Reuters
Senate bill seeks oversight of foreign takeovers
By Susan Cornwell
WASHINGTON (Reuters) - The head of the Senate Banking Committee proposed on Friday to give Congress more oversight of foreign acquisitions of U.S. companies, but stopped short of saying lawmakers should have the power to veto deals.
The executive branch of the U.S. government currently dominates the review approval process, a system that backfired badly on the Bush administration when Republican lawmakers objected to an approved contract under which an Arab company was to manage operations at U.S. seaports.
After an uproar in Congress over the possible national security implications of the Dubai Ports World deal, the company this month said it would sell the U.S. assets it had just acquired to a U.S. buyer.
Richard Shelby, an Alabama Republican who heads the Senate's banking panel, set out draft legislation on Friday that would require administration officials to report to Congress that they are reviewing such proposed deals.
The leaders of both parties in both houses of Congress, as well as heads of key committees, would be notified within 10 days of the start of a contract's review by the inter-agency Committee on Foreign Investments in the United States (CFIUS). The panel, which vets contracts for national security concerns, normally completes it works within 30 days.
Shelby backed away from an option to let Congress overturn deals that get CFIUS approval. The White House and the U.S. business community opposed such a provision, saying it could scare away foreign investment.
A spokesman said Shelby sought to balance lawmakers' oversight, concerns for national security and "undue uncertainty" that could discourage foreign investors.
The bill, to be voted on in Shelby's panel next week, would require longer, 45-day CFIUS reviews of deals involving foreign state-owned companies or "critical" U.S. infrastructure.
It would make the Defense Department the vice chair of CFIUS. The panel is chaired by Treasury and has a number of other departments represented, including Homeland Security and State. The bill also makes the director of national intelligence a formal member of the CFIUS panel.
David Marchick, a lawyer at Covington and Burling who has represented companies seeking CFIUS approval, said there was "relief" in the business community that Shelby had not proposed a congressional veto over foreign takeovers.
"But it's still a very, very tough bill, that reflects the very difficult political environment on Capitol Hill," Marchick told Reuters.
Marchik said requiring 45-day reviews of deals that involve "critical" U.S. infrastructure could affect most proposed acquisitions considered by CFIUS.
Further, he said, the requirement that Congress be notified of all proposed transactions just 10 days into the review would create "a risk of greater politicization" of the process.
The draft bill says CFIUS should rank countries according to their nonproliferation control regimes, ties with the United States, and potential for transshipments of militarily-sensitive technologies. These rankings would be considered in all subsequent reviews.
There are other proposals on CFIUS already in Congress. Sen. Susan Collins, head of the Senate Homeland Security Committee and a Maine Republican, has called for the review of foreign takeovers to be headed by the Department of Homeland Security. Shelby opposes that idea, his spokesman said.
In the House, Missouri Republican Rep. Roy Blunt is working on CFIUS legislation as well, but the Senate is expected to move first. Rep. Duncan Hunter, a California Republican, has introduced legislation to require U.S. ownership of all infrastructure deemed critical to national security.