Monday, May 01, 2006

Dubai Firm's Deal for Pentagon Supplier Is Cleared

By: Greg Hitt
April 29, 2006

Despite wide security concerns, President Bush approved a $1.2 billion deal that will give Dubai International Capital, a Dubai-owned firm, control of nine manufacturing plants in the U.S. that supply machine parts to the Pentagon for military vehicles and aircrafts; Dubai International is taking over for Doncasters Group Ltd., a United Kingdom company. President Bush defended his decision last Friday stating, "I signed off on it this morning because I'm convinced -- at the recommendation of the [Committee of Foreign Investment in the U.S.] as well as our military -- that it's a sale that should go through." The CFIUS committee conducted a 45-day investigation of the transaction, which thus far has provoked nowhere near the level of concern displayed over the ports deal.

The administration conducted a "careful, thoughtful" review of the Doncasters deal, which is very different from the ports transaction. "This is a product, not a service, and the opportunity to infiltrate and sabotage is both more difficult and more detectable," said Senator Charles Schumer, a New York Democrat. CFIUS is led by the Treasury Department and includes representatives of the State and Defense departments, which are deeply involved in the process.

Mr. Bush's press secretary said the review included an assessment of "potential threats to our national security" by the U.S. intelligence community, and as a condition of approval of the deal, the company signed an "assurances agreement" with the Pentagon, agreeing to provide a continuous supply of parts.

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