Friday, April 14, 2006

Bush to make decision on Dubai defense purchase

Bush to make decision on Dubai defense purchase
By Jim Wolf

WASHINGTON (Reuters) - A U.S. panel that reviews foreign investments behind closed doors was sending President George W. Bush a recommendation on Thursday on a Dubai-owned company's proposed $1.24 billion takeover of Doncasters, a British group with U.S. plants that supply the military.

The recommendation, from the inter-agency Committee on Foreign Investments in the United States (CFIUS) was going to Bush for review and a decision, said Frederick Jones, a spokesman for the White House national security council.

Bush's decision, due in 15 days, follows a congressional uproar over security fears that scuttled another Dubai state-owned company's plan to acquire operations at six major U.S. ports.

Jones disclosed no details of the recommendation from CFIUS, which weighs security implications of foreign acquisitions of U.S. firms.

Bush "will thoroughly review the findings and recommendations of CFIUS, he will make a determination within the 15-day period and send a report to Congress as required by statute," he said.

Among Doncasters' units is a plant that is the sole supplier of turbine fan parts for U.S. Abrams battle tanks, according to a spokesman for Rep. John Barrow, a Georgia Democrat who represents a district that is home to the plant.

CFIUS is chaired by the Treasury Department and includes representatives from the Departments of Defense, Homeland Security, State, Commerce, Justice, and other agencies.

Congressional critics have launched a drive to give lawmakers some oversight of the review process. The Treasury had no comment on the Doncasters review.

By law, the president has the authority to block foreign acquisitions and mergers involving U.S.-based firms if they are deemed to present credible threats to U.S. national security.

Dubai International Capital said in a statement on Thursday that the parties expected to close the acquisition following "successful completion of all reviews." The company did not immediately return a phone call seeking further comment.

Dubai Ports World opted last month to transfer terminal operations at the six U.S. ports in question to a U.S. entity after a bipartisan furor over security fears.

The administration had approved DP World's $6.85 billion purchase of London-based Peninsular and Oriental Steam Navigation Co. in January without the matter having gone to an extended, 45-day, security review. Without the extended review, the matter did not rise to Bush as the Doncasters deal has.

(Additional reporting by Tabassum Zakaria)