Sachs alongside Brown and focused on financing West Coast ports, among other business lines.

Upon leaving Goldman in 2008 Holt became a managing director at the Bank of Montreal, and chairman of the Utah Transportation Commission. Holt is still active in arranging private financing for ports and is considered an expert on privatization of infrastructure through specialized private equity funds such as the one he oversaw at Goldman Sachs.

A slide drawn from Jeffrey Holt’s presentation “Attracting Private Sector Investment in Public Ports,” given at the American Association of Port Authorities conference last year in Portland, Oregon. Holt says the privatization of Oakland’s Berths 20-24 by Ports America (owned by the Highstar Capital private equity group) is a successful example of the new trend in port finance.

Holt is currently a member of the Carlyle Infrastructure Partners (CIP) management team. Holt’s biography in a recent CIP document says that while with Goldman Sachs he provided “advisory services associated with acquisitions include the purchase of a minority stake in Carrix Inc., an international terminal operator,” and that he also “[assisted] Highstar Capital and its Ports America team on several terminal acquisitions.” The latter is probably a reference to the Ports America $700 million 50-year concession at the Port of Oakland that replaced APM Terminals and other comapnies as the operator of Berths 20-26, among the busiest and most valuable operations at the Port.

Goldman’s Ownership of Shipping Companies and Port Operators

Through its infrastructure group, and its asset management division, Goldman Sachs holds significant equity stakes in numerous shipping and infrastructure companies. Several are active at the Port or Oakland, further linking the investment bank’s profits to the Port’s operations.

Goldman Sachs’s infrastructure group owns 49 percent of the privately held Carrix, Inc. Based in Seattle, Carrix owns SSA Marine, one of the largest US port terminal operators. SSA operates the Oakland International Container Terminal (Berths 57-59) and the Charles P. Howard Terminal near Jack London Square.

When Goldman’s minority purchase of nearly half of Carrix was completed in 2007 the Financial Times observed that, “the sale of the stake in Carrix is at least the ninth significant deal in the past year in which ownership of stakes in US port assets has transferred from specialist transport companies to a new breed of funds investing in infrastructure.” Goldman Sachs is a leader among financial corporations that have moved to take control over transportation infrastructure, especially ports, in recent years.

Asset management at Goldman Sachs, as well as other major investment banks, is a service offered to wealthy families and institutions whereby the bank manages money to attempt to produce a return on value that beats the market, or at least outpaces inflation. In return for their services to these wealthy families and institutions, Goldman often charges a management fee and takes a percentage of profits made through these investments. To be a client of Goldman Sachs asset management you must have tens of millions of dollars to invest through its various funds. Kathleen Brown worked in this area for several years before becoming the head of Goldman’s public finance and infrastructure group. At least one Goldman Sachs asset management fund is invested in the stocks of corporations that do business at the port.

The Goldman Sachs Structured Intl Equity A fund owns a small number of shares in the AP Moller-Maersk corporation which is the parent company of APM Terminals. Until recently APM Terminals operated Berth 24 at the Port with three cranes and was one of the Port’s larger grossing operations. AP Moller-Maersk still imports through Oakland as one of the major servicing lines.

Through the same Goldman Sachs Structured Intl Equity A fund, Goldman Sachs owns a small stake in Kawasaki Kisen Kaisha, Ltd., also known as K-Lines, a major shipping company that imports through the Port. K-Lines owns International Transportation Service, a company that was the fifth largest revenue generator for the Port in 2010 and 2011 according to the Port’s most recent CAFR.

An excerpt from a recent Goldman Sachs Real Estate Securities Fund report shows a significant equity investment in Prologis.

Goldman’s sources of profit deriving from the Port of Oakland don’t stop there. According to a report from the Goldman Sachs Real Estate Securities Fund, an investment vehicle that focuses on the stocks of real estate companies, Goldman Sachs owns a significant stake in Prologis.

Prologis is one of the developers of the planned logistics facility that will be built on the former Oakland Army base. Prologis also owns a warehouse near the Oakland Airport used in airfreight shipping. Goldman Sachs reports that it recently “trimmed” its position because of the company’s stock value decline, however the bank still has around 3.7 percent of its Real Estate Securities Fund invested in Prologis, making it a top 10 investment.

On the debt underwriting side, most recently Goldman Sachs has been selected as dealer for the Port’s 2011 and 2012 $200 million commercial paper loans to finance various capital projects including “site preparation and redevelopment of the former Oakland Army Base, and remaining costs associated with the deepening of the navigational channels to 50 feet,” as well as “funds to facilitate development plans for the Oak-to-Ninth District.”

In other words, Goldman Sachs is stands to doubly profiting by dealing the Port’s commercial paper. The first profit comes from the spread earned by acting as dealer. The second source of profit will be derived from the improved infrastructure that will be used by companies such as Prologis, AP Moller-Maersk, and K-Lines, which the bank owns small equity stakes in, or from the Oak to 9th project.

Real Estate

Developer’s rendering of the Oak to 9th project.

Rounding out Goldman Sachs’ nearly ubiquitous presence in the Port’s finances and operations is a proposal that allows Goldman Sachs to participate in the redevelopment of Oakland’s waterfront. The Oak to 9th project, ostensibly led by Bay Area-based developers incorporated as Oakland Harbor Partners LLC, involves building housing, retail, and parks on large land holdings owned by the Port.

In 2008 the Port’s board voted to allow Goldman Sachs to potentially take part in the venture through the bank’s urban investment group, which also has offices in San Francisco. A board agenda from the meeting where the item was approved describes the complex change to the previously approved developer contract that allows Oakland Harbor Partners to bring in Goldman Sachs, without future approval by the Port’s leaders;

“The proposed amendments to the Option Agreement, along with the form Purchase and Sale Agreement and form Ground Lease, broaden the category of assignments that do not require Port approval to include a joint venture comprised of the current principals of Oakland Harbor Partners LLC and Pacific Coast Capital Partners, LLC or Goldman Sachs Urban Investment Group, as long as the principals of Oakland Harbor Partners LLC participate in the management and operation of the newly formed entity on an equal basis. Pacific Coast Capital Partners, LLC and the Bay Area Smart Growth Fund 1 were identified in the Developer’s response to the Port’s original Request for Qualifications (RFQ) as an entity comprised within the Oakland Harbor Partners LLC team and are not a new entity to the proposed project transaction. Goldman Sachs Urban Investment Group, while not specifically mentioned in the Developer’s RFQ response, are a well capitalized investment group with a substantial track record of investment experience in urban area residential development projects, on both private development projects and public-private partnership projects. Thus, staff believes that potential future inclusion of a financial partner with the capital strength and experience of these two entities mentioned above in the transaction agreements is consistent with the originally contemplated structure of the deal.”