(Bloomberg) -- DP World Ltd. is putting a major investment at its London port under review after the British government criticized employment practices at one of the Dubai-based logistics giant’s subsidiaries.
The Dubai-based company was planning to announce a £1 billion ($1.31 billion) expansion of its London Gateway port at an investment summit convened by UK Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves next week, according to a person familiar with the matter.
But after Transport Secretary Louise Haigh called some of the employment practices at P&O Ferries “unscrupulous” and “exploitative” earlier this week, DP World Chairman and Chief Executive Officer Sultan Ahmed bin Sulayem is no longer planning to attend the event, the person said, asking not to be identified discussing non-public information.
The move is a blow to Starmer’s efforts to reposition the UK as a country that’s open for business. He is also hoping to use Monday’s event to rekindle relations with key trade partners around the world.
DP World’s planned investment would have created hundreds of jobs and added two berths for deep-sea vessels at London Gateway, increasing the port’s capacity by 50%. A DP World spokesman on Friday confirmed the planned investment is under review.
In a statement earlier this week, Haigh said the government was pushing legislation in parliament that would close a “legal loophole that P&O Ferries exploited when they sacked almost 800 dedicated seafarers and replaced them with low paid agency workers” in an incident back in 2022.
A UK government official said they believed the matter was still under discussion. Representatives for Haigh, the Department for Business and Trade, the Treasury and 10 Downing St. did not immediately respond to a request for comment.
DP World’s decision comes at an awkward time for Starmer as he prepares to host the investment summit on Monday. Starmer’s top deputies have argued it was former Prime Minister Rishi Sunak’s surprise decision to call an early election, which catapulted Labour into power months earlier than expected, that has left the new administration just months to coordinate such a high-profile event.
Still, financiers across London have been puzzled by Starmer’s decision to go ahead with the investment summit before Reeves had a chance to present the budget since the government might be limited in what it can announce ahead of that event on Oct. 30.
DP World’s decision is also the latest sign of tension between the United Arab Emirates and the UK, which erupted earlier this year after Britain joined the US in increasing pressure on the Persian Gulf nation to withdraw backing for the Rapid Support Forces in Sudan. At the time, the militia group was threatening to move on a city that’s home to more than 2 million people in western Sudan.
The UAE has repeatedly denied supplying weapons to the RSF.
The UAE is supposed to be a key trade partner for the UK and it has pledged to invest roughly £15 billion in Britain to support areas such as the life sciences and the energy transition. The country is considering several large investments in the UK, including at Heathrow Airport and the Sizewell C nuclear facility.
Britain is also hoping to strike a free trade deal with the six Gulf nations that form the Gulf Cooperation Council.
©2024 Bloomberg L.P.