Congress pushes ahead on security review reform
By Jeremy Pelofsky
WASHINGTON (Reuters) – U.S. lawmakers said on Friday they
would press ahead to reform how the government reviews foreign
acquisitions even after Dubai Ports World gave up management of
some U.S. port terminals it recently bought.
The Senate Banking Committee said it planned to vote during
the week of March 27 on legislation to improve oversight and
openness of the Committee on Foreign Investment in the United
States, or CFIUS, which approved the deal.
“Clearly there are deficiencies in the way that CFIUS
operates,” said committee spokesman Andrew Gray. “We want to
look at the different proposals on CFIUS, see what’s do-able
and what’s not, and try to get as much support as possible and
move it through.”
CFIUS is led by the U.S. Treasury and has 12 government
representatives, including the departments of Homeland
Security, Defense and State. But numerous lawmakers have said
the process is inadequate.
Senate Banking Committee Chairman Richard Shelby, an
Alabama Republican, wants to explicitly require extended
reviews of deals involving state-owned companies such as DP
World and boost congressional oversight by requiring reports
and notification, Gray said.
Sen. Robert Menendez, a New Jersey Democrat, has offered a
measure that would require CFIUS to notify Congress about its
investigations and for public comment periods on deals.
Democratic Sen. Charles Schumer of New York also called for
“I look forward to working with my colleagues on the
Banking Committee to make sure that CFIUS puts national
security above robust global trade,” Schumer said.
JUST ONE REJECTION
Sen. Susan Collins, head of the Senate Homeland Security
and Governmental Affairs Committee and a Maine Republican, has
called for CFIUS to be headed by the Department of Homeland
CFIUS reviews for 30 days any takeover of U.S. assets by a
foreign company, like telecommunications, oil operations and
transportation assets. Sometimes agreements are negotiated to
address security concerns.
If any CFIUS member raises concerns, the review can be
extended into a 45-day investigation. After that period, the
president has 15 days to decide whether to block or permit it.
CFIUS rejected only one deal among the 1,500 it has
reviewed since 1988, and just 25 deals required a 45-day
review. DP World did not go to an extended investigation
initially but asked for one after congressional opposition
“Congress has to thread the needle in terms of ensuring
they have confidence in the CFIUS process and national security
is protected while not chilling the foreign investment that we
want,” said David Marchick, a lawyer at Covington & Burling who
has represented companies seeking CFIUS approval.
The Bush administration has defended its review of the DP
World transaction but admitted it should have done more to
inform Congress about its action. On Thursday the company
decided to abandon its takeover of the U.S. assets.
The UAE company said it would transfer the ports to a U.S.
entity at the behest of Dubai’s ruler, to allay concerns the
deal posed a threat to American national security. Details of
the transfer were not outlined.
The administration also has acknowledged the process could
“This process for review I think can be done better and
we’re going to be working with Congress, with people like
Chairman Shelby of the Banking Committee, to make sure that we
improve the process,” U.S. Treasury Secretary John Snow said.
(Additional reporting by Richard Cowan, Susan Cornwell and