Despite Dubai Ports World, Paulson Is for Downgrading CFIUS Investigations
June 21, 2007 (LPAC)--Treasury Secretary Henry Paulson, in a confrontation with two House Financial Service Committee members yesterday, emphatically demanded that investigations of foreign investment in the United States be downgraded, despite the 2006 Dubai Ports World controversy and the current BAE takeover of Armor Holding Co.
The U.S. process for investigating a corporate takeover by a foreign firm, supervised by the Treasury Department under Congressional oversight, is known as the Committee on Foreign Investment in the United States (CFIUS). In last year's Dubai Ports World takeover controversy, the buyout of U.S. port operations had been cleared by an Assistant Secretary of Treasury, before Congress intervened and forced a complete 45-day investigation, which disallowed the takeover. Now BAE, the big British arms dealer whose bribes and other secret operations with Saudi Arabian oil and many other nations are at the center of a spectacular scandal, is taking over Armor Holdings, the U.S. firm that produces armor for Humvees of the U.S. Armed Forces. CFIUS has not said whether it is investigating this takeover.
In his House testimony and response to questions from Rep. Carolyn Maloney (D-N.Y.), Paulson flatly opposed a House bill to upgrade CFIUS oversight, which had passed almost unanimously. Maloney was the ranking Democrat on the Subcommittee on Domestic and International MOnetary Policy, Trade, and Technology, from which the bill to upgrade CFIUS came. The bill would require that either the Treasury Secretary or an Undersecretary sign off on all significant foreign takeovers. Paulson said he wanted the approvals to be made by an Assistant Secretary, a Treasury officer two levels lower. And he would not answer questions about how many assistant secretaries Treasury has, or which of them would be qualified to assess U.S. national security interests at stake in foreign takeovers of industrial, military, or infrastructural firms.