[Senate Hearing 109-782]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-782
                       UNITED ARAB EMIRATES (UAE)



                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION


                           FEBRUARY 23, 2006


         Printed for the use of the Committee on Armed Services

                     U.S. GOVERNMENT PRINTING OFFICE
32-744 PDF                 WASHINGTON DC:  2008
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001


                      COMMITTEE ON ARMED SERVICES

                    JOHN WARNER, Virginia, Chairman

JOHN McCAIN, Arizona                 CARL LEVIN, Michigan
JAMES M. INHOFE, Oklahoma            EDWARD M. KENNEDY, Massachusetts
PAT ROBERTS, Kansas                  ROBERT C. BYRD, West Virginia
JEFF SESSIONS, Alabama               JOSEPH I. LIEBERMAN, Connecticut
SUSAN M. COLLINS, Maine              JACK REED, Rhode Island
JOHN ENSIGN, Nevada                  DANIEL K. AKAKA, Hawaii
JAMES M. TALENT, Missouri            BILL NELSON, Florida
SAXBY CHAMBLISS, Georgia             E. BENJAMIN NELSON, Nebraska
LINDSEY O. GRAHAM, South Carolina    MARK DAYTON, Minnesota
ELIZABETH DOLE, North Carolina       EVAN BAYH, Indiana
JOHN CORNYN, Texas                   HILLARY RODHAM CLINTON, New York
JOHN THUNE, South Dakota

                    Charles S. Abell, Staff Director

             Richard D. DeBobes, Democratic Staff Director



                            C O N T E N T S



     Briefing by Representatives from the Departments and Agencies 
Represented on the Committee on Foreign Investment in the United States 
     (CFIUS) to Discuss the National Security Implications of the 
Acquisition of Peninsular and Oriental Steamship Navigation Company by 
   Dubai Ports World, a Government-Owned and -Controlled Firm of the 
                       United Arab Emirates (UAE)

                           february 23, 2006


England, Hon. Gordon, Deputy Secretary of Defense, U.S. 
  Department of Defense; Accompanied by Peter Flory, Assistant 
  Secretary of Defense for International Security Policy.........     8
Joseph, Hon. Robert, Under Secretary for Arms Control and 
  International Security, U.S. Department of State; Accompanied 
  by Anthony Wayne, Assistant Secretary, Bureau of Economic and 
  Business Affairs, Department of State..........................    10
Kimmitt, Hon. Robert, Deputy Secretary of Treasury, U.S. 
  Department of the Treasury; Accompanied by Clay Lowery, 
  Assistant Secretary for International Affairs, Department of 
  the Treasury...................................................    10
Jackson, Hon. Michael, Deputy Secretary, U.S. Department of 
  Homeland Security; Accompanied by RADM Thomas Gilmour, USCG, 
  Assistant Commandant for Prevention, Department of Homeland 
  Security; Stewart Baker, Assistant Secretary for Policy, 
  Department of Homeland Security; and Jayson Ahern, Assistant 
  Commissioner, Office of Field Operations, U.S. Customs and 
  Border Protection, Department of Homeland Security.............    13


                       UNITED ARAB EMIRATES (UAE)


                      THURSDAY, FEBRUARY 23, 2006

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 11:01 a.m. in 
room SD-106, Dirksen Senate Office Building, Senator John 
Warner (chairman) presiding.
    Committee members present: Senators Warner, Levin, Kennedy, 
Byrd, and Clinton.
    Committee staff members present: Charles S. Abell, staff 
director; Leah C. Brewer, nominations and hearings clerk; and 
John H. Quirk V, security clerk.
    Majority staff members present: William C. Greenwalt, 
professional staff member; Ambrose R. Hock, professional staff 
member; Gregory T. Kiley, professional staff member; Sandra E. 
Luff, professional staff member; Elaine A. McCusker, 
professional staff member; Lucian L. Niemeyer, professional 
staff member; Lynn F. Rusten, professional staff member; and 
Sean G. Stackley, professional staff member.
    Minority staff members present: Richard D. DeBobes, 
Democratic staff director; Evelyn N. Farkas, professional staff 
member; and Creighton Greene, professional staff member.
    Staff assistant present: Benjamin L. Rubin.
    Committee members' assistants present: Susan Magill and 
Cord Sterling, assistants to Senator Warner; Jeremy Shull, 
assistant to Senator Inhofe; Meredith Beck and Matthew R. 
Rimkunas, assistants to Senator Graham; Russell J. Thomasson, 
assistant to Senator Cornyn; and Stuart C. Mallory, assistant 
to Senator Thune; Mieke Y. Eoyang, assistant to Senator 
Kennedy; Erik Raven, assistant to Senator Byrd; Frederick M. 
Downey, assistant to Senator Lieberman; Darcie Tokioka, 
assistant to Senator Akaka; Eric Pierce, assistant to Senator 
Ben Nelson; and Andrew Shapiro, assistant to Senator Clinton.


    Chairman Warner. The briefing will now commence.
    Two days ago, I went over to the Department of Defense 
(DOD) and visited with the Secretary and the Deputy Secretary, 
who joins us here this morning, and the Chairman of the Joint 
Chiefs of Staff, regarding this port matter. I was carefully 
following, as all of us were, the intensity of public interest. 
In the course of the briefing, we consulted with Secretary 
Kimmitt, who has also joined us here this morning, on the 
telephone in that meeting. At the conclusion, I said that my 
best advice was that there's a need to get out, and get out 
promptly, a full and complete factual picture of what took 
place by way of the process of decision. Quite frankly, I 
offered some observations what did not, in my judgment, take 
    In the ensuing 48 hours, I made the decision to do this as 
a briefing, for the reason that so many of our colleagues are, 
understandably, on the recess period, back in their respective 
States, or otherwise engaged, and that, in consultation with 
Senator Levin, we would determine, next week, as to whether or 
not this committee would once again come together for a formal 
    I also made the decision that I would not have the 
principal Cabinet officers themselves here this morning, out of 
deference to the other committees of the Senate which have 
expressed an interest in having their own hearings. I know the 
Senate Banking Committee is contemplating one. The Homeland 
Security Committee, which I sit on, together with Senator 
Levin, likewise is having one. They all have indicated that the 
Cabinet officers would be there. But I felt that this very 
distinguished array of witnesses we have this morning would 
give an adequate opportunity for all the facts to be heard.
    I also made the unusual decision that we'd have this 
configuration, such that, at the conclusion of the briefing and 
the questions and answers from members to the witnesses, we 
could then establish a routine by which press who desire to ask 
questions could do so. Having now, for 28 years, been in this 
room for hearings and tried to manage press availabilities in 
the hallway, I said this subject is entirely too important than 
to try and do those hallway press conferences. So, this is the 
reason for this set-up. I take full responsibility.
    With that, I welcome everybody here, and particularly my 
colleagues who have joined, Senator Levin, Senator Kennedy, I 
believe, is going to come, and Senator Clinton.
    We meet today with regard to the pending acquisition of the 
Peninsula and Oriental Steamship Navigation Company (P&O) by 
Dubai Ports (DP) World, a government-owned and -controlled firm 
of the United Arab Emirates (UAE). We'll discuss the specifics 
of this case, and seek some clarity here in this open forum. 
We'll try to ensure that the relevant facts be put forth on the 
record. It's important that this record be compiled now for 
Members of Congress who are actively engaged in their home 
districts with the debate on this subject--to determine what 
deliberations occurred pursuant to section 721 of Public Law 
100-418, as well as what coordination took place to ensure for 
the continuing safeguard and protection of the ports, their 
cargo, and their surrounding communities.
    In my press statements over the last few days, I have 
stressed the need to get the facts out in the public domain. 
This morning, the President, at a meeting of the Cabinet, 
further stressed, wholeheartedly, the importance of getting 
those facts out. This briefing today will help facilitate that.
    Senator McCain, a valued colleague who is on this committee 
made a similar observation here to those that I have made, and 
I quote him, ``We all need to take a moment and not to rush to 
judgment on this matter without knowing all the facts. The 
President's leadership has earned our trust in the war on 
terror, and surely his administration deserves the presumption 
that they would not sell our security short. Dubai has 
cooperated with us in the war on terror, and deserves to be 
treated respectfully. In other words,' McCain concluded, `let's 
make a judgment when we possess all the pertinent facts.'' I 
certainly concur, and have concurred publicly, with similar 
    To accomplish our oversight, we must discuss a very 
important interagency organization whose charter is to oversee 
the foreign acquisitions of U.S. companies and determine 
whether a particular acquisition has national security 
implications. That organization is called the Committee on 
Foreign Investment in the United States (CFIUS). Although CFIUS 
was codified by Congress in 1988, the history of this type of 
review by successive administrations goes back for over 50 
years. It's interesting, since 1988 about 1,500 cases have been 
handled. It seems that this structure has served our country 
    Briefing us today are some of the leaders that represent 
agencies that are members of the CFIUS. These public servants 
bring a wealth of experience and knowledge to their positions. 
I'd like to briefly introduce each member of our panel.
    The Deputy Secretary of Treasury is Robert Kimmitt, former 
Ambassador to Germany, General Counsel to the U.S. Treasury 
Department, and a distinguished veteran of the Vietnam war.
    The Deputy Secretary of Defense is Gordon England, whom I 
have known for many years and worked very closely with, a 
former Secretary of the Navy, and he served as the first Deputy 
Secretary of the Department of Homeland Security prior to 
returning to the DOD.
    The Under Secretary for Arms Control and International 
Security, Department of State, is Robert Joseph. Secretary 
Joseph held a private meeting in S-407 the other day, and I 
think I, and many others, were very impressed with the depth of 
your knowledge on Iraq and Afghanistan and those trouble-spots 
in the world.
    Further, we have the Deputy Secretary of Homeland Security, 
Michael P. Jackson, who also served as a former Deputy 
Secretary of the Department of Transportation.
    Before we begin, I think it's important to recognize that 
every single one of us in this room, and all across the United 
States--most importantly, our President--shares the same goal: 
ensuring our national security. It's important to recognize 
that, in my view, the United Arab Emirates (UAE) has played a 
key role in working with the United States in the war on 
terror. For example, the UAE provides the largest number of 
port calls by our naval ships and our merchant ships. Their 
airfields have been made available for our military aircraft in 
missions in both Afghanistan and Iraq. So, while we must always 
ensure that any proposed foreign acquisition does not threaten 
our national security, we must also, as a Nation, ensure that 
just, fair, equitable treatment be given our allies and 
coalition partners in a wide range of transactions.
    I'd like to end with a quote from our President, who said, 
``If there was any chance that this transaction would 
jeopardize the security of the United States, it would not go 
forward.'' I share that sentiment. I'm very supportive of the 
President's objectives.
    Senator Levin.


    Senator Levin. One of America's greatest vulnerabilities in 
defending against terrorist attacks is our ports. With over 11 
million containers coming into our ports every year--95 percent 
of which are never opened or inspected--port security probably 
leads the list of our Nation's Achilles' heels.
    At the same time, it's been a constant struggle to devote 
adequate funds to strengthen port security. According to the 
Wall Street Journal, while $18 billion has been spent on 
airport security since September 11, the amount spent on port 
security has been only $630 million.
    Now we discover through the media that the administration 
has approved transfer of ownership of port facilities at six 
major U.S. ports to a company owned by the Government of Dubai 
in the United Arab Emirates. This decision was made without any 
consultation with Congress.
    The UAE has had an uneven history when it comes to the war 
on terrorism. On the one hand, the UAE was apparently one of 
only a handful of countries in the world to recognize the 
Taliban regime in Afghanistan, whose support of Osama bin Laden 
and al Qaeda led to the events of September 11. Millions of 
dollars in al Qaeda funds went through UAE financial 
institutions. The Pakistani nuclear scientist A.Q. Khan 
reportedly used the UAE as a clandestine transhipment point for 
nuclear-related materials to Libya and Iran.
    On the other hand, as the chairman mentioned, the UAE has 
provided the U.S. with access to its ports and territory, 
overflight clearances, and logistical assistance for our 
military forces in the region. UAE ports host more U.S. Navy 
ships than any port in the world outside of the United States.
    What is deeply troubling to me about this proposed sale is 
the combination of one of America's greatest vulnerabilities to 
terrorist attack--our ports--with what appears to me to be a 
casual approach to reviewing the sale of U.S. port facilities 
to a country with an uneven record of combating terrorism. This 
approach has been so casual that the President, as well as the 
Secretary of the Treasury, who chairs the Committee on Foreign 
Investment in the United States and the Secretary of Defense, 
who serves on the committee, learned of the U.S. Government's 
approval of the sale the same way that Congress did--after the 
fact, through media reports. America's port security is too 
critical to be subjected to this kind of casual approach. 
Managing U.S. port facilities enables a company's employees to 
more easily obtain visas, driver's licenses, and bank accounts 
that open a window of vulnerability that could be exploited. 
The events of September 11 demonstrate that America is entitled 
to total confidence that a country allowed to acquire assets 
that are key to our security is as committed as we are to 
combating terrorism.
    With some decisions, we have to weigh risks. Port security 
is one area where it is not in our national security interest 
to accept any arrangement that might increase our already 
substantial risks and vulnerabilities.
    The administration assures us that the pros and cons of 
this sale have been weighed and the sale should go forward. But 
as I indicated, we now know that the most senior levels of the 
administration learned of this decision in the last few days by 
hearing about it in the media. As so often happens around here, 
the administration now seeks to avoid the checks and balances 
of congressional involvement. The White House Press Secretary 
recently said that, ``On hindsight, perhaps Congress should 
have been notified sooner.'' We weren't notified at all, unless 
watching CNN and reading the morning paper constitute 
notification. More to the point, Congress should have been 
consulted, and not merely notified.
    The President's threat to veto any legislation that even 
delays this sale in order to give Congress more time to analyze 
it shows how out of touch the administration is with the 
public's and Congress's legitimate concerns about the 
vulnerabilities of our ports. It also demonstrates presidential 
disdain for outside views, in general, and congressional views, 
in particular.
    Thank you, Mr. Chairman.
    Chairman Warner. Thank you, Senator Levin.
    Senator Kennedy.
    Senator Kennedy. Thank you very much, Mr. Chairman--and I 
thank you, Senator Levin--for holding this briefing today. I 
thank all of our witnesses for appearing before the committee.
    The question that must be addressed is whether, and how, 
national security was factored into this decision at every 
stage. The American people need to have confidence that the 
port deal won't undermine national security and that the 
administration isn't outsourcing our national security.
    The administration isn't known for its competence in 
handling critical situations. The only surprise is that the 
administration is surprised by the intense reaction of the 
American people.
    Nearly 4\1/2\ years after September 11, it's obvious that 
our ports continue to be extremely vulnerable. The 9/11 
Commission warned that terrorists would look for opportunities 
like that to do harm as great or greater than September 11. 
Last December, the 9/11 Commission issued its final report and 
reviewed Federal efforts to implement its recommendations. The 
findings were an alarming indictment of Federal failings. With 
respect to the Nation's ports, it issues grades of D for 
critical infrastructure assessments and cargo screening.
    If terrorists were attempting to sneak a nuclear explosive 
device into this country, they might include it in 1 of the 9 
million containers arriving at our ports every year, 95 percent 
of which go undetected.
    Over the next 10 years, the Coast Guard believes we need at 
least $5.4 billion to secure our ports. That's their estimate, 
the Coast Guard's estimate. Yet the administration is only 
seeking $46 million for port security in 2006, and its recent 
request, for 2007, would actually have eliminated the only 
grant program we have that is dedicated solely towards port 
    If port security is not a top priority for our own 
Government, how can we expect it to be a priority for a foreign 
government? We cannot risk contracting out our national 
security, and we cannot keep nickel-and-diming the Coast Guard 
and port security. We need to finally get serious, and we need 
to get this right.
    Thank you.
    Chairman Warner. Thank you, Senator.
    Senator Clinton.
    Senator Clinton. Thank you, Mr. Chairman.
    Well, I join both Senators Levin and Senator Kennedy, and 
I'm sure, to follow, Senator Byrd, in expressing our deep 
concerns about this decision.
    The CFIUS process has been subject to several critical 
reports in the last several years; most recently, a Government 
Accountability Office (GAO) report last fall which pointed out 
that one of its failures was its inability to focus effectively 
on national security issues as the statute establishing CFIUS 
intended it to do.
    This particular decision by CFIUS raises a number of red 
flags. The reaction that has been forthcoming by people 
throughout our country, I think, is understandable, for three 
    First, we know, from the work of the 9/11 Commission and 
other expert commissions, that port security is one of our weak 
links. We have not funded it adequately. We have not taken it 
seriously. That's a particular concern to me, as a Senator from 
New York.
    Second, we know, from the press reports--and I assume we'll 
get additional information from this briefing--that the process 
used to review this transaction appears to be cursory, at best. 
A number of provisions were not required of the company, and it 
appears, similarly, that the mandatory requirement for an 
additional 45-day review, when the entity involved is 
government-owned, was ignored.
    Third, the track record of this administration on homeland 
security, its inadequate funding, its bureaucratic dysfunction 
at the Department of Homeland Security, as evidenced, most 
tragically, with Hurricane Katrina, but in many other similar 
instances over the last 4\1/2\ years, does not create an 
atmosphere of confidence when looking at this particular 
    Moreover, according to the Associated Press, this 
transaction was approved without many of the ordinary 
conditions that are placed on such investments. The 
administration did not require Dubai Ports to keep copies of 
business records on U.S. soil, where they would be subject to 
court orders. It did not require the company to designate an 
American citizen to accommodate U.S. Government requests. If 
September 11 was a failure of imagination, and Katrina was a 
failure of initiative, this process is a failure of judgment.
    In the post-September 11 world, port security is too 
important an issue to be treated so cavalierly. Only 5 percent 
of the cargo entering the United States is inspected. Every 
expert whose reports I have read suggest we should be closer to 
15 to 20 percent. We have not yet deployed the kind of 
technology that everyone knows we need to. We do not yet have 
the radiation detectors that everyone has called for. According 
to the 9/11 Commission Report, ``While commercial aviation 
remains a possible target, terrorists may turn their attention 
to other modes. Opportunities to do harm are as great, or 
greater, in maritime or surface transportation.''
    Port security is national security, and national security 
is port security. Instead, we have a decision making process 
that did not alert the President, the Secretary of the 
Treasury, the Secretary of Defense that several of our most 
critical ports were about to be transferred to a foreign 
government entity. We've heard, from numerous administration 
spokespeople, that those of us who are raising concerns are 
somehow out of place, because, after all, it was a British 
company that was engaged in these activities selling to the 
Dubai company. For many of us, there is a significant 
difference between a private company and a foreign government 
    Under the Exon-Florio statute, which governs these foreign 
investments and the process that you undertook, if we are at 
all impacting national security, the full 45-day investigation 
of an investment by a foreign government is mandatory if it, 
``affects national security.'' Yet the CFIUS board voted 
unanimously, according to our information, not to conduct an 
investigation that, by my reading of the statute, is required. 
Since DP World is controlled by a foreign government, under the 
statute the transaction requires a 45-day investigation if it 
affects national security.
    Secretary Chertoff has claimed, ``We have a very 
disciplined process--it's a classified process--for reviewing 
any acquisition by a foreign company of assets that we consider 
relevant to national security. That process worked here.'' 
Well, on the face of it, it did not work, because the mandatory 
45-day investigation was not conducted.
    So, Mr. Chairman, there are numerous problems with this 
review process that I think we need answers to. But, in the 
larger context of port security, particularly given the 
problems we've been having with the Department of Homeland 
Security--apparently, the White House is about to issue their 
report about Hurricane Katrina, which, just based on the press 
reports, has to make you cry, because--What is it saying? Guess 
what? We need interoperable communications. Guess what? We need 
command and control. Well, guess what? It's 4\1/2\ years after 
September 11, and many of us have been saying all of that for 
that long. So, it's very troubling that we find ourselves in 
this position. I, for one, hope that there are answers, but, at 
the very least, I hope the 45-day investigation is carried out, 
as required under the statute.
    Chairman Warner. Thank you, Senator Clinton.
    Senator Byrd.
    Senator Byrd. Thank you.
    Mr. Chairman, I authored the 1992 amendment that requires 
these sorts of transactions to be subject to a 45-day 
investigation. This briefing should help to answer the 
questions of why that investigation was not carried out and why 
there was no consultation with Congress.
    I thank you for conducting this hearing. I thank all other 
the members, as well.
    Chairman Warner. Thank you very much, Senator Byrd.
    We'll proceed.
    Secretary Kimmitt, my understanding is that we should start 
with the Deputy Secretary of Defense.
    Again, Secretary England, I thank you and the Secretary for 
meeting with me 2 mornings ago and having an extensive briefing 
on this subject. I think you, at that time, concurred, in my 
observation, it was imperative to get a full set of facts 
before the American public so they could, in an informed way, 
reach their own individual opinions on this. We respect the 
concerns of those that have been expressed so far, but I think 
these facts will help allay some of those concerns.
    Please proceed.


    Secretary England. Senator, I thank you for following up 
after that meeting to provide this venue and opportunity to 
bring more facts and more clarity to this issue.
    First, I do want to provide a perspective from the DOD 
point of view regarding our relationship with the United Arab 
Emirates, because they are a friend and ally of the United 
States, and they do stand side by side with us in this war on 
terror. They provide the United States, and also our coalition 
forces, unprecedented access. We have overflight clearances and 
a lot of logistical support from United Arab Emirates.
    Now, as the Senator commented, we have more of our Navy 
ships in United Arab Emirates than any other port outside the 
United States. Last year in the UAE we had 590 of our military 
sealift command ships in the UAE. We had 56 of our warships in 
their ports. Last year in the UAE we had 203 ships (naval 
warships and Military Sealift command ships) make 502 visits to 
UAE ports in fiscal year 2005. By the way, the port at Jebel 
Ali is managed by Dubai Ports, so we rely on them, frankly, for 
the security of our forces there. There were 75 coalition 
partner ships there. Perhaps more importantly, the most 
important commodity we have here in the United States, we had 
77,000 of our military men and women on leave in the UAE in 
fiscal year 2005. That's average at any given time. So, we rely 
on them for our security in their country. I appreciate and 
thank them for that.
    This close military-to-military relationship includes, by 
the way F-16s, our very latest version, which we share with 
them. They have centers there that we use for training our 
forces. We appreciate all their vital military help.
    Now, Mr. Senator, specifically regarding this transaction, 
first of all, I do want to say that, at the DOD, this review 
definitely was not cursory, and it definitely was not casual. 
Rather, it was in-depth and it was comprehensive. This was 
staffed within the DOD to 17 of our agencies or major 
organizations within the Department. During this review 
process, there were no issues raised by any agency within DOD, 
including our U.S. Transportation Command. That is significant, 
because that was a special review measure we put in place to 
ensure that any military transportation security issue would be 
    For example, as part of the review of these 17 agencies, 
which include the Under Secretary of Defense for Intelligence, 
our Defense Technology Security Administration, which 
eventually approved this transaction. It was approved by the 
United States Army. It was approved by the United States Navy. 
It was approved by the United States Air Force, by the Defense 
Security Service, by the Defense Intelligence Agency, by the 
National Security Agency, by the Defense Information Systems 
Agency, and, as I said, by the U.S. Transportation Command, and 
many others. So, we had a very comprehensive and in-depth 
review of this transaction, and no issues were raised by any of 
those agencies or departments within DOD. My view is, this was 
very clear, it was very comprehensive, it was very direct. We 
are very comfortable with the decision that was made.
    I also want to just comment that, Senator, you've invited 
us to appear before this committee in about 2 weeks and discuss 
our Quadrennial Defense Review, and I thank you for that 
opportunity. In that review, we have pointed out that, in this 
war, this very long war, it is very important that we 
strengthen the bonds of friendship and security with our 
friends and allies around the world, and especially with our 
friends and allies in the Arab world. So, it is important that 
we treat our friends and allies equally and fairly around the 
world, and without discrimination. Otherwise, it will be 
harmful in this war.
    The terrorists want us, they want our Nation to become 
distrustful, they want us to become paranoid and isolationist. 
My view is, we cannot allow this to happen. It needs to be just 
the opposite.
    So, the DOD, again, Senator, did this in-depth and 
comprehensive review. Of course, we were only one part of all 
the agencies, but I believe we did this fully in compliance 
with the law and our responsibilities.
    I thank you for the opportunity for making those comments.
    Chairman Warner. Thank you very much. Mr. Secretary, would 
you introduce your colleague with you?
    Secretary England. Yes. This is Secretary Peter Flory with 
me, and the Defense Technology Security Administration reports 
to Secretary Flory.
    Chairman Warner. Thank you.
    We'll now hear from the Department of State. Secretary 


    Secretary Joseph. Mr. Chairman, thank you very much for the 
invitation to participate today.
    By way of introduction, I would just emphasize that the UAE 
is a longstanding friend of the United States. It has been 
working with us for many years to create a more stable 
political and security environment in the Middle East, a region 
of vital importance to not only the United States, but the 
broader international community.
    As others have stated, the UAE is a key partner in the war 
on terror. It does provide outstanding support to U.S. and 
coalition ground, air, and naval forces in their operations 
involving Iraq. It also provides vital military and political 
support to our efforts in Afghanistan, as well as humanitarian 
support in both Iraq and Afghanistan.
    In addition, I would note that the UAE has worked very 
closely with us to disrupt proliferation activities. For 
example, the UAE was the first state in the Middle East to join 
the Container Security Initiative, which is an effort to screen 
containers destined for the United States. It was also the 
first state in the Middle East to join Megaports, which seeks 
to stop the illicit movement of nuclear and radiological 
    In terms of the process, I can assure you, as well, that 
State has a very rigorous internal review process for CFIUS 
transactions. All transactions are referred to experts in a 
wide number of the bureaus, including the Bureau of 
International Security and Nonproliferation, the Political 
Military Bureau, the Intelligence and Research Bureau, as well 
as all relevant regional bureaus that would be involved in any 
particular transaction.
    In addition, we would also, depending on the transaction, 
bring in other experts. One example is that, on telecom 
transactions and on the DP World case, our office that works 
maritime security issues was fully involved.
    Let me just conclude by noting that Secretary Rice is in 
the UAE today. That is a reflection of our strong partnership, 
our deep relationship. Secretary Rice has made very clear that 
the UAE is a stalwart ally of ours and that this deal does 
serve our national interests.
    Thank you.
    Chairman Warner. Thank you very much.
    Secretary Kimmitt.

                          THE TREASURY

    Secretary Kimmitt. Thank you, Mr. Chairman and members of 
the committee, for this opportunity.
    Building on the comments by Deputy Secretary England and 
Under Secretary Joseph, I would like to discuss the Committee 
on Foreign Investment in the United States, a not-so-secretive 
organization now widely known as CFIUS. I'm joined by Assistant 
Secretary of Treasury Clay Lowery, who chairs CFIUS at the 
policy level, as I do at the deputy's level.
    CFIUS is an interagency group comprised of the Departments 
of the Treasury, State, Defense, Justice, Commerce, and 
Homeland Security, and six White House offices, including the 
National Security Council, National Economic Council, and U.S. 
Trade Representative.
    The committee was established by executive order in 1975 to 
evaluate the impact of foreign investment in the United States. 
In 1988, Congress passed the Exon-Florio amendment, which, as 
Senator Byrd noted, was amended in 1992, empowering the 
President to suspend or prohibit any foreign acquisition of 
U.S. corporation if the acquisition is determined to threaten 
U.S. national security.
    CFIUS has evolved over time to keep pace with changes in 
the concept of national security. For example, following 
September 11, the newly created Department of Homeland Security 
(DHS) was added to the committee, and DHS has played a primary 
role in reviewing many transactions, including the case at 
hand. Further, agencies that are not formal members of the 
CFIUS are often called upon to lend their expertise.
    CFIUS operates through a process in which Treasury, as 
chair, receives notices of transactions and coordinates the 
interagency process. Upon receipt of a filing, CFIUS staff 
conduct a 30-day review, during which each CFIUS member 
examines the national security implications of the transaction. 
In addition, the Intelligence Community Acquisition Risk 
Center, which is an office under the Director of National 
Intelligence (DNI), provides an assessment of the foreign 
    All CFIUS decisions are made by consensus. Any agency that 
identifies a potential threat to national security has an 
obligation to raise those concerns within the review process. 
If any member of CFIUS raises a national security concern, then 
the case goes to an extended 45-day investigation period.
    Let me turn now to the DP World review. In contract to some 
accounts, the DP World transaction was not rushed through the 
review process in early February. On October 17, 2005, lawyers 
for DP World and P&O informally approached Treasury staff to 
discuss the preliminary stages of the transaction. This type of 
informal contact enables CFIUS staff to identify potential 
issues before the review process formally begins. In this case, 
Treasury staff identified port security as the primary issue, 
and immediately directed the companies to DHS.
    On November 2, Treasury staff requested an intelligence 
assessment from the DNI. Treasury received this assessment on 
December 5th and circulated it to the staff members of CFIUS.
    On December 6, staff from all agencies on CFIUS met with 
company officials to review the transaction and to request 
additional information. Ten days later, on December 16, after 
almost 2 months of informal interaction, the companies 
officially filed their formal notice with Treasury, which 
circulated the filing to all CFIUS departments and agencies and 
also to the Departments of Energy and Transportation, because 
of their statutory responsibilities and experience with DP 
World. As Secretary England noted, each Department then 
circulates the information throughout their own Departments.
    During the 30-day review period, members of the CFIUS staff 
were in contact with one another and the companies. As part of 
this process, DHS negotiated an assurances letter that 
addressed port security concerns. The letter was circulated to 
the committee on January 6 for its review. CFIUS, on the basis 
of information that they had received from the companies, 
information that had been generated inside the Government, 
information garnered from the public domain and on the basis of 
the assurances letter, concluded its review on January 17. Far 
from rushing the review, members of the CFIUS staff spent 
nearly 90 days reviewing this transaction.
    Another misperception is that this deal was conducted in 
secret. Although the Exon-Florio statute requires us to 
safeguard business-confidential information while the 
transaction is pending, these transactions often become public 
through actions taken by the companies. Here, as is often the 
case, the companies issued a press release announcing the 
transaction on November 29, 17 days before their formal filing. 
In addition, beginning in late October, dozens of news articles 
were published regarding this deal, well before CFIUS 
officially concluded its review.
    Mr. Chairman, we believe the CFIUS process worked, from a 
substantive standpoint, and we are not aware of a single 
national security concern raised recently that was not part of 
the CFIUS staff review. However, we respect the oversight 
responsibilities of Congress, and, therefore, think it is 
important to improve the transparency of the CFIUS process to 
Members of Congress.
    After testimony before Chairman Shelby of the Senate 
Banking Committee last October, we initiated more frequent 
briefings on cases that had been cleared by CFIUS. Although 
CFIUS operates under legal restrictions on public disclosures 
regarding pending cases, we have tried to be responsive to 
inquires from Congress. I am open to suggestions on how we can 
foster closer communication on pending cases in the future.
    In closing, Mr. Chairman, let me stress that all members of 
CFIUS understand that their top priority is to protect U.S. 
national security. As President Bush said this morning, ``This 
deal would not be going forward if we were not certain that our 
ports would be secure.''
    Thank you, Mr. Chairman.
    Chairman Warner. Thank you, Mr. Secretary. Would you 
introduce your colleague that you've brought?
    Secretary Kimmitt. Again, this is Assistant Secretary of 
the Treasury for International Affairs, Clay Lowery, who chairs 
the CFIUS Committee at the policy or assistant secretary level.
    Chairman Warner. Secretary Joseph, would you identify your 
colleague and his role?
    Secretary Joseph. Thank you, Mr. Chairman. This is 
Secretary Tony Wayne, who is the Assistant Secretary for the 
Economic Bureau at the State Department. He plays a key role in 
all of these issues.
    Chairman Warner. Fine, thank you.
    Now we'll hear from Secretary Jackson.


    Secretary Jackson. Thank you, Mr. Chairman and members. 
Thank you for having us here today. I appreciate the 
opportunity to elaborate upon this transaction and any 
questions you may have.
    As Deputy Secretary Kimmitt said, we, at DHS, are the 
newest member of the CFIUS community inside the Federal 
Government. We are taking a very aggressive role in that review 
obligation that we have as participants in CFIUS.
    I would echo what my colleagues have said. This transaction 
received a very sustained, professional, and careful review 
within the whole CFIUS group and, in particular, within DHS.
    Our first look at this in a formal way came on October 31, 
after we had been notified by the applicant that there might be 
a transaction such as this. We met with the Justice Department 
and several parts of the DHS to review the contours of this 
deal, and began working on understanding better the issues 
associated with this potential transaction. We met with CFIUS 
in mid-November. As Bob Kimmitt has explained, the process 
itself then took us through January.
    During that time, at the DHS, we involved, in particular, 
the Coast Guard and Customs and Border Protection (CBP). I'll 
introduce three of my colleagues that I've brought with me 
today, Mr. Chairman. Rear Admiral Thomas Gilmour is the 
Assistant Commandant for Marine Safety and Security, and had 
principal responsibilities for our review of this, as well as 
the ongoing security role within Coast Guard. Next, I have 
Assistant Secretary Stewart Baker, who heads our policy shop 
and who has the primary responsibility at the policy level for 
managing our CFIUS review process. Finally, I have Jay Ahern, 
who is our Assistant Commissioner for Field Operations inside 
of CBP. These organizations and others within the Department, 
our legal office and appropriate other parts of the Department, 
all engaged in this process.
    The concerns that I assume that we'll have a chance to 
explore further in response to your questions, sir, will focus, 
in large part, I suspect, on port security and how adequate are 
our protections in this particular transaction.
    Chairman Warner. I would suggest you take the initiative 
now to go into that detail.
    Secretary Jackson. Okay, I'll be happy to launch into that 
and then take any additional questions, sir.
    Since September 11, the Federal Government has made 
dramatic changes and improvements in port security. I'm going 
to try to unpack the various parts of that responsibility, and 
just begin, at the overview level, an understanding of some of 
those material changes and material improvements that we have 
made in port security.
    First, I'll describe the role of the Coast Guard a little 
bit, in that the Coast Guard has the primary responsibility for 
port security. It owns the captain-of-the-port responsibility. 
It owns the overall management of security within a port. Our 
approach to security is a layered systems of systems. We do not 
rely on any one tool, any one person, any one review, any one 
single activity to strengthen our port security adequately. The 
Coast Guard begins by pushing out our review prior to the 
arrival of vessels. It has substantial insight into, and 
assessment of, the arriving ships. That is managed through our 
Intel Coordination Center in Suitland, Maryland. This is a 
facility that involves close integration with the DOD and other 
Intelligence Community assets, as necessary. The principal 
focus is to look at vessels coming in, and the crews on those 
vessels, to make sure that we have an adequate understanding of 
any security risks and problems that may be associated with 
those inbound vessels.
    At the same time, while containers are beginning to be 
loaded onto ships, we have, through a variety of programs, a 
process to look at that freight. That's a responsibility that 
principally resides at CBP. In that arena, we have, since 
September 11, made very significant changes in how we manage 
the screening of inbound cargo. I'll just mention a few parts 
of that.
    First, in our Customs Trade Partnership Against Terrorism 
(CTPAT) participants who are voluntary, over 8,000 companies, 
participate in this. These include shippers, Customs brokers, 
and, in the United States, importantly, terminal operators, 
including P&O facilities. This is a program that is designed to 
bring a security set of measures, everything from physical 
security, background reviews of employees, maintenance of 
records, special training for security officers, notifications 
to the U.S. Government, and ongoing work with the U.S. 
Government to secure the supply chain in a multiplicity of 
    We also have launched the Container Security Initiative 
(CSI) and have a related Megaports program with the Department 
of Energy that focuses, as has already been mentioned, on 
making sure that we protect against radiological materials 
being moved illicitly through the global supply chain.
    So, we have, through the Container Security Initiative, 
pushed out our review of containers inbound. At the present, we 
have 42 locations where Container Security Initiative ports on 
foreign soil have signed up, participated, and agreed to work 
with us in this process. At present, that 42 locations accounts 
for 80 percent of the inbound container traffic. By the end of 
the year, we expect that, with other additions to the CSI 
program, we will have 50 locations, with up to 90 percent of 
the inbound cargo participating.
    Why is this important? It begins with the cargo container 
headed our way, and we have to have notice 24 hours prior to 
the lading. That means that before that container is put up on 
a ship, we have, in these CSI ports, a notification. This goes 
to our National Targeting Center here in Washington, DC, which 
is a hub for analysis based upon past movements and practice, 
intelligence analysis, the history of the container that's 
being moved by the shippers, by the ocean carriers. We do a 
risk analysis. In that analysis, we are screening 100 percent 
of all inbound containers. If we find an anomaly that concerns 
us, prior to departure, prior to loading in the CSI ports, we 
are able to take that container, to run it through various 
evaluation tools and decide whether or not we need to do a 
physical inspection. If we do need to do a physical inspection, 
we do it.
    So, we have, on the inbound, a very considerable new regime 
of container security that's at work. One of the partners in 
this is the DP World in their location in the UAE. They are the 
first of the Mid-East nations to join the Container Security 
Initiative. They are a valued partner. We have had experience 
with them. They are very aggressive in working to cooperate and 
to comply with the rules and the guidance that we have through 
the various measures we've put in place with CSI.
    So, we have had experience in adding to the layers of 
security for ports. When we get a container in the United 
States, if we have not had a chance to inspect it overseas, if 
it is a concern, we immediately take that into account and do 
an inspection with our inspection forces here in the United 
    So, if I can summarize just this portion, what we have is a 
supply chain that is global in nature, which is owned, in very 
large measure, by global corporations operating ships and 
moving freight through a global supply chain. We have, in this 
country, in ports, many foreign-owned corporations operating in 
ports. Our ports are owned by public authorities in the United 
States. Terminals are owned, or leased, typically. There is a 
considerable amount of management from ports that is in foreign 
hands today, as is P&O. So, the terminal operators manage the 
arrival and the inspection and the movement of cargo in and out 
of the port.
    Just to give you a general snapshot, in the 7 ports where 
P&O has their principal operations in the country today, there 
are some 829 different terminals, terminal facilities that move 
freight--offload freight, store freight, move freight. Of 
these, P&O has about 24 terminals in those 7 ports. So, they 
are an important player, but they are certainly not the only 
player in this process.
    When we looked through this transaction, we, therefore, had 
a new set of tools, a growing set of tools, an experience with 
this particular operator, and a confidence that we could work 
with them.
    That being said, we took some additional precautionary 
measures and sought assurances from DP World that they would 
allow us to impose a greater degree of scrutiny than we have 
done on ports and port terminal operators already in existence.
    First, they had to comply with all the security rules that 
the Coast Guard, the captain of the port, and the CBP put in 
place at a port. Then we asked for a variety of considerations, 
which the organization has agreed to, that we would insist, and 
they have agreed, that they continue to participate in the 
Customs Trade Partnership Against Terrorism, they would 
continue to participate in the Container Security Initiative, 
they would assist U.S. law enforcement officials, on demand, 
without a formal subpoena, without a lot of process, in giving 
us information about their terminal operations, their 
employees, their security programs, and any changes in the 
employee base that we sought to look at, on a voluntary basis 
with immediate and swift cooperation with us. They agreed, 
further, that they would maintain P&O's existing security 
policies and procedures at the U.S. facilities. There is, by 
law, a requirement that any significant change in those 
security procedures must be reviewed and approved by the Coast 
Guard. The Coast Guard has the authority to come in and to 
insist upon any additional measures that it thinks must be 
    So, the firm, in addition, agreed, as part of their 
assurances, to operate any facilities that they own or control 
in the U.S. with current U.S. management structure, to the 
extent possible.
    So, we expect a great deal of continuity, and we have the 
capability of having a good deal of visibility into any changes 
in that management, into any changes in that operating process, 
any changes in that structure. We can get those in a timely 
fashion, and we can make any review that's necessary take place 
quickly through the existing rules and authorities that we have 
in the Department.
    So, in sum, I would just say that we have conducted a 
professional, deliberate, and systematic review, that we found 
no objection to this transaction, that we went even further and 
asked that these assurances be provided to us, and the company 
complied with that request.
    We are not bashful at DHS about pushing on CFIUS matters. 
Some of my colleagues who sit around here have firsthand 
experience of DHS pushing in areas where we thought we needed 
to push farther. The structure of this deal led us to believe 
that we have no national-security-interest concerns to its 
going forward.
    Chairman Warner. Mr. Secretary, given that your colleagues 
have specific responsibilities, and it's your representation 
there would be absolute continuity of what's been done in the 
past, in the future, I think it would be well to have on the 
record some opening comments by both the Coast Guard and the 
Customs and Border Security.
    Secretary Jackson. Admiral?
    Admiral Gilmour. Thank you, Senator.
    Chairman Warner. Also, you make reference to the 
``assurances.'' Now, is that a document that will be made 
available to Congress in open, or is there certain classified 
material--I ask both Secretary Kimmitt and Secretary Jackson--
that would be in a classified state?
    Secretary Jackson. It is our intention, actually, to make 
this open. We have some legal work to finish off to make that 
available, but we want to be able to provide that to this 
committee and to have you review it and ask questions about it.
    [The information referred to follows:]

    Exon-Florio prohibits public disclosure of documents and other 
information filed with CFIUS and such information remains subject to 
this statutory prohibition on public disclosure even after the CFIUS 
process is concluded in a particular matter. There is a classified 
portion of the record.

    Chairman Warner. Secretary Kimmitt--and, therefore, all 
information relevant to this transaction will be given to the 
public through the committee or other means.
    Secretary Kimmitt. We will make available as much as we are 
allowed to make public under the law. We can give you more 
under the law than we can make public directly.
    Chairman Warner. So, there'll be a classified segment to 
this record. Is that correct?
    Secretary Kimmitt. There is, as I mentioned, Mr. Chairman, 
always an intelligence assessment that comes from the 
Intelligence Community. That is a classified document. That is 
being briefed today, and has been briefed, to members of the 
Intelligence Committee. I see no reason why it couldn't be made 
available to members of this committee, also.
    Chairman Warner. We'll, accordingly, attach the 
classification to it.
    The assurance agreement, when is the date/time that that's 
likely to be made, to the extent possible?
    Secretary Jackson. I think, today.
    Chairman Warner. Thank you.
    Admiral Gilmour.
    Admiral Gilmour. Thank you, Mr. Chairman. I'll make a very 
brief statement.
    The Coast Guard, as Secretary Jackson said, is the Federal 
agency in charge of the physical security of our ports. We 
follow safety and security of vessels as they arrive, transit 
through the port, and as they moor at the facilities where they 
are destined.
    New authorities given to us since September 11 are the 
Marine Transportation Security Act (MTSA) of 2002, which gives 
us the authority, and we've developed regulations to regulate 
both foreign vessels that come into our ports and domestic 
facilities. Also, the International Ship and Port Facility Code 
was negotiated concurrently with MTSA at the International 
Maritime Organization, and it provides worldwide security of 
vessels and facilities.
    Also, through our MTSA authorities, we were given the 
authority to visit international ports throughout the world to 
ensure that their ports met the international requirements. As 
we have done this around the world, we have visited a number of 
ports in which DP World has facilities, and, indeed, have 
verified that those facilities in the countries we've visited 
do meet the international requirements.
    Thank you.
    Chairman Warner. Please proceed.
    Mr. Ahern. Thank you very much.
    Chairman Warner. Please restate your portfolio of 
responsibility once again.
    Mr. Ahern. Yes, I will. My name is Jay Ahern, and I'm the 
Assistant Commissioner for Field Operations within United 
States Customs and Border Protection. I oversee our 322 ports 
throughout the United States.
    As part of Customs and Border Protection's layered 
strategy, as the Secretary alluded to, I think it's important 
just to elaborate a bit further on that.
    I think it's very important for everyone to realize that 
the ports here in the United States are not the first time the 
United States Government intervenes or interacts with a 
container or a transaction destined for the United States. 
That's particularly so in the maritime model. I think that's an 
example where we have some great programs in place, and we do 
have a very detailed, layered defense that I would like to go 
through some detail.
    It does begin on foreign soil. As was discussed, we do have 
a rule and a requirement that became enacted a couple of years 
ago, the 24-hour rule, where we get detailed manifest 
information that we can then take 24 hours prior to lading a 
vessel in a foreign port to be run through a centralized 
national targeting database here in the United States. We can 
take current intelligence information and expert rule-based 
systems to go ahead and score that particular container for 
risk. Based on those containers, 100 percent of all containers 
destined for the United States are scored and assessed for risk 
before they're placed on a vessel overseas.
    Those containers that pose a risk--in the 42 ports where we 
currently have United States Customs and Border Protection 
officers today, 80 percent of the containers come through those 
ports, as Secretary Jackson alluded to, and any of those 
containers that pose a risk are then worked, with our targeters 
and our officers that are overseas, collaboratively with the 
host country counterpart, who have actually entered into a 
Declaration of Principles with us to do that. If the risk is 
not able to be mitigated or resolved, then we have a process 
where we will work with them to go ahead and do elaborate 
screening, using high-imaging technology to basically X-ray the 
container, and also use radiation detection capabilities to go 
ahead and make sure there's no national security concerns with 
that container before it gets put on a vessel for the United 
    Also, I think it's important to talk about the overseas 
application of the Customs Trade Partnership Against Terrorism. 
As the Deputy Secretary also alluded to, with the number of 
people we have in our CTPAT program, we also go foreign to the 
point of staffing, which is the suppliers, vendors, 
manufacturers premises overseas, where the greatest 
vulnerability exists, in my opinion, where we need to take a 
look at the security practices, the hiring practices to make 
sure that they're compliant with the agreement they've entered 
into under the Customs Trade Partnership Against Terrorism. 
We've actually concluded 1,536 of those, and we have another 
total of 3,389 underway at this point in time to make sure that 
we, again, at the point of greatest vulnerability, at the point 
of staffing, outside the ports in the foreign location, that 
our officers go and assess the risk and take a look at what is 
there for physical requirements of the security of the 
premises, employee background investigation compliance, things 
of that nature, and that's critical for us.
    We also, upon arrival here in the United States, we 
continue to assess the risk of the vessel before it even comes 
into the ports, collaboratively with the Coast Guard. Ninety-
six hours, we go ahead and assess the risk again through an 
electronic notice of arrival. We also continue to get entry 
information on that particular transaction by the commercial 
brokers, who represent the importers, where we then, again, 
assess the risk, as we have the ability then to cross-reference 
entry information and invoice information against the manifest 
information we initially scored.
    So, at this point, we've had at least two or three shots to 
go ahead and assess risk and intervene if there's a critical 
national security risk demonstrated.
    Then, upon arrival here in the United States, Customs and 
Border Protection officers will go out with the Coast Guard if 
there's a risk of vessel, or wait for the containers to be 
offloaded. Those at risk, we take our high-imaging technology 
again, and our radiation detection capabilities again, dockside 
as it's being offloaded, to assess and then to screen that 
container right there.
    An additional layer--and, Senator Clinton, you alluded to 
the radiation portal monitors, and we need to move quicker with 
the deployment of that in our seaports. Certainly, you'll get 
no disagreement from us. We want to move with all deliberate 
speed to get it done. At this point, we have 181 radiation 
portal monitors deployed in our seaports, and that accounts for 
37 percent of the containers that, after we've done all those 
layers that I've spoken to at this point, still receive 
irradiation screening as they're departing the port to enter 
into the commerce of the United States. As we continue to move 
forward through the rest of this year, we'll get up to 294 
radiation portal monitors, which would get 65 percent of the 
containers. Then, as we move forward with the funding we have 
for calendar year 2007, we will get to 80 percent of the 
containers entering the United States through the radiation 
portal monitors.
    So, those are some of the additional layers that we believe 
are important to lay out, because I think it's important to 
circle back to the 5 percent reference that continually gets 
made. Two or 3 years ago, it was 2 percent. I am often asked, 
what is the best percent to look at? It's the right percent. We 
look at 100 percent of every container, the information coming 
into this country, assess that for risk, making sure we focus 
our technology and our resources through a layered approach to 
focus on those containers that pose a significant risk, and not 
to stifle the global trade of this country as we continue to 
facilitate legitimate trade through our ports of entry, but to 
focus on those that pose a risk. We need to continue to hone 
our expert targeting systems and our use of technology and use 
of information to focus our resource and technology on the 
right percentage of containers.
    Chairman Warner. Thank you very much. I thank all of our 
    We'll now proceed to rounds of questions by the members 
present. We will hope to have two rounds. But I'd like to also 
say that the chairman has tried to keep all members of this 
committee informed in the last 48 hours about the open session 
that was taking place, and that if a member was not able to 
attend, they could forward to the committee their questions, 
and they will be put into the record and responded to by the 
appropriate witnesses so that our record is complete.
    Following the two rounds of questions, we will have a press 
availability. Again, I selected this format so that we could do 
it in an orderly and a careful manner, given, I think, the 
sensitivity and the importance of this information. There's a 
microphone on either side here, and, at your own initiatives, 
if you wish to ask a question, members of the press come up, 
identify themselves, and propound the question either to myself 
or any other members who might remain, or, of course, our 
    Now, I'd like to lead off with this point. There was a 
reference made to this investigation of 45 days. That was an 
important point. The word ``mandatory'' was used. As I read the 
statute, it's more or less discretionary. But that discretion 
is exercised, Secretary Kimmitt, if any of the CFIUS members 
decide that it should be done. Perhaps you should clarify that 
procedure and the reason it was not done in this case, your 
    Secretary Kimmitt. Mr. Chairman, your description was an 
accurate description of how we interpret the Byrd amendment. 
First, let me say I have enormous respect for Senator Byrd, not 
least because of the great courtesy he showed after the death 
of my father, who served under then-Majority Leader Byrd as 
Secretary of the Senate.
    Senator, we have a difference of opinion on the 
interpretation of your amendment. It is now a 14-year 
difference of opinion, because this amendment has been 
interpreted by successive administrations since 1992 as being 
discretionary, as the Chairman described, and that is it would 
require a member of CFIUS raising a potential concern for the 
process to move into the 45-day investigative period.
    I would note, again, going to that point of consistency, in 
1997 there was a Singapore Government company called NOL that 
bought an American port operating company called APL. That 
Singapore Government-owned company today operates ports in Los 
Angeles, Oakland, and Seattle. That did not go into the 45-day 
period either.
    What I will say, though, is that we don't suggest at all 
that the amendment is without effect. Quite to the contrary, I 
think our most intensive review, this being one of them, is 
precisely the case when a foreign government-owned or -
controlled company comes before us. I think you'll find there 
is particular scrutiny by the Intelligence Community. I think 
particular scrutiny by the security agencies on the CFIUS 
panel, most especially State, Defense, Justice, and DHS. But we 
do view the amendment as a quite-important one that creates an 
important standard that we have to follow, but we do, as the 
chairman suggests, see it as discretionary.
    Chairman Warner. Fine. Can you state for the record that 
the troubling facts to many citizens in this country--indeed, 
myself--of the UAE's involvement, to the extent with transfer 
of funds at the time of September 11, when, in the 
international banking system, the allegations that they 
facilitated transit of certain nuclear components, and, indeed, 
two individuals, of course, participating in 9/11 had 
citizenship there. Were those facts weighed it the context of 
deciding to have the 45-day, or not to have it?
    Secretary Kimmitt. They were certainly factors that were 
taken into account during the course of the review, Mr. 
Chairman, and particularly taken into account on the assessment 
done by the Intelligence Community.
    Chairman Warner. Secretary Joseph and your colleague, do 
you have anything to add to this?
    Secretary Joseph. No, sir, nothing to add on that point.
    Chairman Warner. All right. Fine, thank you.
    Now, what is the normal procedure of CFIUS with regard to 
advising Congress? I think it's now been pointed out very 
clearly that facts relating to this transaction have been in 
the public domain as early as November. Is that correct?
    Secretary Kimmitt. The first that we can find, Mr. 
Chairman, is in October.
    Chairman Warner. But it's in the public domain. Now, to 
what extent do you, in your normal types of cases, involve 
Congress? Do you talk to the committee staffs, or is there some 
memorandum that's sent up? Was that procedure followed in this 
case? Did not someone intuitively--even though you're not 
elected public officials, you certainly have a feeling for the 
political system, the strong two-party system we have in this 
country--couldn't someone sort of say, ``You know, this looks 
like something we ought to talk to some of the committee 
chairmen about''?
    Secretary Kimmitt. Mr. Chairman, the procedure is that we 
brief Congress regularly on cases that have been cleared by 
CFIUS. By the Exon-Florio statute, there are very strict 
limitations on what we can discuss with regard to pending 
cases. We have taken the position that we can respond to 
requests from Congress for information, but we cannot initiate 
briefings during the pendency of the review, based on the 
statute, as it now reads.
    Chairman Warner. All right.
    Now, my next question, to Secretary England and Secretary 
Joseph. We've clearly established that the UAE is pivotal--I 
think that's the word that perhaps our President may have 
used--but certainly vital in the war on terror, as a partner. 
Now, putting yourself in the position of that nation, proud 
nation that it is, and proud of its participation by way of 
support to the coalition of forces, if this current question 
before both the executive branch and Congress is a full 
partner, so to speak, in this--at this point in time--is 
perceived by them as not fair, not objective, and they decide 
to pull back some of that support, what are the consequences to 
our forces fighting in Afghanistan and Iraq? What is the 
likelihood that other nations giving similar support--Qatar, 
UAE, Kuwait, others--might take notice of this and perhaps 
their support could be somewhat diminished? I'd like to ask 
about those risks and the consequences.
    Secretary England. Senator, I don't believe we've looked at 
that specifically, because, frankly, hopefully that's not going 
to happen. I'm not going to speculate on that. But, as I 
commented, we have, of course, a lot of our ships, people, and 
bases use their ports. So, obviously, it would have some effect 
on us. I care not to quantify that, because I don't have the 
facts to quantify. It would certainly have an effect on us.
    I actually believe the issue, though, is a little larger 
and perhaps more profound than just the military effect. This 
is a very long war, and this is a war not just of military. I 
mean, this is a war of relationships, ideas, and values. In my 
judgment, it is very important that we maintain the friendship 
and the relationships with our friends and allies, and expand 
those--and, as I said before, especially in the Middle East and 
around the world. I believe there is an American sense of value 
here, of fairness, equity, and treating everyone the same, and 
not just putting populations or countries in certain 
classifications. So, I believe this is a question of equality 
and fairness. It is a fundamental value of America. So, my view 
is, this is important, in terms of long-term relationships of 
the United States and how we treat other countries around the 
world. So, I do believe this is a question of equity and 
fairness; and, therefore, it's very important that we respond 
    Chairman Warner. Secretary Joseph, your views? Particularly 
at this very hour, when, in Iraq, we see signs that some are 
interpreting as the brink of civil war, and we superimpose this 
situation on top. I'd like to have your views.
    Secretary Joseph. Mr. Chairman, I do think it's a very 
important question. It's one that's very difficult to answer.
    I can tell you that this issue is now in the Arab media, 
it's in the Arab press. It is being portrayed in the context of 
the cooperation that the UAE has been providing on the war on 
terrorism, as well as in terms of its long-term relationship 
with the United States.
    As Secretary England has said, the war on terror is a long-
term proposition. It is a war that will go on for years, just 
as the war on combating weapons of mass destruction (WMD). In 
that context, I would say that the UAE plays a vital role. It 
has been a major supporter of our efforts to interdict the 
trafficking in weapons of mass destruction and missile-related 
materials. It has played an important role in unraveling the 
activities of the A.Q. Khan network, which was mentioned 
before, and in following up to ensure that all of those who 
were involved in that network are appropriately punished, both 
because of the actions that they took and also because of the 
need to deter others from getting into this business.
    Chairman Warner. Fine.
    My last question, to the Treasury representatives. Given 
that committees of Congress, certainly the Senate--I know of 
two who are going to have hearings; possibly the other body as 
well--what impact will the time that is required to hold these 
hearings have, if any, on the contractual relations with this 
situation? Is there allowance and flexibility to allow these 
hearings to go forward without any impairment in the 
contractual relations?
    Secretary Kimmitt. Mr. Chairman, I don't have an answer to 
that question. I'd have to have our staff contact the companies 
on that point.
    [The information referred to follows:]

    As an official of P&O Ports North America expressed to Congress in 
a letter on June 9, 2006, DP World is taking a range of steps to 
proceed with the planned sale of P&O to a U.S. buyer. The company 
recently provided potential buyers with financial information related 
to the properties. DP World intends to receive ``first round'' bids by 
the end of August. Based on the information that DP World has made 
available to Congress and to the public, and our own ongoing 
discussions with DP World, we believe it remains committed to selling 
its assets as promised.

    Chairman Warner. Well, I think it should be addressed, 
because, speaking for myself, I think it's important that these 
committee hearings go forward, that there be some 
deliberations; otherwise, obviously, some Senators have in mind 
legislation. That would be a time period. I would hope that 
things can remain in place until those steps are taken. As a 
consequence of those steps, I'm hopeful that this thing can be 
    I thank you.
    Senator Levin.
    Senator Levin. Mr. Chairman, first I'd like to offer, for 
the record, a statement of Senator Bill Nelson and ask that 
that be included in the record.
    Chairman Warner. Without objection.
    [The prepared statement of Senator Bill Nelson follows:]

               Prepared Statement by Senator Bill Nelson

    Over the last few days as details emerged about the Dubai company 
taking over operations at several American ports, a number of concerns 
have come to light with the administration's procedures for verifying 
the safety and reliability of these sorts of deals. One of the ports 
that Dubai Ports World would take over in this deal is the Port of 
Miami, so I am obviously very concerned that all precautions are taken 
to ensure that we are not letting our guard down and increasing our 
risk of being hit by terrorists.
    My concern is to ensure that the Port of Miami and all the other 
important American ports are safe and unencumbered. Simply put, do we 
want the ports that supply us with everything from cars to food, to be 
controlled and run as a part of a foreign government, and particularly 
one of only three in the world whose foreign policy was to recognize 
the Taliban?
    Dubai Ports World is wholly owned and controlled by the UAE 
government, so I look at this deal in the context of the United Arab 
Emirates' performance with regards to stopping international terrorism. 
What I have trouble with is a process that raises no flags for a 
country whose legal and financial systems were exploited by A.Q. Khan, 
the Pakistani scientist who supplied nuclear technology to Iran, Libya, 
and North Korea; a country that Mohammed El-Baradei said has a role in 
the nuclear black market; and a country whose banking system was used 
by Osama bin Laden and al Qaeda to finance September 11.
    I am concerned that the system we have for analyzing these deals 
may be too permissive. This deal, in the opinion of the panel, raises 
no difficult questions regarding security, despite the general 
acknowledgment that our port infrastructure is one of the most serious 
weaknesses in our homeland defense. As I understand the approval 
process, a range of defense, intelligence and homeland security 
agencies reviews proposed transactions such as this, and if any of them 
raise concerns the deal goes to an additional 45-day period for 
intensive review. It has been reported that none of the agencies raised 
anything in this case, and so the review period was skipped.
    This whole situation raises serious questions about the vetting of 
international investment transactions, particularly in the case of 
critical national security assets such as ports. Given what we know of 
the deal and the approval process, I oppose allowing it to go through. 
I for one will require a much higher standard of proof before I am 
comfortable with this transaction, and the process that approved it.

    Senator Levin. The 9/11 Commission report had a number of 
critical statements relative to the UAE involving connections 
or links between UAE and terrorists, financing, and a number of 
other critical references that I'd like to ask you about.
    First, this quote from the 9/11 Commission, ``On March 7, 
1999, Richard Clarke, who was the National Counterterrorism 
Coordinator, called a UAE official to express his concerns 
about possible associations between Emirate officials and Osama 
bin Laden.''
    Secretary Joseph, what did Mr. Clarke say about that 
conversation, the response of the UAE when you talked to him 
about this?
    Secretary Joseph. Senator, I don't believe I've ever had a 
conversation with Mr. Clarke about this.
    Senator Levin. Well, then I'm not sure who to ask on this 
panel here.
    Secretary Kimmitt, maybe you know.
    Secretary Kimmitt. Well, Senator, I didn't have a direct 
conversation with Dick Clarke on that subject either. What I 
would say, however, is that the facts that you just referred 
to, plus the facts that have developed since September 11 in 
the relationship with the UAE, as well as the facts associated 
with the company, the acquiror, were looked at very carefully 
by the Intelligence Community.
    Again, going back, if I could, to what Senator Byrd said, 
remember, Senator, anytime a foreign government-owned or -
controlled company comes in, the intelligence assessment is 
both of the country and the company when we take a look at 
that. So, we take a look at the facts, certainly, Senator 
Levin, the historical facts, but also the facts that have 
evolved since then, How has the country responded to those 
instances that you've mentioned?
    Senator Levin. I understand you've looked at the post-
September 11 facts. You've given us your testimony on that. But 
I'm also now asking about the pre-September 11 facts, as to any 
links or relationships between UAE and bin Laden. I'm not 
suggesting they existed. I'm simply saying that, according to 
the 9/11 Commission, the national counterterrorism coordinator 
called a UAE official to express concerns about possible 
associations. I just need to know from some of you what Mr. 
Clarke said. You say, well, you're sure the Intelligence 
Community talked to him. Did you read the intelligence reports?
    Secretary Kimmitt. I read the intelligence reports that 
were prepared on this case.
    Senator Levin. Did they say that they had discussed this 
matter with Mr. Clarke?
    Secretary Kimmitt. I did not see that in the reports.
    Senator Levin. All right. Let me keep going here. It seems 
to me that since the 9/11 Commission made a representation 
about that, that somebody among this group here would have 
talked to Mr. Clarke or be certain that Mr. Clarke was talked 
to about that conversation that the 9/11 Commission found to 
have existed.
    Here's what else the 9/11 Commission said, that the 
``United Arab Emirates was becoming both a''--``both,'' that's 
the key word, ``both''--``a valued counterterrorism ally of the 
United States and a persistent counterterrorism problem.'' It's 
a mixed bag, according to the 9/11 Commission.
    You have given us the one side, where there's a lot of 
evidence that there is an ally here which does some valuable 
things for us, but according to the 9/11 Commission--and we 
haven't had an opportunity to have our staff review the 
underlying facts, because this was called so hastily--but 
according to the 9/11 Commission, there's a ``persistent 
counterterrorism problem'' represented by the United Arab 
    So, did any of you talk to the 9/11 commissioners about 
that representation or finding of theirs? Just raise your hand 
if anybody talked to the 9/11 commissioners. Did anybody talk 
to them? [No response.]
    No, okay.
    Next, the 9/11 Commission said that, ``From 1999 through 
early 2001, the United States and President Clinton personally 
pressed the UAE, one of the Taliban's only travel and financial 
outlets to the outside world, to break off its ties and enforce 
sanctions, especially those relating to flights to and from 
Afghanistan. These efforts achieved little before September 
    Now, did any of you talk to the people who pressed the UAE 
in the Clinton administration to break off its ties with the 
Taliban? Did any of you? If so, give me help here, give me a 
hand. [No response.]
    Okay. So, none of you talked to the Clinton folks, who, 
according to the 9/11 Commission, actually pressed the UAE 
before September 11. Those are critical times, before September 
11. I'm glad that the UAE has taken some steps, apparently 
afterwards, to address some of the antiterrorism needs that the 
world has, but there is some evidence in the 9/11 Commission 
Report that that was not true just not too many years ago.
    Now, I want to read to you a reference one of you made to 
A.Q. Khan, and I want to read to you from a New York Times 
article, which I think summarizes a point on this question, 
that ``the Emirates was also the main transhipment point for 
A.Q. Kahn, the Pakistani nuclear engineer who ran the world's 
largest nuclear proliferation ring from warehouses near the 
port, met Iranian officials there, and shipped centrifuge 
equipment, which can be used to enrich uranium, from there to 
Libya,'' referring here to the port in Dubai.
    Can you expand a little more as to the accuracy of that 
statement in the New York Times of February 22, Secretary 
    Secretary Joseph. Senator, I can tell you that the A.Q. 
Khan network stretched over three continents. It had activities 
in a significant number of countries. Those countries 
included--and this has all been made part of the public 
record--Malaysia, South Africa, Turkey, a number of European 
countries, including the Netherlands, Germany, and Switzerland. 
Yes, the UAE was an important site for A.Q. Khan activities.
    I can also assure you that the UAE authorities have been 
very helpful in unraveling the network and, as I said, in 
pursing those individuals who were taking actions to facilitate 
the work of this network on their territory. They have been a 
very good ally in the effort to combat WMD proliferation.
    Senator Levin. So, you can't comment then on this 
particular statement in the New York Times.
    Secretary Joseph. Senator, I think I just did.
    Senator Levin. No, you said that there were contacts in 
other countries, but that doesn't address this issue as to 
whether there were warehouses in Dubai, and that it was the 
main--the transhipment point for A.Q. Khan, who ran the world's 
largest nuclear proliferation ring from a warehouse--warehouses 
near the port and shipped centrifuge equipment from there to 
Libya. I mean, can you confirm that or deny that?
    Secretary Joseph. Well, I can certainly confirm--and, 
again, it's part of the public record--that large numbers of 
centrifuge parts that were manufactured in Malaysia were 
shipped and did transit Dubai.
    Senator Levin. Finally, on this one issue----
    Secretary Joseph. Senator, if I could----
    Senator Levin. Yes.
    Secretary Joseph. --because I think this is very important, 
the actions that were taken in Dubai led to the interdiction of 
the B.B.C. China, which was carrying parts to Libya, and that 
had a very important role in the Libyan decision to give up 
weapons of mass destruction.
    Senator Levin. Finally, the report in February 2004 that 
President Bush said that A.Q. Khan's deputy was a man named 
Tahir, who ran a business in Dubai, which was a front for the 
proliferation activities of the A.Q. Khan network. Was the 
President accurate in that statement?
    Secretary Joseph. The President was accurate in that 
    Senator Levin. So, his deputy ran a business in Dubai which 
was a front for A.Q. Khan's network.
    Okay, we haven't read the intelligence reports, folks. I 
assume we'll get them. But we have a lot of digging here to do.
    Chairman Warner. Senator Levin, I inquired about the 
intelligence. It was stated that that would be provided to this 
committee before sundown today. Is that correct?
    Secretary Kimmitt. Actually, Mr. Chairman, I think it was 
the assurances letter that was going to be made available.
    Chairman Warner. All right.
    Secretary Kimmitt. The intelligence would be available to 
be brought to you and briefed. I think it's happening with the 
Senate Intelligence Committee today. But I think it could be 
made available to the committee, it would just be a request to 
the National Intelligence Office.
    Chairman Warner. Fine. We'll do that. I'll consult with you 
as to a time that's convenient for our members.
    Senator Kennedy.
    Senator Kennedy. Thank you. Thank you very much, Mr. 
Chairman. I thank our panel.
    As Senator Levin has pointed out, the serious kinds of 
issues and questions about the activities of al Qaeda, one of 
the very significant observations that were made by the 9/11 
Commission, and that was that the areas of most significant 
danger for the United States were its ports, its chemical 
plants, its nuclear power plants, and its subways and tunnels. 
It mentioned all of those areas. In the 9/11 Commission report, 
or in the most recent report, in December 2005, they again 
point out the grade level in terms of port security is down to 
a D. All of us have responsibility in raising that, but it's an 
extremely vulnerable area.
    I'd like to ask the panel, was there any voice of dissent 
in considering the national security issue raised when the 
approval for this application came through? Did anyone on the 
panel raise any national security concerns at all, or was it 
virtually unanimous in the panel that there were no national 
security issues that we should be concerned with?
    Secretary Kimmitt. Senator Kennedy, I think it would be 
fair to describe the process as one that allows all of the 
members of the committee to raise any national security 
concerns that they have, to have those properly addressed on 
the basis of the intelligence information they received, 
information from the companies, and if there is need for either 
further information or further assurances, that could be done. 
But when, on January 17, the committee was asked to make its 
judgment on this proposed acquisition, by consensus, they said 
that there was not a national security concern, in their mind, 
that would require either blocking the deal or sending it to 
    Senator Kennedy. Well, my question is, were there any 
individual members that raised that and voted in ``no'' on 
that. Was this a unanimous vote?
    Secretary Kimmitt. It was a unanimous vote, and, as I said 
in response to the Byrd-amendment question, had it not been, 
then it would have to go into the 45-day review.
    Senator Kennedy. Now, in the definition of the language on 
what is considered on national security, the five different 
criteria, there are those who believe that those five criteria 
are not truly reflective of the kinds of real threats that al 
Qaeda or terrorist organizations might pose, that they are more 
technical, talking about defense production, defense products, 
various materials, technology, and other factors. I'm 
interested in what national security test was really applied at 
the time of the consideration. Was the test just the test that 
is included in these five, or were the issues of the kind of 
threat that al Qaeda is posing and the kind of threats that 
have been mentioned heretofore in the 9/11 Commission that 
Senator Levin had mentioned--were those considered, as well?
    Secretary Kimmitt. Decidedly, the latter, Senator Kennedy. 
Those statutory provisions are the starting point, not the 
ending point, of the national security analysis. Remember, when 
the statute was last amended, we didn't even have a Department 
of Homeland Security. We, at the Treasury Department, didn't 
have an Under Secretary for Terrorism and Financial 
Intelligence. The world has changed.
    I think it's the question everyone on this side of the 
panel--and it's, Mr. Chairman, very unusual to be up here--
struggles with: What is national security? I think we have to 
recognize it can never be defined in the abstract. It's a 
dynamic concept. I think the way this CFIUS process has been 
set up--it's been running this way for 31 years, through 
multiple Democratic and Republican administrations--says that 
``national security'' is defined by the definition brought to 
the table of the representative from each of those departments 
and agencies that is on the committee. These are highly 
dedicated, professional security officials. Many of them, 
Senator Levin, I might say, have been around well before 
September 11. I would imagine that they had direct contact with 
the 9/11 commissioners and others.
    So, the way it works is, people can bring whatever concern 
they have to the table, and unless that concern is addressed, 
not only can we not approve it at the policy level, it has to 
go to a 45-day investigation.
    So, I think the short answer is, if you listen just to the 
kinds of issues that have been brought to the table, they're 
very different than when CFIUS was created in 1975. Exon-Florio 
was passed in 1988, amended in 1992. I would say that the 
definition that we might have of national security today, in 
2006, I think will look a bit out of date even next year. So, 
those are a starting point, but not an ending point, and we 
trust the security professionals to come to the table with any 
concern that they have.
    Senator Kennedy. We have some outstanding individuals doing 
extraordinary jobs. But you're against a background where, as 
we understand, effectively 1,500 of these proposals have been 
approved, and only one has not been approved. We are trying to 
get a sense of what the standard is going to be used and 
whether the standard, in terms of national security, is 
sufficiently high that it's going to clearly override a 
narrower interest, and that is a commercial interest. That, I 
think, is a key issue in this whole debate and discussion.
    Secretary Kimmitt. Senator, if I could just respond to 
    Senator Kennedy. Please.
    Secretary Kimmitt. Again, an excellent point. That's 
exactly the balance. Remember, the CFIUS process and the Exon-
Florio amendment aren't an end unto themselves, they're part of 
a process on how we evaluate these acquisitions. There are many 
other aspects to it. No department or agency gives up its 
fundamental responsibilities for laws related to the national 
    You're right that since 1988 there have been roughly 1,500 
cases notified. Only one has been disapproved by the President. 
But there have been many that have withdrawn because they 
weren't going to be approved. In 1989, just as an example, 
there were 204 notifications. In 2005, there were 65. What's 
happened is people have begun to understand that certain cases 
just are not going to get through. So, they don't even come to 
us. There's a self-selection process. There's actually a CFIUS 
bar--I don't know if they would, these days, admit to that--who 
basically advise companies. So, some of these things are just 
not going to happen.
    So I think when we look at the statistics, you look at the 
fact that, again, this is generated in the private sector, 
these people generally come in early, and very often they find 
it's just not going to happen, or they're told, ``If you're 
going to have an issue, it's going to be with the Department of 
Homeland Security or Justice or Defense. Go work it out with 
them.'' If it can't be worked out, it's not going to go 
forward. It doesn't have to go to presidential decision for the 
deal not to go forward.
    Senator Kennedy. Well, just finally, because my time is 
up--and I appreciate your response--I think the concern that 
you have on issues of national security is, each individual is 
bringing their own definition. We don't have a clear standard 
for oversight so that others could really tell whether they are 
meeting that responsibility and that obligation. That is at 
least a concern of this Senator.
    Thank you, Mr. Chairman.
    Chairman Warner. Thank you, Senator Kennedy.
    Secretary Kimmitt. If I could, Mr. Chairman, just respond. 
They bring, of course, that view of national security based on 
the responsibilities of their departments and agencies set by 
legislation passed by Congress. There are many committees of 
jurisdictions, we're finding out, who have an interest not only 
in this process, but in the national security process.
    Again, though, I think it's going to remain a dynamic 
concept. I think the statute is a starting point, but not an 
ending point.
    Chairman Warner. Thank you.
    Senator Clinton.
    Senator Clinton. Thank you, Mr. Chairman.
    I just want to see, Secretary Kimmitt, if we can nail this 
down. As I read the Treasury Web site, section 837(a), known as 
the Byrd amendment, requires--requires--an investigation in 
cases where the acquiror is controlled by, or acting on behalf 
of, a foreign government. Do you agree that DP World is 
controlled by, or acting on behalf of, a foreign government?
    Secretary Kimmitt. It certainly is owned by a foreign 
government. I don't have the full text of what the Web site 
says. With all due respect to our Web site, I look to the law--
    Senator Clinton. Well, this is quoting the law.
    Secretary Kimmitt.--and the interpretation that's been 
given by our general counsel, which I reconfirmed this morning.
    Senator Clinton. Well, that's fine, but I'm reading the 
language of the law, and the law requires an investigation 
where the acquiror is controlled by, or acting on behalf of a 
foreign government--and I think we can agree that DP World is 
controlled by, it's owned by a foreign government--and the 
acquisition, ``could result in control of a person engaged in 
interstate commerce in the United States that could affect the 
national security of the United States.''
    As I understand your testimony, you're saying that that 
second provision is not met, because no one in the CFIUS 
process, in the administration, thought that this transaction 
could affect--a very low standard; we're not talking about 
damage, we're talking about affect--the national security. Is 
that basically the testimony?
    Secretary Kimmitt. My testimony, Senator, is that the way 
the process has run for 14 years through three administrations 
has been that an agency has to register a national security 
concern before it can go into the investigation. I would say, 
for a State-owned case, it is a lower threshold of concern than 
it would be for a non-State-owned company making an 
acquisition. But we do not see it as mandatory. As the chairman 
said, we have, and administrations have, consistently seen that 
to be discretionary.
    I would also say, because you made the point about the GAO, 
the GAO has done terrific work in this area. They're as 
knowledgeable as anybody in the city about the CFIUS process. 
They have more continuity on this than anyone. This has been a 
subject of review on their part four times. They've never 
endorsed it, but they've never taken exception to our view.
    I think it is just an interpretation difference. But I 
would also say companies are looking for ways to get as much 
information as they can to us prior to making their 
    Senator Clinton. Well, Secretary Kimmitt, I understand the 
point that you have made. You've made it very persistently. But 
the bottom line is that what is discretionary is the 
definition, that this very low standard could affect the 
national security of the United States, in your view, and in 
the view of everyone who participated in this CFIUS process, 
was not met. That is the discretionary element. Because if 
there was a trigger that it could affect the national security, 
then it was mandatory, because you had a government-owned 
entity and the effect on national security. So, clearly the 
bottom line is that, in this CFIUS review, no one from any part 
of the administration raised any issue, including the issues 
that Senator Levin just raised with you, that in any way raised 
a concern about an effect on national security. That is the 
    Secretary Kimmitt. No, Senator, if I may respectfully 
disagree. All of those concerns were raised. All of those 
concerns were addressed. Because they were addressed to the 
satisfaction of individuals who had to make an individual, as 
well as an institutional, judgment that the national security 
interest of the United States was not adversely affected----
    Senator Clinton. It doesn't say ``adversely affected.'' It 
says ``affect.'' It's not even the requirement of ``adverse 
effect.'' It's just ``affect.''
    Secretary Kimmitt.--that based on the interpretation that 
has been consistent since 1992, the members of the CFIUS 
reached the conclusion that they did.
    Senator Clinton. But how many requests for approval have 
come from country-owned entities that were called both a 
problem and an ally, that had a track record that raises 
serious questions about America's national security? There 
haven't been any. I find this kind of a circular argument. The 
bottom line to me is that you looked at all of this, or failed 
to look at all of it, and concluded that it did not affect the 
national security.
    But let me move on. Secretary Jackson, I want to ask you to 
respond to a couple of the public comments that have been made 
by former officials of the Department of Homeland Security.
    Joseph King, who headed the Customs Agency's antiterrorism 
efforts under the Treasury Department and the new Department of 
Homeland Security, said, ``national securities are well 
grounded.'' He said, `` `A company the size of Dubai Ports 
World would be able to get hundreds of visas to relocate 
managers and other employees to the United States. Using 
appeals to Muslim solidarity or threats of violence, al Qaeda 
operatives could force low-level managers to provide some of 
those visas to al Qaeda sympathizers,' said King, who for years 
tracked similar efforts by organized crime to infiltrate ports 
of New York and New Jersey. `Those sympathizers could obtain 
legitimate driver's licenses, work permits, and mortgages that 
could then be used by terrorist operatives.' ''
    Do you agree or disagree with Mr. King's assessment?
    Secretary Jackson. I disagree with Mr. King's assessment.
    Senator Clinton. Why do you disagree?
    Secretary Jackson. Because we have a multiple set of layers 
here. First of all, I believe that there will be substantial 
continuity, and any change in the management that the firm 
would be sending here would be something that we'd have a 
chance to explore in detail and to do very detailed assessments 
and reviews of.
    Second, the process for awarding visas would include 
appropriate reviews that would allow us to explore possible 
linkages to terrorism. That's very much a part of what we do. 
The State Department might care to join in that conversation, 
as well.
    But I believe that we have a set of tools available for us 
to have a great deal of visibility into the personnel 
associated here, and to make sure that you are a lawful 
permanent resident or a U.S. citizen for access to these jobs.
    Senator Clinton. Well, let me ask you this, Secretary 
Jackson. Clark Kent Irvin, who served as the Inspector General 
of the Homeland Security Department from 2003 to 2004, has 
written, in an op-ed published today, ``It is true that at the 
ports run by the Dubai company, Customs officers would continue 
to do any inspection of cargo containers and the Coast Guard 
would remain in charge of port security. But, again, very few 
cargo inspections are conducted, and the Coast Guard merely 
sets standards that ports are to follow, and reviews their 
security plans. Meeting those standards each day is the job of 
the port operators. They are responsible for hiring security 
officers, guarding the cargo, and overseeing its unloading.''
    Secretary Jackson, this is your former Inspector General. 
Do you agree or disagree with what he said?
    Secretary Jackson. I agree, in part, with what he said. I 
disagree with other parts. Let me just unpack that a little 
    I believe that we have much more substantial inspection and 
screening than is suggested by the comments that you read to 
    Senator Clinton. Well, he was your Inspector General. These 
aren't my comments. This is the man who was the Inspector 
General of your Department for 2 years.
    Secretary Jackson. He's writing an op-ed, and he didn't 
have opportunity, or didn't choose to take the opportunity, to 
explain fully the layered security system that both I have 
talked about and that my colleague from CBP has talked about. 
So, the idea that we are passively allowing containers to flood 
through the country without some substantial amount of scrutiny 
is just simply wrongheaded.
    Could we do more? Absolutely. Are we trying to improve and 
deepen and strengthen our tools? Every single day. Secretary 
Chertoff made a commitment, after he finished his initial 
review of the Department's programs in summer of last year, to 
strengthen and deepen, through a program called Secure Freight, 
our review and our analysis of that.
    But I would tell you that quote does disservice to the work 
that the CBP is doing to evaluate inbound cargo.
    Senator Clinton. Finally, if I could ask, Mr. Chairman, was 
the White House coordinator----
    Chairman Warner. We'll have a second round.
    Senator Clinton. Okay.
    Chairman Warner. Could you reserve the question until then?
    Senator Clinton. Okay.
    Chairman Warner. Because I am quite anxious. We, I think, 
had an excellent briefing, thus far. We'll have another round 
of several minutes for each Senator to ask questions, at which 
time you'll be accorded that opportunity. I must say that I am 
impressed with your question on the law. I have sent for the 
statute. I'd like to read it myself, because there is clearly 
that phrase ``the acquisition results in control of a person 
engaged in interstate commerce in the United States that 
could''--I repeat, ``could affect the national security.''
    In that context, Secretary Kimmitt--I think we've been over 
it, but it's so critical--are there some minutes that were 
taken, or kept, of the various CFIUS meetings, at which time 
presumably these questions were raised and there was a colloquy 
between the members on the issues?
    Secretary Kimmitt. Mr. Chairman, I'd be glad to locate 
those records and respond to that question.
    [The information referred to follows:]

    Exon-Florio prohibits public disclosure of documents and other 
information filed with CFIUS and such information remains subject to 
this statutory prohibition on public disclosure even after the CFIUS 
process is concluded in a particular manner. While the statute does not 
prevent our disclosure of information in response to the committee's 
oversight request, it does prohibit any disclosure of the information 
to the public. These confidentiality provisions are, of course, 
intended to assure companies that their proprietary business 
information will not be publicly disclosed, thereby encouraging them to 
make full disclosure to CFIUS of their proposed transactions and other 
relevant facts. This full disclosure is important in order that CFIUS 
be able to evaluate properly any potential national security issues 
raised by a proposed transaction.
    While CFIUS does not produce a report of its findings or a report 
following the 30-day period, we have enclosed copies of unclassified 
documents that we believe will be helpful in informing you about CFIUS 
actions in this case. They were provided by the Office of International 
Investment, Department of the Treasury, from the CFIUS case files for 
the notices submitted by DP World on December 15, 2005, and March 3, 
2006. They include the DP World filings with CFIUS; press releases and 
articles; electronic mail; informational briefs provided by the 
companies and related correspondence.
    We have substantial confidentiality interests in the deliberative-
process information and law-enforcement-sensitive materials that have 
not been produced or have been redacted from these documents. We also 
have withheld or redacted information that did not relate to the DP 
World transaction as unresponsive to your request, as well as 
information that would identify agency employees below the senior 
    No classified information is being provided with this paper. The 
intelligence assessments before CFIUS during its consideration of the 
December 15, 2005, filing were: (1) the December 5, 2005, Intelligence 
Community Acquisition Risk Center (CARC) assessment; and (2) the 
December 28, 2005, Defense Intelligence Agency assessment. The National 
Intelligence Council led an Intelligence community collaborative effort 
to produce an all-source, all-threat National Security Threat 
Assessment for the March 3, 2006, filing. I understand that these 
reports were previously provided to Congressional Intelligence 

    Chairman Warner. I think it would be helpful for this 
committee, to the extent that it doesn't involve the executive 
    Secretary Kimmitt. All right.
    Chairman Warner. Does your colleague wish to add anything?
    Secretary Kimmitt. No.
    Chairman Warner. All right.
    You've explained, certainly, in the discussions I've had 
with you and with the Defense Department--although the 
Secretaries of State, Treasury, Defense, Homeland--the 
Secretaries themselves compose the CFIUS board where the final 
decision resides. This decision starts with a group of, I 
presume, thoroughly seasoned and experienced civil servants. Is 
that correct?
    Secretary Kimmitt. Yes, sir.
    Chairman Warner. I'm trying to look at all of the steps 
that are taken.
    Secretary Kimmitt. Sure.
    Chairman Warner. When you say ``if anyone raised a 
question,'' it would have triggered this investigation, under 
your interpretation--so, that's the civil servant level--if 
someone had triggered it, then it goes to an Assistant 
Secretary level? Is that correct?
    Secretary Kimmitt. That's correct.
    Chairman Warner. Then either through the Deputy Secretaries 
or Under Secretaries through--to the Secretary, if they feel it 
is necessary----
    Secretary Kimmitt. That is correct.
    Chairman Warner. So any one of those series of individuals, 
in fulfilling their review process, could have triggered the 
need for this investigation.
    Secretary Kimmitt. Any one of those institutions, yes, Mr. 
    Chairman Warner. Now, would you go into the technical 
status of the contract today? Does that contract terms and the 
situation permit someone, at this point in time, saying, ``Upon 
reflection, and given the very conscientious concern of 
Congress and many citizens across the United States, we should 
take a look at that 45 days''?
    Secretary Kimmitt. Mr. Chairman, as I said in response to 
your earlier question, I do not have that information. As a 
general matter, the CFIUS review is a national security review. 
Other agencies of the Government get involved, as necessary, on 
antitrust and other matters. We may have that answer ourselves. 
If not, I think we could obtain it. But I just don't have it 
available to me right now.
    Chairman Warner. We have your assurances, at the earliest 
opportunity you will transmit your opinion on that question, 
and response to it, to this committee.
    Secretary Kimmitt. Yes, Mr. Chairman.
    [The information referred to follows:]

    All CFIUS decisions are made by consensus of the entire committee. 
The review process allows for any agency that sees a potential threat 
to the national security, as is its obligation, to raise those concerns 
within the review process. In such a case, an extended 45-day 
investigation period would commence.
    The Exon-Florio amendment prohibits disclosure to the public of any 
documents or information about a transaction that is provided to CFIUS 
or the President pursuant to Exon-Florio. Federal employees could be 
subject to criminal and other sanctions for making an unauthorized 
disclosure of such information.

    Chairman Warner. All right. I thank you.
    In reading--and I've studied this question intensively for 
the last 72 hours, certainly--so much of the press refers to 
phrases like this. I'm not trying to fault the press, and 
that's one of the reasons I want to get these facts out, 
because these professionals in the press want to be accurate. 
But there are headlines like, ``Port Security Operations Sold 
to the UAE at Six Ports,'' others I've seen where the public 
has the perception that the UAE is buying these facilities, 
acquiring them, in title.
    Let us be exactly explicit as to what this contract 
provides and what it is that they get and what they do not get.
    Secretary Jackson. Mr. Chairman, DP World's contract allows 
it to acquire the assets of P&O Ports. Those assets--let me 
divide into a couple of categories. First, what they are not. 
They are not buying a port. Ports are publicly owned 
facilities, typically by the State or local----
    Chairman Warner. States or municipalities or others.
    Secretary Jackson. Exactly. So, they are not buying a port. 
They are not buying a portion of the port. Typically, the 
relationship is a long-term lease from a port authority to a 
terminal operator. So, what is principally at stake here, 
first, is long-term leases for operating a particular terminal 
that are granted by a public institution at the State or local 
    Second, there are some services provided for other terminal 
operators or other ocean carriers responsible for terminal 
operations. These are stevedoring services, for example, and 
sometime warehousing service that are associated with the 
movement of cargo globally.
    So, essentially, they're buying the authorities, the leased 
landhold authorities, some infrastructure that is associated 
with managing of terminal operations, including equipment 
necessary to operate these facilities.
    Chairman Warner. Now, by virtue of those acquisitions, does 
this company, or others involved elsewhere, get a better 
insight into how we go about the security relationships? I have 
to believe that they're part of this agreement, which requires 
inspection at the point of origin of a container, and many 
containers are point of origin in UAE, that they have a very 
good idea of what the security requirements are as that 
container moves from a port of embarkation to the United 
States, and, therefore, by virtue of this contract, they don't 
get any better understanding or more insight or more control 
over the security. Is that correct?
    Secretary Jackson. Yes, sir. I think it's generally 
correct. Let me try to elaborate on some components of that.
    First, there are certain things that they do as a terminal 
operator which involve the definition of security plans under 
Coast Guard-approved rules. The Coast Guard would then go in 
and inspect compliance with those rules. The same thing applies 
with the Customs and Border Protection. They establish 
procedures, rules, guidelines, and security requirements. 
Again, the terminal operator complies. We inspect, we audit, we 
    There is a series of things that are at the heart of our 
security processes that are not exposed to the terminal 
operator. I would tell you, one very important one, for 
example, is the calculus that goes in, in our targeting center 
with CBP, to decide which specific containers are going to be 
audited, examined, studied, opened, and further scrutinized. 
So, that would be an example of something that a terminal 
authority would have no visibility into. They simply are told, 
``We're taking that one, and we're doing this with it.''
    So, there is a substantial amount that is behind a veil 
that's not seen by the terminal operator. It's a partnership 
every day out there on the terminal working the other security 
    Chairman Warner. The United States, the business interests 
in our country, haven't expressed a great deal of interest in 
trying to do this management. I think that's one of the reasons 
that foreign operators are involved in so many of our ports. Is 
that correct?
    Secretary Jackson. There are a large number of foreign-
owned firms that are operating in the United States in terminal 
operating agreements. There are many foreign-owned ocean 
carriers that, themselves, have subsidiaries that do 
termination operations in the United States and globally. So, 
this is not an industry dominated by U.S. assets.
    Chairman Warner. Fine.
    To Secretary England, in my consultations with you and 
Secretary Rumsfeld, the Chairman of the Joint Chiefs was 
present. We look upon the Joint Chiefs as an independent entity 
that has, first and foremost, in their hearts and minds every 
day every hour of the day--our security. Did they participate 
in this decision and, likewise, concur in the issue that they 
would not be a security risk?
    Secretary England. Pardon me, Mr. Chairman. I'm not sure of 
the extent that they're a formal part of the process, but, of 
course, the military services report directly to the chairman, 
and all the military services were, indeed, part of this 
    I do know the chairman concurs in the findings of the 
Department. Again, I would stress that this question about what 
level of security--I mean, we don't go just to an arbitrary 
level. Literally anyone who has any issue on any subject 
dealing with the security of these transactions is free to 
raise them, and they do. So, this is about as broadbased and an 
open process as you could possibly have. Literally anyone can 
comment in this regard.
    Chairman Warner. There was no negative comment, to the best 
of your knowledge, coming from the Joint Chiefs.
    Secretary England. No, that's correct. There were no 
negative comments in the entire Department.
    Chairman Warner. Fine. Thank you.
    Senator Levin.
    Senator Levin. Thank you, Mr. Chairman.
    First, on the issue which Senator Clinton has raised, I 
don't see how you can interpret the statute two ways. It is not 
a discretionary statute. The statute says that the President, 
or the President's designee, ``shall make an investigation.'' 
Now, the word ``shall'' is not discretionary. The word 
``shall,'' I think you'd agree, Secretary Kimmitt, is a 
mandatory word. Would you agree with that, so far?
    Secretary Kimmitt. I would agree with that, Senator.
    Senator Levin. Okay.
    Secretary Kimmitt. So far.
    Senator Levin. Good. Well, now we are going to get to the 
rest of the sentence, ``where the takeover could affect--could 
affect--the national security of the United States.'' Are you 
saying that there is not one department that looked at this 
that thought that the takeover of these facilities could affect 
the national security? You may have reached a conclusion that 
with all of the added protections, that it doesn't impact the 
national security. But I'm asking this question. Is it, there 
is not one agency in this Government that believes that this 
takeover could affect the national security of the United 
States? Is that what you are telling us?
    Secretary Kimmitt. Senator, what I'm saying is that there's 
been a consistent interpretation in the executive branch of 
that law since 1992. Our feeling is that the law, going back to 
1988, when it was first passed, brings before us any case that 
affects the national security. Our view has been to give 
meaning to that phrase. I accept what you said with regard to 
``shall,'' but as to the ``could,'' which isn't ``shall,'' we 
have basically taken the position, as have previous Democratic 
and Republican administrations, that that is only triggered if 
concerns about potential harm to the national security have not 
been resolved. This is really not a political point, because I 
don't think we do the country a justice when we politicize 
national security. I'm not saying that you're intending to. 
But, in the last 5 years of the previous Democratic 
administration, there were 21 foreign government-owned cases. 
One went to investigation.
    Senator Levin. Well, maybe they decided that, in none of 
those cases, it could affect national security.
    I'm asking you whether----
    Secretary Kimmitt. But, Senator, you said ``mandatory.'' In 
other words, it's----
    Senator Levin. If--no, no. What's mandatory is if it could 
affect national security, then it has to go to that 
    Secretary Kimmitt. Sure.
    Senator Levin. That's what the law says.
    Secretary Kimmitt. In this administration, in the first 
term, from 2001 to 2005, there were 43 such cases, 4 of which 
went to investigation. The determination was different here, 
because no one raised a concern.
    Senator Levin. And----
    Secretary Kimmitt. All concerns----
    Senator Levin. No, I'm----
    Secretary Kimmitt. Could I rephrase that? This is really 
important. Concerns are raised. They're raised from the start. 
I mean, it was really exceptional here that we had the 
Intelligence Community, weeks before anything was filed, do 
their assessment of many of the factors that you've brought up. 
By the way, the Intelligence Community is not just the Central 
Intelligence Agency (CIA). We all have intelligence elements in 
our departments, and we looked particularly closely at some of 
the terrorist financing points that you made.
    But the consistent interpretation of administrations has 
been if those concerns could not be resolved, we go to 
investigation; if they have been resolved, the deal is cleared.
    Senator Levin. I can't go back and argue whether a statute 
has been interpreted one way or another, because the question 
is whether or not it is interpreted correctly in the matter 
before us. This isn't a court. We write laws. If agencies 
ignore the law, even though they have been ignored before, 
apparently, or misinterpreted before, or----
    Secretary Kimmitt. No, I don't----
    Senator Levin. Well----
    Secretary Kimmitt.--I don't----
    Senator Levin.--Secretary Kimmitt----
    Secretary Kimmitt.--I don't think----
    Senator Levin.--let me finish now.
    Secretary Kimmitt. Yes, sir.
    Senator Levin. An ambiguity has been found in a statute 
which is unambiguous. The statute says--and I'm just going to 
read the words again and go on to another issue--that ``an 
investigation shall be made''--that's mandatory--if the 
acquisition, ``could affect the national security of the United 
States.'' It is saying--it seems to me it is obvious, it is 
clear, even by your own actions, the fact that additional 
requirements were imposed here, that this acquisition ``could 
affect'' the security of the United States.
    If you want the law changed--I don't care which 
administration you represent--if any administration wants the 
law changed, this or a previous one, come to Congress and 
change it, but do not ignore it.
    Secretary Kimmitt. Sure.
    Senator Levin. I'm going to leave it at that, because I 
have to go on to other--you have given us your position on it. 
    Secretary Kimmitt. But, respectfully, if I could respond 
briefly. We didn't ignore the law. We might interpret it 
differently. But the fundamental fact here, concerns were 
raised, they were resolved. If they hadn't been resolved, then 
the national security could have been affected.
    Senator Levin. If the national security could be affected, 
then this law requires an investigation, period. Not just what 
you call ``resolution of concerns.'' It requires that 45-day 
investigation. That's what the law says. If you don't like it, 
you--and I'm looking at you as representative of either this 
administration or any other administration--if the executive 
branch doesn't like it, come to Congress and change it. Don't 
interpret it away. That's my plea to any executive branch.
    I want to finish my questions.
    Chairman Warner. I'll give you the time. Let me make a 
suggestion here. I think that the Senators raise a very 
important issue. I note that the Attorney General of the United 
States is a member of the CFIUS. Is that correct?
    Secretary Kimmitt. That's correct, Mr. Chairman.
    Chairman Warner. Then I would suggest--and I will join with 
my colleagues, but, through you, let's start it--to have him 
prepare a memorandum as to the interpretation of the law by 
this administration and other administrations and how the CFIUS 
process has been conducted consistent with those 
interpretations. So, in that way, this committee and other 
Members of Congress and others interested will have some 
clarity to what has been done. But, I must say, as a lawyer 
myself, reading this, on the face, my colleagues raise a 
legitimate question.
    [The information referred to follows:]

    Deputy Secretary Kimmitt's March 31, 2006, letter to Chairman 
Warner responds to this matter.
    The enclosure referred to was received and has been retained in 
committee files.

    Senator Levin. I don't want to sound skeptical of the 
Attorney General's opinion, which will be forthcoming, but I 
would also suggest we ask the Senate legal counsel to give us 
an opinion.
    Chairman Warner. I concur in that. We'll do that.
    Secretary Kimmitt. Let me say this. I think it is a valid 
question. I said that when it was first raised by Senator 
Clinton. It's been one of the tough questions. That's why I 
have a Q&A in front of you. Senator, our faithful staffs tried 
to anticipate what the tough questions are. This is a tough 
one. It's a close call. I think that we have applied it 
consistently. We may have a difference on it. But I will say, 
again, I think the most important thing is, it doesn't suggest 
that security concerns were not raised. They were raised, they 
were resolved, we moved on.
    Senator Levin. A quick few questions if I can.
    Chairman Warner. Yes, go ahead.
    Senator Levin. Is it true that the UAE was one of a handful 
of countries that recognize the Taliban? That statement was 
made, I think, either in the 9/11 Commission report or 
somewhere else. Is that accurate?
    Chairman Warner. That goes to the State----
    Senator Levin. State Department?
    Mr. Wayne. Yes, Senator, that is accurate. They made a 
strategic decision after September 11 not only to cut those 
ties, but to deepen and strengthen their relationship with the 
United States, and to join us in fighting the war on terror. 
But, yes, they did have relations with Taliban before. They've 
cut those off. The presence of our troops there, and our 
facilities, underscores that. They have progressively worked 
with us on counterterrorism, on cutting off the financing of 
terrorism, on cutting off the flow of weapons of mass 
    Senator Levin. When did our troops first visit those ports? 
What year, approximately? How long have we been using their 
    Secretary England. Senator, I don't know. I can go back----
    Senator Levin. All right, just give us that, if you would, 
for the record.
    Secretary England. Okay.
    [The information referred to follows:]

    The U.S. Navy has made periodic port calls to the UAE since the 
1970s. Regular use of the UAE ports began during the preparation phase 
for the first Gulf War in 1991.

    Secretary England. I can answer they were using it when I 
was Secretary of the Navy in my first term, so at least the 
last 4 or 5 years.
    Senator Levin. But the fact that they allowed us to use 
their ports doesn't satisfactorily answer why they were one of 
a handful of countries that were recognizing the Taliban even 
at the same time they were using our ports. That sort of 
symbolizes the duality here, where we have an ally most of the 
time, or recently. But not too many years ago, even while they 
were giving us access to their ports, they were also doing 
something that very few other countries in the world did, which 
was to recognize a terrorist regime that was hosting a 
terrorist organization.
    My final question. The Clinton administration, and I 
believe I read this, attempted to get the UAE to strengthen its 
money-laundering laws prior to September 11. Now, I don't know 
where I read it, but was that accurate? I think I read that 
they were frustrated by the lack of a positive response at that 
time. Now, this is pre-September 11. Can someone tell me if 
that's accurate or not?
    Mr. Wayne. Senator, I don't know if, pre-September 11, we 
tried to get them to strengthen those laws. Post-September 11, 
we did try to get them to strengthen those laws. They have now, 
several times strengthened those laws.
    Senator Levin. Right.
    Mr. Wayne. They've also cooperated with us in freezing the 
funds of a number of terrorist groups, including a group called 
the al Barakat group that was operating out of Dubai. That 
group has been shut down. Since 2000, they've frozen $1.3 
million of funds in 17 different accounts based on the U.N. 
    Senator Levin. Thank you.
    Mr. Wayne. We've had a very close relationship in working 
on terrorist finance with them. In the region, they've actually 
been a leader in setting up new standards for controlling the 
Hawala or the informal money-exchange system.
    Senator Levin. It is very welcome, and there is no doubt 
about that. The question I was asking is, pre-September 11, 
because we need constancy and longstanding commitments, it 
seems to me, and that's one of the factors that we ought to be 
looking at when we look at the question of port security and 
reliability of a government that takes over any of our 
facilities. But I'll leave it at that.
    Thank you, Mr. Chairman.
    Chairman Warner. Thank you very much, Senator.
    We'll turn to you, Senator Clinton. I might like to, once 
again, say that, at the conclusion of Senator Clinton's 5 
minutes, we will engage in a press availability, at which time 
those desiring to propound questions to anyone here on the 
dais, please go to the microphone, identify yourself, and ask a 
    Senator Clinton.
    Senator Clinton. Thank you, Mr. Chairman.
    I want to just get additional information about how CFIUS 
actually operates. How many times did CFIUS meet to consider 
this transaction?
    Mr. Lowery. Senator, the CFIUS met once, and then it 
reviewed documents, both in early November, early December, 
mid-December, and in mid-January. But there was one official 
meeting that I know of.
    Senator Clinton. So, there was one official meeting. Are 
there quorum and proxy rules for conducting business for CFIUS?
    Mr. Lowery. No. I think the way that CFIUS operates, an 
invitation goes out to all the agencies to come to the 
meetings, and they're usually attended by all the agencies, 
unless there's an outstanding exception or something. The 
agencies work through the processes together in that particular 
meeting. Then they go back and they individually, because it is 
a committee, do their own analysis on the transactions.
    Senator Clinton. I understand the chairman has already 
asked for minutes of the meeting. I assume it's that one 
meeting that CFIUS held that the chairman asked for minutes 
    Chairman Warner. Senator, it seems to me that we should be 
given the record of all levels of deliberation and such minutes 
as recorded at all levels of that deliberation.
    [The information referred to follows:]

    See response on page 31.

    Senator Clinton. Was the White House Coordinator for 
Homeland Security, Frances Townsend, apprised of the CFIUS 
    Mr. Lowery. My understanding is that when the transaction 
was initiated, or review was initiated, there was an e-mail 
that went out to the White House and including, I believe, to 
the Homeland Security Council. That is my understanding.
    Senator Clinton. Now, by executive order, the assistant to 
the President for National Security Affairs sits on CFIUS. Was 
the National Security Advisor, Steven Hadley, apprised of the 
review? Was he at the meeting that was held?
    Mr. Lowery. The National Security Council was certainly 
apprised of the meeting. I don't know exactly who would have 
been at that meeting.
    Senator Clinton. Was the Secretary of Homeland Security, 
Michael Chertoff, both apprised of the review and at the 
meeting where the decision was made?
    Secretary Jackson. The Secretary was not at the meeting. 
The Department was aware of the transaction, obviously, and 
deeply engaged in it.
    Senator Clinton. Now, one of the concerns that we have in 
the New York/New Jersey area--Senator Menendez and I have been 
working, along with my colleague Senator Schumer, Congressman 
King, Congressman Fossella; it's a completely bipartisan, 
bicameral concern--is that--there is no requirement that the 
Federal Government consult with, or take into account, the 
views of State and local officials. Do you think that we should 
look at providing some kind of requirement, especially when we 
get to the area that we're most concerned about, a government-
owned entity, a potential effect on national security, that 
there ought to be consultation with State and local officials?
    Secretary Kimmitt. Senator, that's a question I hadn't 
considered. A very good question. I would have thought that the 
companies would have done that. Because one company, of course, 
is already a resident of the State, another is wanting to come 
in to conduct operations there. With the press reports that 
showed up in the New York Times, Wall Street Journal, Miami 
Herald, Baltimore Sun, and elsewhere, I guess I would have 
thought that that would have begun, I think, the question of 
whether the Federal Government has a responsibility in an 
acquisition like this to reach out, is one I'd like to consider 
and come back to you on.
    [The information referred to follows:]

    Certain CFIUS agencies and subcomponents historically have worked 
very closely with State and local officials. While laws relating to 
information and document privileges generally preclude the provision of 
case-specific information to these officials, CFIUS believes that 
cooperation with State and local officials can be and is achieved 
through existing working relationships.
    CFIUS has worked to improve communication with Members of Congress 
so that it can perform its oversight responsibilities more effectively. 
However, it is the position of the administration that any information 
provided to Congress must not compromise proprietary corporate 
information provided to CFIUS by the companies.

    Senator Clinton. Thank you.
    Thank you, Mr. Chairman.
    Chairman Warner. Thank you. Thank you, Senator Clinton, 
Senator Levin, and all who participated in this.
    We will now proceed to a press availability. Those 
desiring, please approach a microphone.
    I'd like to also, respectfully, ask that the questions be 
germane to the subject at hand. These witnesses are here for 
that purpose.
    Tony, we'll start on the right.
    Mr. Cappacio. Tony Cappacio of Bloomberg News. To Senator 
Clinton and to Senator Warner, and Secretary Joseph and 
Secretary England might be able to elaborate a little bit too, 
but, Senator Clinton, after the hearing today, do you 
anticipate legislation next week, bipartisan legislation, to 
block the consummation of the business deal by March 2?
    For Secretary Joseph and Secretary England, if such 
legislation is introduced, debated, and passed, what impact 
might that have on our relations in the Arab world as we're 
trying to develop allies for the long war?
    Chairman Warner. Let me first address the question. I 
think, at this point in time, the President has stated very 
clearly his concerns about this situation as it relates to a 
broad range of our foreign policy decisions and the like. Now, 
I respect those Members of Congress--indeed, of my own party, 
as you might imagine--who have come forward with these various 
ideas. I think it is unwise, speaking for myself, to try and 
speculate what's going to take place in the coming days and 
weeks. I do think it's important that the administration 
cooperate fully with those hearings the committees of the 
Senate and the House schedule. As a consequence of those 
hearings, I'm sure that there will be further cooperation 
between the administration and Congress. I am, in my own heart, 
confident that this matter can be reconciled.
    So, that is my view, but I yield to my distinguished 
colleague from New York. You have a very major port, and I 
think you have----
    Senator Clinton. We do.
    Chairman Warner.--stepped up to this issue very quickly.
    Senator Clinton. Thank you, Mr. Chairman.
    Tony, there will be legislation introduced. There will be 
probably several pieces of legislation, most of it bipartisan. 
There will certainly be legislation to require the 45-day 
investigation. It seems, to many of us, that, on the face of 
the statute and given the circumstances of this transaction, 
that should have been undertaken, but, in the absence of it, it 
should now be ordered.
    That may be the first step in trying to resolve this 
matter, to understand more fully exactly what all of the 
factors were and to guarantee that the questions that many of 
us have, those that we've raised here and those that have been 
raised by colleagues on both sides of the aisle, are fully 
taken into account.
    Mr. Cappacio. Secretary England and Secretary Joseph, what 
impact might that kind of legislation have on our relations 
over there?
    Chairman Warner. Again, they don't know how exactly the 
legislation would read. With all due respect to the bill that's 
been introduced, as we all know, in my 28 years here, the bills 
are modified substantially as they proceed on the individual 
chamber floors, then go to conference, where often further 
modifications take place. So, I'm not going to interfere with 
the asking of the question, but I make that observation.
    Secretary Joseph. Let me just say that the UAE today is a 
good friend, and it's a good ally. As my colleague said, after 
the events on September 11, the government of the UAE made a 
strategic decision to be on the right side of the issues and 
has cooperated with us very extensively on the war on terror, 
as well as on combating weapons of mass destruction.
    I think what we need to do is, we need to treat the UAE 
fairly, as we would any other friend or ally. I would not want 
to speculate on the consequences of legislation that has not 
yet been proposed.
    Mr. Cappacio. Thank you.
    Chairman Warner. On the left.
    Mr. Rosen. Yeah, thanks.
    Chairman Warner. Yes.
    Mr. Rosen. Ira Rosen, with CBS. This is for Commissioner 
Ahern. I think everybody would agree that the threat of weapons 
of mass destruction is really the paramount threat going right 
now, yet only one of the six ports that are under question--
only one of them is equipped with a working radiation detection 
system. Why is that?
    Mr. Ahern. What has happened at this point is our 
deployment footprint--we've been moving them out incrementally 
based on the site surveys that are done by us and by our 
contractor who does the installation of the radiation portal 
monitors (RPM). One of the first stages of implementation that 
we actually took was on the Northern Border, where we didn't 
have as much information in advance of container or truck 
crossings coming into the country. As we take a look at the 
maritime model, we've had a lot of different opportunities to 
put layers of defense out in front of the arrival of the ports. 
So, we made some of those determinations initially, knowing 
that we had confidence with the information coming in, knowing 
we had the ability to screen and vet that information for 
security concerns, and as also as far as with the forward 
deployment of our CSI teams overseas in 42 ports.
    So, we looked at seaports as a phase-3 implementation, and 
we're in that process of implementation at this point in time. 
As I stated, 181 RPMs at this point in time, 37 percent of the 
container traffic, and we'll continue to deploy as we go 
    Mr. Rosen. But you don't have the machines that could 
really screen the devices that people are most concerned about. 
Shouldn't that be priority one?
    Mr. Ahern. I think priority one was pushing our defense in 
depth as forward as we possibly could in the process and not 
wait for them to arrive in the ports in the United States. This 
is an additional layer in our security that adds to the ones we 
have already placed.
    Chairman Warner. The chair notes--and I think it's a very 
significant and important thing--there a number of press that 
are going to ask questions. So, I would hope that you would 
just have the one question; then, if absolutely essential, a 
quick follow-up.
    Thank you.
    This is to accommodate your colleagues who are standing in 
line patiently.
    Ms. Cornwell. Thank you. I'm Susan Cornwell, with Reuters. 
I have a question for the administration officials here.
    We know what your decision was, but I'm wondering if, given 
perhaps what you've heard today and also the political fallout, 
whether you, any of you, now think that a 45-day investigation 
might be a good idea. Then I do have a quick follow-up.
    Chairman Warner. I think, in my question to that, the 
Secretary Kimmitt has said you will get me the information as 
to the flexibility under the law. But go ahead with the 
    Secretary Kimmitt. I think what you had indicated, Mr. 
Chairman, was a request for flexibility under the contract.
    Chairman Warner. That's right, yes.
    Secretary Kimmitt. I'll have to find that for you.
    [The information referred to follows:]

    See response on page 32.

    Chairman Warner. Correct. I stand corrected. But do you 
wish to further amplify my observation?
    Secretary Kimmitt. I think essentially it goes to the point 
that Secretary Joseph said. Because it involves pending 
legislation, I'm not in a position to comment on it. The 
administration would have to comment on that in a statement of 
administration position.
    Ms. Cornwell. But the legislation hasn't been introduced 
    Secretary Kimmitt. No, but, as Senator Clinton says--and I 
think she, Senator Menendez and other members had pretty 
clearly indicated that it was coming--I just think that the 
administration will provide its views at the appropriate time.
    Ms. Cornwell. Okay. The follow up is, In all the history of 
CFIUS, how many of these 45-day investigations have there been? 
Any details of them would be appreciated, too.
    Secretary Kimmitt. I have only the number since 1988, when 
the law came into place. There were 25 cases that had gone into 
investigation in the period 1988 through 2005.
    Chairman Warner. Thank you.
    On the left.
    Mr. Rugaber. Chris Rugaber, at BNA publications. Some 
critics of CFIUS have said that there may be a reluctance to 
open a 45-day investigation, out of concern over chilling 
foreign investment in the United States and whether it would 
send a bad signal to foreign investors. Was that issue 
discussed? How was that issue discussed in the CFIUS meetings? 
I was also wondering if the Senators shared that concern that 
perhaps security was not given as much a priority, and that 
perhaps worries over foreign investment were given too much of 
a priority.
    Chairman Warner. Well, stating, myself, having intensively 
looked at this whole situation, and I wanted to carefully await 
the facts. I think the administration is to be commended for 
the manner in which we were so forthcoming--I don't find that, 
at this point in time, there was a breach of the procedure that 
would have in any way resulted in a lessening of our security 
considerations. That's my opinion.
    Now, as to your first question, you directed it to which 
member of the panel here, the first part of your question?
    Mr. Rugaber. Well, Secretary Kimmitt or anyone----
    Secretary Kimmitt. I'd be glad to answer.
    Senator Clinton, did you want to respond?
    Senator Clinton. Please go ahead.
    Secretary Kimmitt. Okay. The U.S. has pursued an open 
investment policy since the beginning of the CFIUS days in 
1975. We believe that the world economy works best on the basis 
of free and fair trade, flexible exchange rates, and free flow 
of capital across borders, which means an open investment 
    Foreign investment in the United States supports between 5 
million and 6 million jobs. It's 20 percent of our exports, $30 
billion a year in research and development (R&D) investment. 
It's a very powerful part of the American economy. Of course, 
we're the key part of the world economy.
    At the same time, our first priority as government 
officials, whether political appointees or career, is to 
protect the national security. So, although we operate in the 
context of an open investment policy, the process of CFIUS, in 
spite of what you've read by many people, is driven by one 
thing: Does anyone in the committee have a national security 
concern? If so, the case is not going to go forward.
    Chairman Warner. Thank you very much.
    Mr. Kulisch. Hello. Eric Kulisch, American Shipper 
Magazine. I have a question. Will Dubai Ports World set up or 
operate as a North American incorporated subsidiary, have a 
U.S. board, be subject to U.S. laws, like U.S. companies? That 
often takes place when foreign companies invest here, and 
related to that----
    Chairman Warner. Let's take this question, in seriatim.
    Go ahead. Secretary Kimmitt, do you want to take it, or 
Secretary Jackson?
    Secretary Kimmitt. I think I'm going to defer to Stewart 
Baker, the Assistant Secretary of Homeland Security, who had 
been most directly in touch with the company on that.
    Mr. Baker. Yes, my understanding is that the company will 
be taking over P&O North America, which is a U.S. company. They 
do not have plans to change corporate structure at this time.
    Chairman Warner. Thank you very much.
    On the left? Yes.
    Ms. Hess. Pam Hess, with United Press International. Could 
you tell me how many non-U.S. entities control port terminals? 
I think you mentioned that there are 877 in the country. Could 
you tell me if there are any correlative arrangements at 
airports? Are there any foreign companies in charge of port 
terminals? Or in the airport terminals?
    Secretary Jackson. The number that we mentioned was in 
these 7 cities, 829 facilities.
    Ms. Hess. Okay.
    Secretary Jackson. That is not data that I have right here. 
We might be able to try to get that for you, that shows you, 
all across the country, how many terminals there are and how 
many have foreign ownership and how many domestic. We do not 
have that information, ourselves, completed. I believe we're 
trying to get some better data on that.
    [The information referred to follows:]

    Secretary Jackson did not respond in time for printing. When 
received, answer will be retained in committee files.

    Mr. Hess. The arrangements at airports, are they any 
    Secretary Jackson. Yes, they are. This is a fundamentally 
different process at U.S. airports. There are a whole different 
set of rules, and you're basically operating under the 
authority of an airport authority with different air carriers 
and freight forwarders having access to very delimited portions 
of the airport.
    Mr. Hess. Right, and is there----
    Chairman Warner. Thank you. No, we have so many people 
waiting. I appreciate that.
    This gentleman?
    Mr. Meek. Good afternoon, Mr. Chairman. Thank you for the 
opportunity to ask a question. I'm James Meek, from the New 
York Daily News.
    I have a question for each of the Deputy Secretaries--and 
I'd appreciate all of them answering; it's a yes-or-no 
question, unless the answer is yes--and for Under Secretary 
Joseph. Can any of you think of any occasions since the 2001 
September 11 attacks where the United States has requested the 
United Arab Emirates authorities to cooperate on a 
counterterrorism investigation or have requested information 
which they have subsequently refused or gave an unsatisfactory 
response to or delayed a response to? Any occasion since 
September 11.
    Secretary Kimmitt. I'm not aware of any.
    Secretary England. I am not aware of any.
    Chairman Warner. Secretary Joseph, please address the 
microphone. Thank you.
    Secretary Joseph. I'm not aware of any either.
    Secretary Jackson. Neither am I.
    Chairman Warner. Thank you very much.
    Mr. Meek. Thank you very much, gentlemen.
    Chairman Warner. Question?
    Ms. Turner. Thank you, Mr. Chairman. Trish Turner, with FOX 
    Secretary Kimmitt, of the 45-day investigations, you said 
there were 25, I believe, between 1988 and 2005. Can you give 
us some idea, or give us an example, preferably, of what would 
send this to a 45-day investigation that would set it apart 
from what we're talking about here?
    Mr. Chairman, I have a question for you.
    Secretary Kimmitt. The view of any member of CFIUS that the 
national security interest could be adversely affected.
    Ms. Turner. But can you give us some kind of example of one 
particular case that was sent to this kind of review?
    Secretary Kimmitt. I don't have that immediately available 
to me, but if you get in touch with us after this, we'll be 
glad to take you through that with what we can. Again, you 
might want to take a look at the statute, the way that it is 
written. What you want is companies to provide business, 
proprietary, and other confidential information to you so you 
can assess these very carefully. We do have limits on what we 
can discuss publicly. We have more flexibility, as I said, in 
what we can share with Congress.
    Senator Clinton. But, Mr. Chairman, I think it would be 
useful for the committee to get those examples, because if this 
definition of ``national security'' is kind of a moving target, 
we need some idea of what the field looks like.
    [The information referred to follows:]

    We endeavor to protect information about the companies from public 
disclosure, including for proprietary business reasons, but we would be 
pleased to provide the chairman and committee members a briefing on the 
transactions that went to investigation.

    Chairman Warner. Assuming that the reason for the 
investigation was prompted by national security. It could have 
been others, could it not?
    Secretary Kimmitt. Well, it could have been other reasons. 
Essentially, though, this is an interagency process.
    Chairman Warner. Right.
    Secretary Kimmitt. You operate by consensus. So, in each 
one of those cases, at least one member was not prepared to 
recommend that the transaction proceed after the 30-day period.
    Chairman Warner. We're looking at the triggering mechanism 
of those investigations.
    Secretary Kimmitt. I understand the very important question 
that Senator----
    Chairman Warner. There are----
    Secretary Kimmitt.--Clinton has raised.
    Chairman Warner.--25 instances, and the triggering 
    Secretary Kimmitt. Right, and what we've done--again, the 
tradition has been that we do, on a quarterly basis, a 
briefing. I have to say it hasn't included this committee. We'd 
be welcome to include this committee--it's generally Banking 
and Financial Services on the Senate and House sides, 
respectively--of cases completed during that quarter. We could 
bring up these different cases and either look at all of them 
or whatever subsection is important for you.
    Chairman Warner. We'll work it out.
    Secretary Kimmitt. When it comes to completed cases, we 
have a lot more flexibility.
    Secretary Jackson. Mr. Chairman, if I could just add to 
what Bob said. I think it's also very important to focus on 
what he earlier spoke about, in terms of cases withdrawn from 
consideration. There are a not-insignificant number of cases 
that go through the 30-day process, and it becomes clear they 
are not going to get over the finish line. So, I think that the 
full complexity of cases includes those that got a significant 
amount of scrutiny and were subsequently withdrawn.
    Chairman Warner. So the 25, in reality, is much larger.
    Secretary Jackson. Yes, sir.
    Secretary Kimmitt. It could be larger. I didn't mention 
those, Michael, in part because it's a little bit tougher for 
us to talk about those.
    Chairman Warner. All right.
    Secretary Kimmitt. I mean, if a company's done the right 
thing and said, ``This isn't going to work,'' we don't want to 
penalize them, and then have to go into great detail why.
    Chairman Warner. Understood.
    Secretary Kimmitt. I think you'd rather have the system 
come to the conclusion this isn't going to work, they walk away 
from the deal. But it is larger.
    Chairman Warner. Right.
    Ms. Turner. Mr. Chairman, may I just ask you--I don't think 
you've said----
    Chairman Warner. Can you speak up a little louder?
    Ms. Turner. I don't believe I've heard you say if a hold 
isn't placed on this particular transaction before Congress has 
had a chance to work its will, if you will, are you willing to 
support legislation that would place a hold on this 
    Chairman Warner. I'm not going to speculate on that. I'm 
really confident that these matters now being brought to the 
attention--now, the public having had a full disclosure of the 
facts that are available, I think it's going to work itself 
out. So, I'm not going to participate in trying to speculate.
    Ms. Turner. Thank you.
    Chairman Warner. But we will get the information that 
Secretary Kimmitt promised. Thank you very much.
    Mr. Straw. Thank you, Chairman. My name is Joseph Straw. 
I'm from the New Haven Register, and my question is for the 
Treasury Department officials.
    Per current statute, does the President have the authority 
to stay the ruling, or is the only option either to void it or 
let it stand? Parallel to that is the issue of a 45-day 
investigation. Was that only applicable prior to the CFIUS 
vote, or can the President enact that himself now?
    Secretary Kimmitt. If I understood your question correctly, 
now that approval has been given, the process can be reopened 
only if is discovered that the parties provided false, 
misleading, or incorrect information.
    Ms. Atkinson. Hello. Sheryl Atkinson, from CBS. Did anybody 
on the committee discuss, anticipate, or have any conversations 
about the idea that this deal might not be well received by the 
public, that there would be sensitivities to it and/or (b) 
anticipate any political issues with the deal?
    Secretary Kimmitt. I haven't asked that question. I will 
give you the best answer I can give. Before I came back into 
the Government last summer, there was quite a bit of attention 
on the CNOOC deal, when the Chinese National Overseas Oil 
Corporation was looking to acquire Unocal, in competition with 
Chevron. That case was never formally notified to the Treasury 
Department. The 30-day process was never begun. Yet, there was 
considerable press attention and hearings on the Hill. In this 
particular case, the people that I have talked to who conducted 
the review, I think once they saw the stories start appearing 
in mainstream newspapers and also some of the specialty press 
as early as October, some of which had headlines that says, 
``Arab Company to Acquire Port,'' to the best of my knowledge 
we didn't get a single question from either the press or 
    So, I think, to some degree, because so many of the people 
involved in the process had lived through the CNOOC process, 
they might have made the judgment that this didn't have quite 
the press or political sensitivity.
    I think the White House has said that it would have been 
good for us to have engaged Congress earlier. I certainly 
support that. I've indicated some of the problems that we have 
under the law. In being as forthcoming as we might like to be, 
I'd like to continue that discussion. But I can't really figure 
out why a case like this, that did show up in these major 
papers in New York, in Baltimore, in Miami, and national 
papers, as well as ones overseas, wouldn't have occasioned some 
question. It doesn't solve the issue. We're up here now dealing 
with the security concerns that have been raised. But I think 
that might have had an effect on the people doing the review.
    Ms. Atkinson. Just a quick follow-on, if I may. Do you 
understand the public sensitivities that some people are 
addressing, just on a professional level, or do you think this 
is way off base?
    Secretary Kimmitt. I certainly understand and accept them. 
Every question that has been raised, either by the public or 
their elected representatives, is absolutely legitimate. As I 
said earlier, I think we've looked at these questions. We're in 
the process of trying to explain the way that we looked at them 
and how we resolved them. But they're certainly legitimate. We 
work for the American people.
    Ms. Atkinson. Thank you.
    Chairman Warner. Thank you. I must advise everyone that 
we've been having a 2\1/2\-hour hearing, and it's important to 
try and continue to give the facts as asked by the press. But 
I'm going to have to cut it down to two more questions from 
either side. Thank you very much for your very good cooperation 
in making----
    Secretary Kimmitt. Mr. Chairman, if I might add----
    Chairman Warner. Yes.
    Secretary Kimmitt.--they are welcome to follow up with us 
in the Departments.
    Chairman Warner. Surely.
    Secretary Kimmitt. We've had a major outreach. In fact, I 
think one of the reasons I have to leave is, I have two 
scheduled press availabilities, as do other colleagues. So, 
please don't take this as the end of it. We need to answer 
these questions. We understand it. They've been raised 
legitimately, they need to responded to professionally.
    Chairman Warner. I thank you for that.
    On this side?
    Mr. Liang. Thank you, Mr. Chairman. John Liang, with Inside 
Defense. A question for Secretary England.
    Mr. Secretary, during your testimony, you mentioned more 
than one DOD agency and office that had looked at this 
particular case. One of the offices you did not mention, 
however, was the Office of the Under Secretary of Defense for 
Industrial Policy. Could you characterize--which is currently 
being run by a career civil servant in an acting capacity--
could you characterize for us what that office's comments were 
concerning this case? How close are you to forwarding a name to 
the President and Congress as to who's going to be the next 
appointee for that role?
    Secretary England. I'm not quite sure where the nominee is 
for that office, although we have, indeed, interviewed several 
people. So, that is in the process of being filled.
    We sent this out to 17 agencies. I do not believe that's 
one of the ones in DOD, because that's really not a national 
security issue. They are part of our Acquisition, Technology, 
and Logistics (AT&L) organization. So, we go to AT&L; they 
distribute it within that department. So, I'm not sure where 
all they go within that total component. Industrial policy is 
part of AT&L and has the CFIUS lead within that component and 
we do get a definitive answer from them.
    It doesn't go out to them as a separate, independent 
organization within DOD. They answer as part of AT&L.
    Mr. Liang. Thank you very much.
    Ms. Caldwell. Good morning. Leanne Caldwell, Pacific Radio. 
To the administration officials, I think it would be really 
helpful if you could be specific about the amount of foreign 
companies, or foreign companies run by foreign governments, who 
do have a--some sort of stake in our ports. Since you have 
generally said that there are these situations, to the 
Senators, do you think it's a double-standard that this is an 
Arab-based company that we are questioning?
    Chairman Warner. All right. You make that request for 
information. I'm not sure we have all the facts here, at the 
moment. Do we?
    Secretary Jackson. Mr. Chairman, we've committed to try to 
get additional facts----
    Chairman Warner. Just provide it for the record.
    Secretary Jackson. We'll provide it to the committee.
    [The information referred to follows:]

    Secretary Jackson did not respond in time for printing. When 
received, answer will be retained in committee files.

    Chairman Warner. I thank you very much.
    Senator Clinton. May I respond to that for a minute, Mr. 
    Chairman Warner. Yes.
    Senator Clinton. We hear, on a fairly regular basis, that 
we live in a post-September 11 world. Sometimes that's used as 
a declarative statement, and sometimes it's used as a political 
attack. But the fact is, we do live in a post-September 11 
world, and I think it's important that, whatever the 
interpretations of the statute was in the past, that there is 
now a necessity for a heightened scrutiny. I don't think this 
has to do with the nationality of the company so much as the 
track record that Senator Levin and others have laid out, and 
the fact that it is a foreign government-controlled and -owned 
entity. Senator Menendez and I will be introducing legislation 
to prohibit government-owned entities from controlling, owning, 
and managing our ports. We don't let them do it to our 
airports. There's a very different standard. Yet, the potential 
for danger and damage to our country is as high, or higher.
    This is not in any way directed at any particular country, 
but, as a matter of national security in the post-September 11 
world, I think we have to take a hard look at this.
    Secretary Kimmitt. Mr. Chairman, could I----
    Chairman Warner. If I may, I'm confident that Congress will 
perform that oversight. There are means by which to, first, 
clarify any ambiguity in this law--that's number one--and, 
second, to emphasize the importance of the ports as a part of 
our security system.
    Secretary Kimmitt. Mr. Chairman, if I could.
    Chairman Warner. Yes.
    Secretary Kimmitt. I would just say, as Senator Clinton 
did, let's put the law aside. We'll take a look at that, and 
maybe agree to disagree, and maybe we'll find common ground. I 
agree with everything else you've said in your statement. We 
have to adapt our national security review to the circumstances 
at hand. It's a post-September 11 world, it's also a post-July 
7 world. Who would have thought Britain would have been hit the 
way that we were? We look at things very differently.
    This Community Acquisition Risk Center is a very important 
development, the Intelligence Community getting involved in 
this. We'd like to see that operation expanded a bit from a 
resource-and-personnel perspective to take a particularly close 
look. We know they did a good job here. There was no rush. The 
company came in, in advance. They took 33 days to look it over. 
I think that's where you start your really deep look on 
foreign-owned and -controlled companies, whether they be from 
the Mid-East or elsewhere.
    Chairman Warner. We'll take a last question from this side.
    Mr. Starks. Chairman Warner, Tim Starks, from Congressional 
Quarterly. Is it your view that the best way to diffuse this 
situation is for the administration to voluntarily conduct a 
45-day review, if it's possible, without legislation? Do you 
have any concerns, or do any of the administration officials 
here have any concerns, about whether, legally speaking, 
Congress can legislatively halt this process or order a new 
review before March 2?
    Chairman Warner. I would just generally say I think 
Congress, being a coequal branch of the Government, could enact 
such legislation--hopefully it wouldn't come to that, but I 
think it would probably have the authority--certainly, at that 
point in time, the administration would recognize the very 
strong sentiment in Congress. On the other hand, the President 
has made explicit in his statement with regard to the veto--
but, again, I do believe this thing--it's my own opinion--can 
be worked out satisfactorily so that there's a reconciliation 
of the views of Congress and the executive branch that's in the 
best interest of our national security.
    I thank you for that question. I thank all who have been 
present. I think we've made a contribution that's very 
important at this time. This briefing is adjourned.
    [Questions for the record with answers supplied follow:]

             Questions Submitted by Senator Saxby Chambliss

                             REVIEW PROCESS

    1. Senator Chambliss. Secretary Kimmitt, to block a foreign 
acquisition of a U.S. corporation, the President must find that: (1) 
there is credible evidence that a foreign entity exercising control 
might take action that threatens national security; and (2) provisions 
of law do not provide adequate and appropriate authority to protect 
national security. Is the Committee on Foreign Investment in the United 
States (CFIUS) process of a 30-day review sufficient to assess issues 
of this complexity?
    Secretary Kimmitt. The Exon-Florio amendment provides the President 
or his designee with sufficient time to consider the national security 
implications of a foreign acquisition of a U.S. company. The filing of 
notice with CFIUS (or the committee) begins an intensive 30-day 
investigative period that provides the committee with sufficient time 
to investigate most transactions fully. In many cases, the committee 
has more than 30 days to conduct its examination because many companies 
approach the committee in advance of a formal filing. This informal 
pre-filing notification allows CFIUS members and the Intelligence 
Community to prepare for formal consideration of a transaction. If any 
CFIUS agency determines that national security concerns remain after 
the conclusion of the 30-day investigative period, that agency is and 
should be empowered to require an extended investigation. This ensures 
that all members of the committee have the time necessary to consider 
the full range of a transaction's national security implications.
    During the 30-day investigative period, CFIUS agencies are able to 
consider information from multiple sources, including the filing, 
follow-up discussions with the companies, and unclassified and 
classified data sources. In addition, mitigation agreements between the 
parties to a transaction and the Departments of Defense, Justice, and 
Homeland Security or other agencies are frequently negotiated before 
the parties file a notice with CFIUS. This is particularly common for 
telecommunications cases that go through the FCC regulatory licensing 
process. If any CFIUS agency determines that national security concerns 
remain after the conclusion of the 30-day period, such agency can 
request an extended 45-day investigation. Finally, it is important to 
note that the vast majority of cases that are notified to CFIUS do not 
raise national security issues and are easily reviewed within the 30-
day investigative period.

    2. Senator Chambliss. Secretary Kimmitt, the CFIUS process requires 
the evaluation to consider the record of the acquiring foreign entity 
as to compliance with U.S. laws and regulations and the shareholders 
(and others) with influence over the foreign entity including foreign 
governments. In this case, what was the assessment of the U.S. 
Government over influence of a company owned by a foreign government?
    Secretary Kimmitt. The committee's assessment of DP World's record 
of compliance with U.S. laws and regulations, which included 
consideration of the records of its principal shareholder, was informed 
by several sources. In the first review of the DP World transaction, 
CFIUS requested and received an assessment of the transaction from the 
Director of National Intelligence's (DNI) Intelligence Community 
Acquisition Risk Center (CARC). The CARC conducted a thorough 
assessment of the proposed transaction, which CFIUS member agencies 
reviewed carefully before making a determination on whether or not to 
proceed to a further 45-day investigation. CFIUS also requested and 
received an assessment of the transaction from the Defense Intelligence 
Agency, as well as extensive analytical input from the National 
Counterterrorism Center. After DP World filed a second notice (under 
the Exon-Florio amendment), an all-source assessment was conducted by 
the National Intelligence Council of any potential threats arising from 
the proposed transaction.
    Among other things, CFIUS considered the degree and type of 
influence of the ruler of Dubai over DP World and the relationship of 
Dubai and the United Arab Emirates (UAE) to the United States. The 
committee's deliberations included consideration of potential threats 
emanating from the UAE. It also included consideration of the UAE's 
cooperation with U.S. authorities through the Container Security 
Initiative, MegaPorts, various terrorist financing initiatives, and the 
conflicts in Iraq and Afghanistan.

                         DECISIONMAKING PROCESS

    3. Senator Chambliss. Secretary Kimmitt, who made the decision to 
approve this transaction given the delegation was to the Secretary/
Cabinet level?
    Secretary Kimmitt. The Exon-Florio amendment provides authority to 
the President alone to suspend or prohibit a foreign acquisition where 
the foreign acquirer might threaten to impair the national security. It 
does not confer authority to approve or disapprove of transactions. On 
behalf of the President, the committee reviews proposed foreign 
acquisitions of U.S. companies, and if national security concerns 
remain at the end of the 30-day investigative period, any agency may 
recommend a further 45-day investigation. At the end of such 
investigation, CFIUS provides the President with a recommendation. 
Under the Exon-Florio amendment, the President may suspend or prohibit 
a merger or acquisition or take no action, allowing the acquisition to 
    In the DP World transaction, because the companies informed the 
U.S. Government of the proposed acquisition well before filing, CFIUS 
agencies had approximately 90 days to review the transaction. After 
carefully reviewing the transaction, CFIUS agencies agreed that an 
extended 45-day investigation was not necessary. CFIUS consists of six 
Departments and six White House agencies. The Departments of Energy and 
Transportation were also invited to participate in the DP World case 
and, given their relevant expertise, were involved in the investigative 
process. After carefully considering all available facts, CFIUS 
determined by consensus that the proposed acquisition by DP World did 
not present a threat to national security.

    4. Senator Chambliss. Secretary Kimmitt, why were the President and 
other senior leadership not informed of this decision?
    Secretary Kimmitt. CFIUS agencies agreed that there were no 
national security issues to warrant a further 45-day investigation, and 
thus the case was concluded. The Administration supports a high level 
of political accountability for CFIUS decisions and is committed to 
ensuring that senior, Senate confirmed officials play an integral role 
in examining every transaction notified to the committee. The Treasury 
Department and other CFIUS agencies have recently put in place 
mechanisms to ensure that senior CFIUS officials are better apprised of 
CFIUS reviews and investigations and their disposition, even when the 
cases raise no national security issues. In addition, we have put in 
place an internal process to keep senior officials, including the 
Secretary, better apprised of CFIUS activities generally.

    5. Senator Chambliss. Secretary Kimmitt, what consideration was 
given to the political and national security implications?
    Secretary Kimmitt. The Exon-Florio amendment provides for a 
national security review of foreign acquisitions of U.S.-based 
businesses engaged in U.S. interstate commerce. In the DP World case, 
as in all cases, CFIUS gave the national security implications of the 
transaction top consideration, The committee considered the full range 
of national security issues in assessing the proposed DP World 
acquisition of Peninsular and Oriental Steamship Navigation Company.

                       AUTHORITIES ON ACQUISITION

    6. Senator Chambliss. Secretary Kimmitt, the CFIUS process involves 
evaluation of foreign companies' interest in acquiring U.S. companies. 
What are the authorities of the provision related to transactions from 
one foreign company to another?
    Secretary Kimmitt. The authorities of the Exon-Florio amendment 
cover potentially any transaction in which a foreign person acquires 
control of a U.S.-based business engaged in U.S. interstate commerce. 
Therefore, the sale of any controlling interest in a U.S.-based 
business by one foreign owner to another, including the sale of only a 
partial interest in that business, would be subject to Exon-Florio.

                        CONCURRENCE ON AGREEMENT

    7. Senator Chambliss. Secretary Kimmitt, CFIUS seeks unanimous 
agreement among CFIUS agencies on the recommendation to the President. 
Did any CFIUS members non-concur with the final decision? Did any 
member concur but with issues? If so, what issues were raised and how 
were they addressed or resolved?
    Secretary Kimmitt. After thorough examination of the issues, at the 
conclusion of the 30-day investigative period of the proposed DP World 
acquisition of the Peninsular & Oriental Steamship Navigation Company, 
CFIUS determined by consensus that a further 45-day investigation was 
not warranted. I would note that because the companies informed the 
U.S. Government of the proposed acquisition well before filing, CFIUS 
agencies had approximately 90 days to review the transaction. Further, 
the Department of Homeland Security (DHS) negotiated an unprecedented 
assurance letter with DP World with respect to law enforcement, public 
safety, and national security.

                             REPORT SUMMARY

    8. Senator Chambliss. Secretary Kimmitt, if an investigation is 
conducted, a report and recommendation are sent to the President. Is 
there a summary or report of this decision? If so, please provide a 
    Secretary Kimmitt. Regarding the DP World investigation, due to the 
fact that CFIUS completed its work at the end of the 30-day 
investigative period and did not go into a further 45-day 
investigation, CFIUS did not prepare a report and recommendation to the 

                          NOTIFICATION PROCESS

    9. Senator Chambliss. Secretary Kimmitt, the CFIUS process requires 
a review and determination to be complete within 30 days unless an 
investigation is pursued. According to press information, the CFIUS 
process was set into motion in December 2005. Describe the timeline to 
assess the filing--was any of this over the holiday?
    Secretary Kimmitt. The attorneys involved in the transaction 
brought the proposed transaction to the attention of CFIUS on October 
17. By early November, the companies had provided to CFIUS 
comprehensive information about the transaction and CFIUS had requested 
an Intelligence Community Threat Assessment. On November 29, the 
companies publicly confirmed the transaction. The Intelligence 
Assessment was circulated to CFIUS in early December. The companies met 
with CFIUS on December 6 to discuss the transaction. The companies 
filed with CFIUS on December 16. CFIUS began its formal review on 
December 17, 2005, and concluded on January 17, 2006. Thus, the CFIUS 
evaluation of the transaction lasted substantially more than 30 days.
    Section 800.404 of the Exon-Florio regulations stipulates that the 
review days are calendar days. However, pursuant to CFIUS regulations, 
if a review ends on a holiday or weekend, it is moved forward to the 
next business day.

    10. Senator Chambliss. Secretary Kimmitt, what process of 
notification did you employ within the review process?
    Secretary Kimmitt. During the CFIUS review process, Treasury, as 
the CFIUS chair, routinely communicates with other CFIUS agencies, the 
filing companies, and their legal counsel to notify them of relevant 
developments. This communication takes the form of unclassified and 
classified e-mail, faxes, phone calls, and meetings.

                            MAKE-UP OF CFIUS

    11. Senator Chambliss. Secretary Kimmitt, the CFIUS membership is 
comprised of 12 executive branch agencies. What role did the 
Intelligence Community have in assessing the national security 
(threats, warning) implications?
    Secretary Kimmitt. CFIUS consists of six Departments and six White 
House agencies. In addition, CFIUS invites other Federal agencies to 
participate in investigations on a case-by-case basis when they have 
expertise relevant for a particular case. For example, the Departments 
of Transportation and Energy have participated in CFIUS reviews. The 
Intelligence Community (IC)--primarily the Intelligence CARC and the 
Defense Intelligence Agency (DIA)--has played a long-standing and 
important role in the CFIUS process, not as a voting member, but as 
providers of intelligence assessments of the foreign acquirer and the 
transaction. The Office of the DNI--via the National Intelligence 
Council--is now providing an all-source assessment of any potential 
threats arising from proposed transactions.

    12. Senator Chambliss. Secretary Kimmitt, what is the experience 
level of the CFIUS and how are they selected for membership?
    Secretary Kimmitt. Each CFIUS agency staffs its own CFIUS 
activities and chooses its own staff. Depending on the nature of the 
transaction and the business of the U.S. target company, an agency may 
include staff from several offices in its agency to review and analyze 
the national security implications from its agency's perspective.

                          SECURITY COMMITMENTS

    13. Senator Chambliss. Secretary Kimmitt, the Dubai Ports World 
signed a letter of assurances making commitments to meet and maintain 
security standards for the port terminals. What are those security 
    Secretary Kimmitt. The companies committed to maintain no less than 
their current level of membership in, cooperation with, and support for 
the Customs-Trade Partnership Against Terrorism, the Business Anti-
Smuggling Coalition, and the Container Security Initiative (CSI). They 
also committed to their current level of membership in, cooperation 
with, and support for the March 2005 Memorandum of Understanding with 
the U.S. Department of Energy to support CSI by cooperating and 
restricting the trafficking in nuclear and radioactive materials. The 
companies committed to provide advance written notice to the DHS before 
making any material change with respect to its cooperation/membership/
support, and to meet with any DHS designated U.S. Government officials 
prior to implementation. In fact, the DHS agreement with DP World 
provides assurances with respect to law enforcement, public safety, and 
national security that DHS does not have from other terminal operators.

    14. Senator Chambliss. Secretary Kimmitt, what government agency is 
responsible for overseeing these commitments?
    Secretary Kimmitt. The DHS signed the assurance letter with DP 
World and has the responsibility for overseeing the commitments.

    15. Senator Chambliss. Secretary Kimmitt, what is the enforcement 
mechanism if the commitments are not maintained?
    Secretary Kimmitt. DP World's assurance letter to DHS includes two 
enforcement mechanisms. For a material breach of any representation or 
commitment in the letter, DHS may seek any remedy available at law or 
equity in a U.S. court of law. For any materially false or misleading 
representation or commitment or omission of material information in the 
assurance letter, in addition to other remedies available at law or 
equity, DHS may request that CFIUS initiate a review to determine the 
impact on national security and the appropriate response to protect 
national security.
               Questions Submitted by Senator Bill Nelson

                         INTERCOUNTRY DIALOGUE

    16. Senator Bill Nelson. To the panel, given that the Dubai Ports 
World buyout of Peninsular and Oriental (P&O) Steamship Navigation 
Company is a global buyout, has the administration contacted or worked 
with any other countries faced with this situation about their mutual 
concerns and level of comfort with having their port operation taken 
    Secretary England. The Defense Department did not contact or work 
with foreign countries faced with this situation about their mutual 
concerns and level of comfort with a take over of port operations by a 
foreign acquirer. At the interagency level, we understand that there 
was some informal discussion with several countries where the 
acquisition of P&O Steamship Navigation by Dubai Ports World would 
result in DPW assuming responsibility for the off- and on-loading of 
cargo at terminals in their ports.
    Secretary Joseph. It is true that Dubai Ports World is assuming 
operations of some container terminal and other facilities in a number 
of countries. Based on press reports and information from our 
embassies, the transaction appears to have generated much less public 
interest or concern in those other countries than it has in the United 
States. The U.S. Government did not reach out specifically to foreign 
governments regarding this transaction, but our intelligence review 
necessarily included information derived from numerous foreign 
countries. In addition, the CFIUS did draw on the judgment of its 
member agencies and their extensive experience in cargo and port 
security in reaching the conclusion that the risk management provisions 
in current law and regulations, in numerous bilateral and multilateral 
cooperative efforts, and in the DHS assurances letter provided by the 
companies was sufficient for purposes of clearing this transaction in 
the original CFIUS review.
    The U.S. Government is working with other countries every day to 
enhance vessel, cargo, and port security. For example, the DHS is 
working in the CSI led by U.S. Customs and Border Protection with 
numerous other countries, including the U.K. and Dubai, to screen cargo 
before it ever reaches U.S. shores. DHS is also working in the 
multilateral World Customs Organization to promote the adoption 
worldwide of standards for cargo security best practices. Through the 
U.S. Coast Guard, DHS is working to enforce global facility and vessel 
security standards in the International Ship and Port Facility Security 
Code. We are working with foreign governments on a daily basis to 
enhance vessel, cargo, and port security as well. The Justice 
Department, including the Federal Bureau of Investigation and DHS's 
Immigration and Customs Enforcement, is working on a bilateral and 
multilateral level investigating and bringing terrorists that may harm 
U.S. ports to justice worldwide.
    Secretary Kimmitt. Our assistant secretary communicated with his 
counterparts in a few countries in which DP World is now operating. 
They explained that they had reviewed the transaction--in most cases 
from a national security perspective--and did not have any concerns.
    Secretary Jackson. The DP World transaction did not involve the 
``take over'' of any U.S. ports. Through its acquisition of P&O, DP 
World sought to acquire the leases at 24 terminals in the U.S. That's a 
relatively small part of the operations in the six ports where they 
would operate terminals, including New Orleans, Houston, Miami, Newark, 
Baltimore, and Philadelphia. The company's CFIUS filing indicated that 
DP World would also assume responsibility for P&O equities at other 
ports, but those equities consisted of stevedoring and labor operations 
where P&O was not the designated terminal operator.
    Terminal operators do not run ports and do not provide or oversee 
security for the entire port complex. That is the responsibility of the 
government and the local port authority, which is usually a government 
    Terminal operators ordinarily sign a long-term lease for waterfront 
property in the port. They build a pier for ships, cranes to unload the 
ship, a parking lot to store the containers they unload, and perhaps a 
small management office. They make their money lifting containers out 
of ships and holding them for shippers. The business is very 
    Terminal operators, such as DP World, conduct business throughout 
the world. The administration has not had specific discussions with 
other countries about how comfortable these countries are with the 
conduct of terminal operations in their countries. DHS addressed all of 
its national security concerns during the CFIUS review of the 


    17. Senator Bill Nelson. To the panel, how responsive was Dubai 
Ports World and the UAE Government to inquiries? What documents did you 
request and did you feel that you received full cooperation?
    Secretary England. For the Defense Department, we thought Dubai 
Ports World and the UAE Government were responsive to inquiries. The 
DOD did not request additional documents; however, at the interagency 
level we noted that where other member agencies requested documents, 
the companies and the UAE Government were responsive.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. DP World was extremely cooperative. They came to 
CFIUS well before the transaction was publicly announced. They met with 
CFIUS, including the Department of Transportation, on December 6 to 
discuss the transaction. They promptly provided all information 
requested. They worked closely with CFIUS throughout the U.S. 
Government's consideration of the transaction, which lasted 
approximately 90 days.
    Secretary Jackson. Most requests for information and documents made 
before and during the CFIUS review were made through the Department of 
the Treasury, the interagency Chair for CFIUS, so Treasury is in a 
better position to respond to the portion of the question addressing 
any specific document requests. Both DP World and P&O responded 
promptly to all inquiries that were made directly by DHS and DHS feels 
that it received full cooperation before and during the CFIUS review.

                          FOREIGN POLICY TOOLS

    18. Senator Bill Nelson. Secretary Joseph, what assurances can you 
offer that under this deal the UAE Government will not view its 
management of strategic American ports as one of its foreign policy 
tools in its relations with the United States?
    Secretary Joseph. Dubai Ports World (DPW) is owned not by the UAE 
Government but by the Emirate of Dubai, the second richest of the seven 
emirates (essentially states) of the UAE federation, which has existed 
since 1971. Dubai does not have a foreign policy per se, since foreign 
relations for all seven emirates are handled by the UAE Federal 
Government. Dubai as an emirate is primarily interested in developing 
and expanding its trade and business as a means of survival in the 
post-oil economy.
    In practice, DPW functions on business principles like any 
competitive multinational maritime services provider, with a diverse 
international managerial cadre recruited for its commercial skills. In 
our judgment DPW does not operate in any practical sense as a tool of 
the foreign policy of the Emirate of Dubai, or of the UAE Government, 
which is headquartered in the Emirate of Abu Dhabi.

                          DEFENSE IMPLICATIONS

    19. Senator Bill Nelson. Secretary England, please describe the 
process that the Department of Defense (DOD) followed in granting its 
approval within the CFIUS process. Does the DOD look at the deal solely 
in regards to the potential threat, or does it look at it in the 
context of the overall relationship with UAE? Please respond 
specifically to the concern that the DOD may have agreed to approve the 
deal as a ``trade'' in exchange for our existing military relationships 
with UAE.
    Secretary England. The DOD did not agree to approve the deal as a 
``trade'' in exchange for our existing military relationships with the 
UAE. The DOD conducted an in-depth and comprehensive review of the 
proposed transaction. This transaction was staffed and reviewed within 
the DOD by 17 of our agencies or major organizations which examined the 
filing for impact on U.S. national security interests, critical 
technologies, the presence of any classified operations existing with 
the company being purchased and any other concerns this transaction 
posed. Given the issues related to port security in this case, we took 
the added measure of including U.S. Transportation Command among the 
reviewing agencies and organizations. In summary, DOD conducted a 
comprehensive and indepth review of this transaction, and no issues 
were raised by any of the reviewing agencies or organizations within 
the DOD.

    20. Senator Bill Nelson. Secretary England, it is my understanding 
that some of the ports implicated by the Dubai Ports World deal are 
centers for shipment of military materiel. Did the DOD consider the 
strategic implications of this deal in light of which specific ports 
are involved and how they are used in military operations?
    Secretary England. The DOD considered the strategic implications of 
this deal in light of the specific ports involved and how they are used 
in military operations. In particular, consideration was given to the 
critical infrastructure aspects of this case because some of the port 
facilities also handle U.S. military traffic. Defense analyzed the 
Dubai Ports World case thoroughly and determined that it posed no risk 
to national security, including to the shipment of military cargo. The 
U.S. Transportation Command (USTRANSCOM) is the Department's designated 
single port manager for military cargo. Port operations are overseen by 
military and career government civilians. Other ports utilized for 
military cargo have no connection with the Peninsular & Oriental 
Steamship Navigation Company.
                Questions Submitted by Senator Evan Bayh

                       CONSIDERATION OF COUNTRIES

    21. Senator Bayh. To the panel, was any consideration given to the 
country in which the acquiring entity is located?
    Secretary England. The DOD took into account a number of factors 
relating to the UAE. For example, Dubai was the first Middle Eastern 
entity to join the CSI--a multinational program to protect global trade 
from terrorism. It was also the first Middle Eastern entity to join the 
Department of Energy's Megaports Initiative, a program aimed at 
stopping illicit shipments of nuclear and other radioactive material. 
In reviewing CFIUS filings, foreign government control and influence 
over an acquiring company is an important consideration. But the actual 
possibility of direct control and influence varies with the nature of 
the transaction, including the types of companies being acquired and 
how the business is ultimately managed. It may also depend on whether 
the acquiring company is in a country of concern. If the DOD identified 
threats to national security that could not be resolved adequately 
during the 30-day review period, we would have asked for the 
transaction to go to investigation. In this case, the DOD did not have 
concerns with the foreign government involved, the acquiring company, 
or the nature and structure of the actual business operations. The 
ports will remain under the ownership and control of U.S. State and 
local authorities, not DP World.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. CFIUS regularly considers the country in which 
an acquiring entity is located as part of its broad and comprehensive 
security review and gives extra scrutiny to transactions involving 
foreign governments. CFIUS agencies are guided by the criteria in the 
Exon-Florio amendment and consider whether the foreign acquirer, acting 
through the U.S. target company, might take action to threaten the 
national security and, if a threat is identified, whether existing laws 
are adequate and appropriate to deal with it.
    In establishing whether the foreign acquirer may be a threat to 
national security, CFIUS examines the intelligence reporting and any 
reports of the foreign acquirer violating U.S. laws and regulations, 
such as not complying with the export control laws. In addition, it is 
important to examine the home government of the foreign company with 
respect to a number of issues, including whether it maintains an 
acceptable export control regime that protects against unlawful U.S. 
technology diversion.
    Secretary Jackson. As part of its comprehensive examination of the 
potential national security effects of every CFIUS transaction, DHS 
always considers the identity of the acquiring entity and its 
connection to the government.

    22. Senator Bayh. To the panel, should the law be amended to 
require such consideration?
    Secretary England. The DOD defers to the Treasury Department, the 
Chair of the CFIUS on this question.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. The law need not be amended to require such 
consideration because, as described above, CFIUS already considers an 
acquirer's country of origin in every case.
    Secretary Jackson. The country in which an acquiring entity is 
located is already considered as part of the national security 
analysis, so there is no need to amend the law to require such a 

                          LINKS TO TERRORISTS

    23. Senator Bayh. To the panel, was there any consideration and/or 
investigation into the UAE's links to terrorist groups? Should there 
have been?
    Secretary England. There was consideration and investigation into 
any reports of the UAE's links to terrorist groups. The UAE has been a 
key partner in the war on terror, working closely with the United 
States to shut down terror finance networks. The UAE has worked with us 
to stop terrorist financing and money laundering, by freezing accounts, 
enacting aggressive anti-money laundering and counterterrorist 
financing laws and regulations, and exchanging information on people 
and entities suspected of being involved in those actions.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. Yes, consideration was given to the UAE's 
position on terrorism. The UAE has addressed terrorist financing issues 
since September 11 and has worked with the United States in shutting 
down terrorist finance networks. The UAE has strengthened its banking 
laws and regulations to prevent the misuse of its financial 
institutions by money launderers and terrorist financiers. The UAE has 
taken steps to curb and block financial flows to terrorists. We 
continue to encourage the UAE government to take further steps to 
strengthen its financial defenses and to vigorously enforce its 
existing anti-money laundering/counterterrorist financing laws and 
    In its thorough review of the proposed DP World transaction, CFIUS 
did not uncover any evidence that any DP World executive contributed 
funds to terrorist organizations. As in all of its cases, CFIUS 
carefully considered the possibility that the proposed transaction 
could contribute to a heightened risk of terrorism.
    In the first review of the DP World transaction, CFIUS requested 
and received an assessment of the transaction from the DNI's 
Intelligence CARC as well as extensive analytical input from the 
National Counterterrorism Center (NCTC). The CARC conducted a thorough 
assessment of the proposed transaction, which CFIUS member agencies 
reviewed carefully before making a determination on whether or not to 
proceed to an extended 45-day investigation. CFIUS also requested and 
received an assessment of the transaction from the DIA as well as 
extensive analytical input from the National Counterterrorism Center.
    During the second review, an all-source, all-threat assessment was 
produced by the National Intelligence Council, which incorporated 
judgments based on terrorist-related name traces of senior DP World 
personnel conducted by the Federal Bureau of Investigation and the 
Intelligence Community Acquisition Risk Center. The Treasury 
Department, DHS, and Department of Justice also directed other 
appropriate authorities to investigate whether any DP World executive 
was implicated in terrorism, money laundering, or any other criminal 
activity. A thorough interagency search did not produce evidence of any 
such activity.
    Secretary Jackson. A detailed answer to this question would involve 
the discussion of classified material. The unclassified answer is that 
all relevant information, including any alleged links to terrorist 
groups, was considered.


    24. Senator Bayh. To the panel, what consideration was given to the 
nature of the asset? Specifically, was there a closer examination 
because the acquisition involved critical infrastructure?
    Secretary England. For the DOD, consideration was given to critical 
infrastructure because some of the port facilities also handle U.S. 
military cargo. Defense analyzed the Dubai Ports World case thoroughly 
and determined that it posed no risk to national security, including to 
the shipment of military cargo. The U.S. Transportation Command 
(USTRANSCOM), the DOD's designated single port manager for military 
cargo, took part in the review. Port operations are overseen by 
military and career government civilians. Other ports utilized for 
military cargo have no connection with Peninsular & Oriental Navigation 
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. As part of CFIUS' broad consideration of 
national security issues, CFIUS always considers the nature of the 
assets being acquired and whether such assets represent critical 
infrastructure for the United States, broadly defined. With respect to 
the DP World transaction, CFIUS member agencies carefully considered 
the fact that P&O North America carries out operations at ports across 
the Eastern and Gulf Coasts. The Committee looked at both threats and 
vulnerabilities to the United States when assessing the implications of 
the DP World deal. CFIUS agencies do not ask companies to enter into 
security agreements for every transaction CFIUS reviews; the fact that 
this acquisition involved critical infrastructure played a role in 
DHS's decision to seek assurances. In fact, DHS signed an assurances 
letter with DP World with respect to law enforcement, public safety, 
and national security.
    Secretary Jackson. DHS gave very close consideration to this 
transaction because of the nature of the asset and its role within our 
critical infrastructure. Given our special responsibilities for 
critical infrastructure pursuant to Homeland Presidential Security 
Directive (HSPD)-7, DHS takes a particularly active role in 
transactions like DP World that involve an asset under the regulatory 
supervision of DHS and/or where the asset is part of the Nation's 
critical infrastructure.

    25. Senator Bayh. To the panel, should the law be amended to 
require such consideration?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. CFIUS already considers a broad range of factors 
in considering whether a proposed acquisition could pose a threat to 
national security, including whether the assets to be acquired 
constitute critical infrastructure. Consequently, we do not believe it 
is necessary to amend the law to require consideration of such factors.
    Secretary Jackson. No amendment to the law is necessary since DHS 
already gives close scrutiny to any transaction involving a critical 
infrastructure asset.


    26. Senator Bayh. To the panel, was there any thought to notifying 
Congress in advance of this pending transaction?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. Over the past 17 years, CFIUS has not notified 
Congress before a review and investigation is complete. To keep 
Congress informed adequately and regularly about the CFIUS process, I 
have offered that Treasury, on behalf of CFIUS, orally briefs our 
oversight committees, the Senate Banking and House Financial Services 
Committees, generally every quarter on completed reviews. On a case-by-
case basis, CFIUS may suggest that its oversight committees invite 
other potentially interested members and committees with jurisdiction 
over areas affected by decisions under Exon-Florio to attend these 
briefings. For instance, Treasury officials were scheduled to brief 
Senate Banking Committee staff on CFIUS matters on February 16, but the 
briefing concentrated on the DP World case, which had arisen the 
preceding weekend. I am open to other suggestions on ways to improve 
our reporting on the process so that Congress can fulfill its oversight 
    Secretary Jackson. Traditionally, Congress has not been notified of 
pending CFIUS cases. At the time this transaction was under review, the 
Department of the Treasury, as interagency chair, had the lead role in 
providing information to Congress on transactions that had been 

    27. Senator Bayh. To the panel, should the law require that 
congressional notification be made?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. The administration is committed to improved 
communication with Congress in connection with the CFIUS process. Since 
the DP World matter arose, we have promptly notified Congress of all 
reviews upon completion. As noted above, we are also briefing Congress 
on a quarterly basis.
    Secretary Jackson. The administration and the CFIUS agencies are 
examining how to expand notifications of decisions to Congress so that 
it can fulfill its important oversight responsibilities. Since those 
discussions are still ongoing, it would be premature for DHS to express 
a firm opinion at this time.


    28. Senator Bayh. To the panel, did the CFIUS ask for the views of 
the DNI?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. In the first review of the DP World transaction, 
CFIUS requested and received an assessment of the transaction from the 
DNI's Intelligence CARC. The CARC conducted a thorough assessment of 
the proposed transaction, which CFIUS member agencies reviewed 
carefully before making a determination on whether or not to proceed to 
a further 45-day investigation. CFIUS also requested and received an 
assessment of the transaction from the DIA as well as extensive 
analytical input from the National Counterterrorism Center.
    After DP World filed a second notice under the Exon-Florio 
amendment, an all-source assessment was conducted by the National 
Intelligence Council of any potential threats arising from the proposed 
transaction. As part of some procedural changes CFIUS has made to 
improve its reviews, the DNI's National Intelligence Council is now 
providing consolidated all-source Intelligence Community assessments of 
any potential threats arising from a proposed transaction for all CFIUS 
    Secretary Jackson. The views of the intelligence community are 
considered in every CFIUS case since the Director of National 
Intelligence's CARC provides classified reports to all CFIUS members. 
The CARC provided a classified threat assessment to all CFIUS members 
regarding the proposed DP World transaction.

    29. Senator Bayh. To the panel, should the DNI play a substantive 
role in CFIUS?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. Senior representatives from the Office of the 
DNI now participate in all CFIUS meetings. The DNI does not and should 
not vote on CFIUS matters because the role of the DNI is to provide 
intelligence in support of the President and not to issue policy 
judgments based upon that intelligence. However, the DNI examines every 
transaction and provides CFIUS with broad and comprehensive 
intelligence assessments.
    Secretary Jackson. DHS is not certain what is meant by playing ``a 
substantive role.'' The intelligence community provides relevant 
reporting in each CFIUS case. The DNI is asked to assess the threat to 
U.S. national security posed by each proposed transaction, not to 
render a judgment about whether the transaction should be approved. DHS 
believes that these policy judgments must continue to be made by each 
of the CFIUS members. CFIUS continues to work with the DNI to integrate 
appropriately the DNI into the CFIUS process.


    30. Senator Bayh. To the panel, has any consideration been given to 
convening unclassified public hearings?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. Since implementation of the Exon-Florio 
amendment involves national security, there is a limit on the extent to 
which the process can be public. For example, sometimes the impetus for 
an investigation is based on information contained in a classified 
report. In such cases, it may not be possible to reveal the reasons for 
an investigation without compromising classified information. Similar 
considerations may pertain to the reasons for the final determination 
by the President. In addition, companies filing with CFIUS provide 
proprietary information to enable CFIUS to conduct its reviews. Under 
the Exon-Florio amendment, this information--and the fact of the filing 
itself--cannot be made public by the government.
    Secretary Jackson. The public has a role to play in the CFIUS 
process by alerting government officials, to national security concerns 
they perceive from transactions that have been reported on in the 
press. DHS does not believe, however, that there should be a formal 
mechanism in the CFIUS process for the general public to express 
satisfaction or dissatisfaction with proposed or pending mergers, 
acquisitions, and takeovers by or with foreign persons.
    Moreover, under Exon-Florio and its implementing regulations, no 
information provided to CFIUS in connection with a CFIUS review may be 
made public. Therefore, any detailed discussion in an unclassified 
public hearing of a transaction reviewed by CFIUS would be problematic.

    31. Senator Bayh. To the panel, should the law be amended to allow 
some public participation?
    Secretary England. The DOD defers this question to the Treasury 
Department, the Chair of the CFIUS.
    Secretary Joseph. The State Department defers this question to the 
Treasury Department, the Chair of the CFIUS.
    Secretary Kimmitt. Direct public participation in the CFIUS process 
would be problematic given the commercial sensitivity of much of the 
information provided and discussed in connection with the CFIUS 
process. The administration believes that the most appropriate way to 
bring about public participation is through effective communication 
with Congress.
    Secretary Jackson. For the reasons already given, the law should 
not be amended.

    [Whereupon, at 1:35 p.m., the briefing adjourned.]