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February 24, 2006 CFIUS and the Protection of the National Security in the History of the Dubai Ports World proposed acquisition of P&O All members of the Committee on Foreign Investment in the United States (CFIUS) understand that their top priority is to protect our national security, including homeland security. On November 29 of last year, two companies publicly announced a proposed transaction: Dubai Ports World (DPW), a state-owned company located in the DPW and P&O believed that this proposed transaction could raise national security issues that should appropriately be reviewed by the U.S. Government. The companies contacted CFIUS on October 17 and voluntarily told the Committee of their intention to file a notification with CFIUS for a national security review. They also held a complete briefing for DHS and other CFIUS members with security, defense, or law enforcement responsibilities on October 31.
Each of the CFIUS 12 members (departments and agencies) conducts its own internal analysis. In this case, the Departments of Transportation and Energy were also brought in to the CFIUS review to widen the scope and to add the expertise of those agencies reviewing the transaction. On November 2, well before DP World and P&O filed with Treasury, CFIUS requested an intelligence assessment of the foreign acquirer. A little more than 30 days later -- still well before the companies formally filed with CFIUS or the review began -- the intelligence community provided CFIUS with a threat assessment regarding whether the foreign acquirer -- DPW – has the intention or capability to threaten On December 6, the companies held another pre-filing briefing for all CFIUS agencies. On December 16, the companies officially filed their formal notice with CFIUS, requesting a review. The 30-day formal review began on December 17. During that 30-day review period, DHS, which is the CFIUS agency with specific expertise on port security, negotiated an assurances letter with the companies. DHS also consulted with all other CFIUS members before the assurances letter was finalized on January 6. On January 17, roughly 90 days after the parties to the transaction first approached CFIUS about the transaction and roughly 75 days after a thorough investigation of the transaction had begun, all CFIUS members agreed that this particular transaction should be allowed to proceed, pending any other regulatory hurdles before the companies. Background on the Committee (CFIUS): CFIUS operates under the authority granted by Congress in the Exon-Florio amendment (Section 721 of the Defense Production Act of 1950). CFIUS brings together twelve department and agencies with diverse expertise to ensure that transactions are considered from a variety of perspectives and that all national security issues are identified and considered in the review of a foreign acquisition. The Secretary of the Treasury serves as the Chair of CFIUS. Other CFIUS member agencies are: The Departments of State, Defense, Commerce, Homeland Security, and Justice, and the Office of Management and Budget, the Council of Economic Advisors, the National Security Council, the National Economic Council, the Office of Science and Technology Policy, and the US Trade Representative. The Departments of Energy and Transportation, the Nuclear Regulatory Agency, and other U.S. agencies sometimes participate in the consideration of transactions that have an impact on the industries under their respective jurisdictions. Treasury receives notices of transactions, serves as the contact point for the private sector, establishes a calendar for review of each transaction, and coordinates the interagency process. The intelligence community also provides CFIUS with an independent assessment of whether the foreign acquirer poses a threat to the national security. Upon receipt of a filing, CFIUS conducts a 30-day review, during which time each CFIUS member agency conducts its own internal analysis of the effects on national security implications of the notified transaction, and particularly an analysis of the foreign acquirer. The agency(ies) with primary concern with a particular transaction will take the lead in negotiations with the foreign company. 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. G:ITICFIUS Case 05-60 Dubai-P&OE-F Fact Sheet wit |
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