Bush se­cu­rity re­view changes for for­eign firms panned

The Washington Times Weekly - - National - By Bill Gertz

Law­mak­ers from both par­ties on Nov. 6 chal­lenged the Bush ad­min­is­tra­tion over a draft pres­i­den­tial or­der that they say will un­der­mine a law de­signed to im­prove se­cu­rity re­views of for­eign com­pa­nies seek­ing to buy U.S. firms.

Rep. Carolyn B. Maloney said the draft ex­ec­u­tive or­der “seems to flatly con­tra­dict the law” passed to give se­cu­rity con­cerns more weight be­fore the Trea­sury De­part­ment-led Com­mit­tee on For­eign In­vest­ment in the United States (CFIUS).

“Our bi­par­ti­san bill gave sig­nif­i­cant di­rec­tion to the agen­cies, in­clud­ing Trea­sury, charged with im­ple­ment­ing it to en­sure that the voice of each agency re­ceived proper weight in the con­sen­sus process,” said Mrs. Maloney, the bill’s spon­sor.

The New York Demo­crat’s com­ments came in re­sponse to the dis­clo­sure of the or­der by The Wash­ing­ton Times, which would make the Trea­sury sec­re­tar y the “sole author­ity” for CFIUS. Se­cu­rity of­fi­cials said that lim­its the author­ity of the Jus­tice and Home­land Se­cu­rity de­part­ments and the Pen­tagon to re­quire se­cu­rity “mit­i­ga­tion agree­ments.”

Rep. Peter Hoek­stra, a Michi­gan Repub­li­can who was ac­tive in the CFIUS re­form leg­is­la­tion, said the draft or­der is “prob­lem­atic” be­cause of its lack of na­tional-se­cu­rity fo­cus.

“This doesn’t mir­ror or fol­low the law,” Mr. Hoek­stra said. “While the draft or­der is pre- lim­i­nary, if it comes out in this fi­nal for­mat, I think there will be con­sid­er­able is­sues [in Congress] with what they’re propos­ing.”

The draft ex­ec­u­tive or­der will pro­vide im­ple­ment­ing rules for the For­eign In­vest­ment and Na­tional Se­cu­rity Act, a re­sponse to the failed bid last year by United Arab Emi­rates-based Dubai Ports World to take over op­er­a­tions at six ma­jor U.S. ports.

The Jus­tice, De­fense and Home­land Se­cur ity de­par tments out­lined their con­cerns that the draft or­der is not se­cur ity-fo­cused, de­spite the re­quire­ment of the law. The three agen­cies listed 11 is­sues and rec­om­men­da­tions to cor­rect the draft or­der so it re­flects na­tional-se­cu­rity con­cerns.

In the Se­nate, a spokesman for Sen. Richard C. Shelby, Alabama Repub­li­can and rank­ing mem­ber of the bank­ing com­mit­tee, said the pro­posed im­ple­ment­ing r ules are be­ing watched closely. Jonathan Graf­feo, the spokesman, said it was pre­ma­ture to com­ment on the or­der but noted that “we are be­ing kept abreast of the sit­u­a­tion and will con­tinue to closely mon­i­tor the im­ple­men­ta­tion of the law.”

A Bush ad­min­is­tra­tion na­tional se­cu­rity of­fi­cial said the new or­der, if signed by the pres­i­dent in its cur­rent form, would un­der­mine the cur­rent CFIUS re­view of the planned merger of 3Com and Huawei Tech­nol­ogy. Huawei, a Chi­nese firm that is linked to that coun­try’s mil­i­tary, had been in­volved in vi­o­lat­ing U.N. sanc­tions against Iraq.

Un­der the cur­rent process, Dan Price, the White House deputy na­tional se­cu­rity ad­viser for eco­nomic af­fairs, would have the power to re­solve all is­sues re­lated to the 3Com-Huawei deal over any ob­jec­tions from se­cu­rity agen­cies, the of­fi­cial said.

The 3Com deal was sub­mit­ted to CFIUS and is ex­pected to be op­posed by the De­fense, Jus­tice and Home­land Se­cu­rity de­part­ments and some U.S. intelligence agen­cies over con­cerns that the merger will boost Chi­nese mil­i­tary com­puter net­work at­tack op­er­a­tions, de­fense of­fi­cials said.

Trea­sury Sec­re­tary Henry M. Paul­son Jr. was forced to re­cuse him­self from the CFIUS re­view of the merger, which also in­cludes Bain Cap­i­tal Part­ners, be­cause Mr. Paul­son’s for­mer firm, Gold­man Sachs, is ad­vis­ing 3Com.

White House spokesman Tony Fratto had no com­ment on Nov. 6.

Mrs. Maloney said Trea­sury of­fi­cials have been asked to “come up to Capi­tol Hill and ex­plain to me in per­son what is go­ing on with the im­ple­men­ta­tion of the new CFIUS law.”

“It was Congress’ in­tent that this law be quickly im­ple­mented,” she said. “And, if the ad­min­is­tra­tion is im­ped­ing that, we need to find out why.”

S. A. Miller con­trib­uted to this re­port.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.