Or­der would ease for­eign busi­ness se­cu­rity

The Washington Times Weekly - - National - By Bill Gertz

A draft pres­i­den­tial or­der on for­eign in­vest­ment in U.S. com­pa­nies would limit gov­ern­ment se­cu­rity re­views and give more power to such pro-busi­ness agen­cies as the Trea­sury De­part­ment, The Wash­ing­ton Times has learned.

The draft or­der is op­posed by the De­fense, Jus­tice and Home­land Se­cu­rity de­part­ments as con­trary to the in­tent of a law cre­ated in re­sponse to the up­roar that killed a bid by a United Arab Emi­rates com­pany to op­er­ate sev­eral U.S. ports.

A mem­o­ran­dum sub­mit­ted to Trea­sury by the op­pos­ing de­part­ments stated that the new leg­is­la­tion is “se­cu­rity fo­cused” but that the draft ex­ec­u­tive or­der for the re­struc­tur­ing of the Com­mit­tee on For­eign In­vest­ment in the United States (CFIUS) does not give their three agen­cies a for­mal lead­ing role in con­duct­ing re­views or in­ves­ti­ga­tions.

Ac­cord­ing to a na­tional se­cu­rity of­fi­cial in­volved in the de­bate, “un­der the pro­posed or­der, Trea­sury will re­serve to it­self the fi­nal power to ap­prove or dis­ap­prove for­eign ac­qui­si­tions and merg­ers.”

The na­tional se­cu­rity of­fi­cial said the mem­o­ran­dum from the three se­cu­rity agen­cies is a con­sen­sus po­si­tion that in­cludes a list of 11 is­sues and rec­om­men­da­tions that should be added to the ex­ec­u­tive or­der to “ac­cu­rately re­flect pro-se­cu­rity in­ter­ests.”

Copies of the draft pres­i­den­tial or­der and the mem­o­ran­dum out­lin­ing the three agen­cies’ con­cerns were ob­tained by The Times.

The pres­i­den­tial or­der would pro­vide im­ple­ment­ing rules for the For­eign In­vest­ment and Na­tional Se­cu­rity Act of 2007, which Pres­i­dent Bush signed July 26. The law was to go into ef­fect on Oct. 24, but en­act­ment has been de­layed by de­bate over the or­der, which the pres­i­dent must sign.

The re­form leg­is­la­tion grew out of last year’s failed bid by Dubai Ports World to take over op­er­a­tions at six ma­jor U.S. ports. The Trea­sury-led CFIUS ini­tially ap­proved the deal, but it was can­celed un­der pres­sure from Congress over con­cerns that ter­ror­ists could in­fil­trate U.S. ports. The law was passed with bi­par­ti­san sup­port to tighten se­cu­rity re­views.

In the past, U.S. se­cu­rity agen­cies in CFIUS could man­date that a for­eign pur­chase of a U.S. com­pany be re­stricted through a writ­ten “mit­i­ga­tion agree­ment.” Such agree­ments have put lim­its on for­eign na­tion­als hold­ing di­rec­tor po­si­tions of U.S. sub­sidiaries, re­quired vet­ting of for­eign em­ploy­ees and put lim­its on ac­cess to sen­si­tive U.S. tech­nol­ogy.

“That ex­ec­u­tive or­der re­jects the sub­mis­sions of se­cu­rity agen­cies and makes po­ten­tial mit­i­ga­tion agree­ments sub­servient to the CFIUS chair­man, who rep­re­sents trade agen­cies that have a much more lib­eral view of what should be per­mit­ted,” the of­fi­cial said.

Mr. Bush de­fended the scut­tled Dubai Ports World deal, and crit­ics say he has used en­abling reg­u­la­tions to coun­ter­act the in­tent of laws he signed but did not sup­port while Congress de­bated them.

Among the le­gal de­tails that give greater author­ity to Trea­sury, Com­merce and other pro-busi­ness agen­cies, the draft or­der would give the Trea­sury sec­re­tary the “sole author­ity” to act on be­half of the CFIUS as its chair­man, in­clud­ing is­su­ing reg­u­la­tions to im­ple­ment the re­form leg­is­la­tion, al­though con­sul­ta­tion would be re­quired.

Among the other is­sues out­lined were ques­tions on how Trea­sury picks an agency to lead a for­eign­pur­chase re­view, fi­nal author­ity over agree­ments that are re­quired to pre­vent the loss of tech­nol­ogy to a for­eign com­pany as a con­di­tion of the for­eign pur­chase and mon­i­tor­ing fi­nal mit­i­ga­tion agree­ments.

The agen­cies also iden­ti­fied weak­nesses in the le­gal re­quire­ment for threat as­sess­ments to be done by the Of­fice of the Di­rec­tor of Na­tional Intelligence (DNI). The mem­o­ran­dum said the DNI is lim­ited to as­sess­ing threats posed by a for­eign pur­chase. Any gov­ern­ment agency should be al­lowed to pro­duce other risk as­sess­ments that in­clude re­views of “vul­ner­a­bil­i­ties” and “con­se­quences” likely to re­sult from a for­eign pur­chase, the agen­cies stated.

White House spokesman Tony Fratto at first de­nied that the new ex­ec­u­tive or­der would limit the author­ity of U.S. se­cu­rity agen­cies. How­ever, when asked to com­ment on the spe­cific lan­guage of the draft or­der, Mr. Fratto de­clined to com­ment, say­ing he could not talk about in­ter­nal gov­ern­ment dis­cus­sions.

“The CFIUS com­mit­tee al­ways works by con­sen­sus,” Mr. Fratto said. “If there is no con­sen­sus, the mat­ter then goes to the pres­i­dent.”

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