Charleston International Ports, whose managing member is Friends of the Hunley Chairman Warren Lasch, sued the SPA earlier this month, seeking an injunction to return the terminal to the company's control until its differences with the SPA could be settled in arbitration.

CIP representatives were jubilant at learning that Circuit Judge Roger Young had issued the injunction.

"It's a vindication of the legal process," said CIP attorney Gedney M. Howe III. "We used (the process); they didn't."

Richard Quinn, a spokesman for CIP, relayed a similar message from attorney Bart Daniel.

"The decision vindicates Warren Lasch and CIP," Daniel said in a statement. "It proves that no one, not even a powerful state agency, is above the law."

According to Young's order, SPA officials must return the Pier Zulu terminal at the base to CIP control "without further delay." Port officials also must notify any customers of the change in command and use their best efforts to advertise the facility to potential customers.

In a statement to The Post and Courier on Tuesday, SPA Board Chairman Whit Smith expressed concern about the removal of the facility from state oversight.

"It is amazing to me that despite the facts of the case, which strongly point to the need for the state of South Carolina to take back and operate this facility with professionalism and efficiency, and, despite the fact that after three years, the CIP hadn't paid the state a dime for its use, that the judge could turn it back over to CIP.

"We are absolutely determined to pursue all possible legal options to correct this wrong," said Smith, "and that can include whatever our attorneys deem appropriate from appeal to arbitration. We already were set to arbitrate and postponed it because Warren Lasch wanted to resolve the issue without going through with arbitration."

Smith also expressed concern for the customers. "We had to get contracts in place because CIP had never properly filed those or gotten approval from the RDA, and now I guess that issue is back on the table. We don't like to see customers treated that way and will work with them as best we can, but it is out of our hands."

Smith said the judge's order doesn't change the facts.

"The financial misdealings that PricewaterhouseCoopers found before we terminated CIP's contract are still there, and the default is still there. The only thing that has happened is that the state of South Carolina has been hurt, and many people will feel the pain -- our customers and the citizens of South Carolina."

While Young's order temporarily settles the issue of who controls the terminal, broader differences between the former partners appear headed for a panel of high-profile arbitrators. Port officials had argued that only those arbitrators could order an injunction.

CIP selected former judge and former College of Charleston President Alex Sanders as its arbitrator, while the SPA tapped former Georgia Gov. Roy Barnes. Those two, in turn, selected the third arbitrator, former South Carolina governor and U.S. Education Secretary Dick Riley.

The tribunal could decide if the SPA owes CIP a buyout of the remainder of its contract, a figure CIP has estimated at $25 million. The ports authority said it should be reimbursed more than $1 million that it has spent trying to prove contract defaults by CIP.

The SPA licensed CIP to run the terminal in 1999, but then terminated the contract in April and assumed control of the facility in May. The move came after the completion of a financial report of CIP's books that said Lasch used CIP funds to make political and charitable contributions and loan money to one of his other companies.

SPA officials said those and other spending decisions harmed CIP's profitability. CIP's 30-year contract required it to split profits with the SPA, but the operation never made any profits.

CIP officials contend that despite a lack of marketing help from the SPA, the terminal did produce a net income in 2002 but that after debts were paid, there was no money left to split with the SPA.

The SPA has operated the terminal since the takeover, setting aside its revenues in a special escrow account and attempting to resign contracts with CIP's former business partners, including four other companies that subleased land from CIP.

In a related move Tuesday, the Charleston Naval Complex Redevelopment Authority, the SPA's landlord at the base, decided not to act on the SPA's recent request for new leases with the four subtenants.

After the SPA took over the terminal earlier this year, RDA Executive Director Jack Sprott wrote a letter to port officials asking them to submit the subleases for RDA approval. Sprott said the RDA did not know the companies with which CIP had subleases, even though the subleases required RDA approval.

Hours before Young issued the injunction, the RDA board decided Tuesday to delay issuing new leases until arbitration is done.

The judge's order was not a complete surprise. At a hearing last week, Young said he was inclined to grant the injunction but wanted to review an argument raised by the SPA, which claimed that because the dispute is tied up in arbitration, the courts could not get involved.

CIP's attorneys, citing an opinion from S.C. Attorney General Henry McMaster, argued that the court should step in to maintain the status quo until arbitrators could settle the contract dispute.

After reading the judge's order, new SPA board member Harry Butler said it appears to ignore evidence of misspending by CIP.

"I am concerned for the people's investment in the port," Butler said. "How can a judge put an individual's interests ahead of protecting those of all the citizens of South Carolina? We as board members are to be good stewards of the people's assets. This court's action makes that very difficult."

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