[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[Extensions of Remarks]
[Pages 2294-2296]
[From the U.S. Government Publishing Office, www.gpo.gov]




    INTRODUCTION OF THE FOREIGN INVESTMENT SECURITY IMPROVEMENT ACT

                                 ______
                                 

                           HON. PETER T. KING

                              of new york

                    in the house of representatives

                       Tuesday, February 28, 2006

  Mr. KING of New York. Mr. Speaker, I rise to speak in support the 
Foreign Investment Security Improvement Act of 2006, a bill to make 
certain that there is a full and complete investigation into the 
national security implications of the proposed acquisition of U.S. port 
terminal operations by Dubai Ports (DP) World--and to ensure Congress' 
crucial oversight role with respect to this transaction. I introduce 
this legislation today with support of my Ranking Member of the 
Committee on Homeland Security, the Honorable Benny Thompson, and 80 
bipartisan colleagues.
  This legislation, and the message it sends about the importance of 
the national security concerns with the proposed deal, is crucial given 
what appears to be the cursory review of the serious national security 
questions that exist regarding the acquisition of port terminal 
operations by a company that is wholly-owned by the Government of 
Dubai.

[[Page 2295]]




   Serious National Security Concerns Exist Over DP World Acquisition

  On February 13, 2006, shareholders from Peninsular and Oriental 
Steamship Navigation Co. (P&O) approved an acquisition proposal from DP 
World, a port operations company owned by the government of Dubai, a 
member of the United Arab Emirates (UAE). The deal would position DP 
World to conduct terminal operations at six U.S. ports: the Port of New 
York and New Jersey, the Port of New Orleans, the Port of Miami, the 
Port of Baltimore, the Port of Philadelphia, and the Port of Newark.
  I have serious concerns over the national security implications of 
the proposed takeover of U.S. port operations by a government who less 
than five years ago was documented as having significant ties to 
terrorism. As the 9/11 Commission reported, money used to carry out the 
September 11th attacks was funneled through UAE banks, many of the 
hijackers traveled to the U.S. from the UAE, at least one of the 
hijackers was born in the UAE, and the UAE was used as a crossroads for 
the shipment of nuclear material to Iran.
  I recognize that the UAE has provided significant assistance to our 
efforts in the War on Terror since 9/11. I commend the UAE for its 
willingness to be an ally in the War on Terror, including military 
cooperation, intelligence sharing and money laundering prevention and I 
encourage its continued efforts in securing our world. However, these 
positive commitments do not mean that we should ignore the real 
security concerns that exist with respect to this transaction.
  Late last year, DP World and P&O requested that the Committee for 
Financial Investment in the United States (CFIUS) review the 
transaction for national security concerns. CFIUS, an interagency 
committee chaired by the Department of Treasury and with members from 
twelve other agencies, was established by Executive Order in 1975 and 
assigned to carry out the national security reviews mandated under 
Section 721 of the Defense Production Act of 1950. Current law requires 
CFIUS to review proposed foreign acquisitions to evaluate national 
security concerns during a 30-day initial review period. If national 
security concerns remain after this initial review period, the statute 
requires a more thorough 45-day investigation, followed by a 
Presidential evaluation of the proposed transaction. In the case of DP 
World, the Committee incredibly raised no national security objections 
to the proposed deal after a 30-day review period, and the more 
detailed 45-day investigation was not triggered.
  Members of Congress, state and local officials responsible for port 
security and the public at large were understandably shocked to first 
learn from press reports that this transaction had been approved in 
thirty days, without a formal investigation and without any attempt by 
the Administration to provide basic information on the deal in advance. 
I was also shocked to learn that the CFIUS approval was made by mid-
level officials and that senior decision makers in the Administration--
including the Secretary of Defense, Secretary of the Treasury, 
Secretary Homeland Security and the President of the United States--
were not informed until they became aware of the CFIUS approval via 
press reports. It also appears that state and local officials who 
oversee the affected ports were never consulted or otherwise informed 
of the DP World acquisition.
  In response to considerable public pressure over the past few weeks, 
the Administration and DP World have come forward to offer only limited 
information on the details of the 30-day CFIUS review, the national 
security concerns examined, and the measures taken to address those 
concerns. For informed judgments to be made, significantly more 
information is needed.
  DP World and the Administration recently announced an agreement to 
subject the DP World deal to a 45-day CFIUS investigation. While this 
announcement is a step in the right direction there remain a number of 
serious questions about the company and its security practices that 
must be answered before the deal can proceed. Congress must be made 
aware of the findings so that we can be certain our nation's homeland 
security is not being undermined.
  As this 45-day investigation begins, more questions exist than 
answers. I stress that this 45-day investigation must not be viewed as 
a 45-day campaign to ``educate'' Congress on the limited work that has 
already been done by CFIUS. I am troubled by recent statements of 
senior administration officials that suggest that the focus of these 45 
days should be on addressing so-called misconceptions of Congress. 
Rather, this 45-day review must be vigorously pursued by all relevant 
federal agencies to scrutinize the work that has been done on the 
proposed DP World transaction, conduct additional reviews where 
appropriate, and extract additional commitments from the company where 
necessary.
  Consistent with the legislation I introduce today, I expect CFIUS to 
review U.S. Coast Guard assessments of foreign ports where DP World 
operates, perform background checks of DP World officers and security 
personnel, and to provide a thorough review of national security and 
port security impacts--in consultation with state and local officials 
responsible for port security. It is essential that CFIUS recognize the 
significant concerns that exist regarding U.S. critical 
infrastructure--an area of national security that has not traditionally 
been recognized in the CFIUS process. I expect CFIUS to fully 
investigate the financing and control of DP World, including the 
involvement of UAE and Dubai government officials in company operations 
particularly current and former government officials that may have ties 
to terrorist organizations and/or the Taliban. I expect that CFIUS will 
review the company structure and the potential for terrorist 
sympathizers to infiltrate company operations--including port 
operations in the U.S. We must take all appropriate steps to ensure 
that al-Qa'ida and other terrorist organizations are not learning about 
our vulnerabilities based on access to DP World operations.
  Finally, I urge CFIUS to make clear that this 45-day investigation is 
a serious, thorough review that will address all relevant national 
security concerns and to assert the right of the President to block the 
deal or extract additional assurances should national security concerns 
require such actions. It is crucial that the President make clear that 
CFIUS will not prejudge the results of this investigation.


                    Congress Must Stand Ready to Act

  While I am encouraged by recent developments taken to voluntarily 
begin an investigation, I believe Congress must nonetheless stand ready 
to act pending the results of the 45-day investigation. The Foreign 
Investment Security Improvement Act of 2006 would impose an immediate 
suspension of existing CFIUS approval of the DP World transaction 
granted on January 17, 2006; require a 45-day CFIUS investigation of 
the DP World transaction, to include (1) a review of U.S. Coast Guard 
assessments of foreign ports where DP World operates, (2) background 
checks of DP World officers and security personnel, (3) an evaluation 
of the impact of port security by DP World's control of U.S. port 
operations, and (4) consultation with the U.S. Coast Guard, U.S. 
Customs and Border Protection, the Secretary of Homeland Security and 
State and local officials, an evaluation of the impact on national 
security of DP World operations at affected U.S. ports. Following the 
45-day review, the bill would require, within fifteen days, a report to 
Congress providing the detailed findings of the investigation and the 
Presidential determination. Congress would then have 30 days to reverse 
an approval of the transaction through legislation.
  At a minimum, CFIUS should use this legislation to inform its 
investigation and subsequent notification of Congress. As Chairman of 
the Committee on Homeland Security, I intend to work with my Committee 
Members to aggressively scrutinize the findings of CFIUS following its 
investigation, including a thorough review of the intelligence 
assessments utilized.


             Broader Concerns Exist With the CFIUS Process

  While the legislation introduced today only addresses the short-term 
concerns with the CFIUS review of the DP World transaction, I believe 
the current controversy has revealed that the larger CFIUS review 
framework is broken. Beyond the review of the proposed DP World 
transaction, I want to make clear that I intend to work with my 
colleagues in the Congress to conduct a comprehensive review of the 
CFIUS process and ensure that the Federal Government's review of 
foreign investments properly account for the security concerns of a 
post-9/11 world. I specifically note several concerns that I have with 
respect to the CFIUS process:
  The current statute was enacted at the end of the cold war in the 
1980s, when encouraging foreign investment was a priority. The 
9/11 attacks changed our thinking and highlighted the need to more 
carefully scrutinize national security concerns.
  Current CFIUS practices effectively nullify the statute's requirement 
for a more extensive investigation where national security concerns are 
raised with respect to a transaction involving a foreign government-
controlled entity.
  Current CFIUS practices create an incentive to avoid the formal 45-
day investigation and subsequent Presidential decision because of a 
perceived negative impact on foreign investment and a conflict with the 
U.S. open investment policy.
  The compressed 30-day initial review period effectively provides 
CFIUS with only 23 days to review all national security issues 
presented by a proposed transaction.

[[Page 2296]]

  ``National security'' is defined narrowly under CFIUS regulations, 
and does not explicitly embrace concerns over U.S. critical 
infrastructure. While the Departments of Homeland Security, Justice and 
Defense have moved to utilize an expanded view of national security, 
there is concern that many of the CFIUS members rely on an overly 
constrained ``pre-9/11'' view of national security.
  From 1997 through 2004, CFIUS received notices for 451 proposed or 
completed acquisitions. The committee initiated only eight 
investigations during that period.
  Enforcement of assurances provided during CFIUS review is the 
responsibility of the agency requesting those assurances. It is not 
clear whether sufficient resources are devoted to ensure parties to a 
transaction live up to their commitments.
  Congress is only notified when a full 45-day investigation and 
Presidential decision are completed. The lack of notification has led 
to the situation where the concerns of senior Administration officials, 
Members of Congress and the general public cannot be expressed until 
after a deal is done. This lack of transparency must change.
  Possible long-term CFIUS reforms to consider include the following:
  Elevate the Secretary of Homeland Security to serve as co-chair of 
CFIUS (the Secretary of the Treasury is the current chair) to increase 
emphasis on security issues;
  Abolish the current statutory interpretation by CFIUS by imposing a 
standard 75-day review, rather than the two-tiered 30/45 day structure, 
providing additional time for review and removing the negative stigma 
associated with an investigation;
  Expand Congressional notification and oversight with respect to CFIUS 
reviews;
  Revise the statutory factors to be considered in CFIUS national 
security reviews to include critical infrastructure concerns; and
  Require vigorous agency oversight and enforcement of letters of 
assurance provided by parties to a transaction.
  Mr. Speaker, I want to thank my Ranking Member, Mr. Thompson, for his 
support in developing this legislation, and I look forward to working 
with him to ensure that our national security is not undermined by the 
proposed DP World acquisition. I urge the Administration to be diligent 
in investigating this transaction and to recognize Congress' important 
role in safeguarding our national security.

                          ____________________