US lawmaker upset by silence on another Dubai deal

WASHINGTON, Apr 12 (Reuters) A US lawmaker fumed that the Bush administration refused to divulge anything about a security review it is conducting of a Dubai-owned company that is planning to take over several plants in the US that make equipment for defense contractors.

The Committee on Foreign Investment in the United States (CFIUS), an inter-agency panel led by the Treasury Department, is reviewing the 1.24 billion dollar takeover of Doncasters, a British engineering group with US holdings, by state-owned Dubai International Capital.

Doncasters has plants in nine US locations making parts for defence contractors. The Dubai takeover has sparked security concerns from Rep. John Barrow, a Georgia Democrat, who represents a district which has a plant that makes tank engines.

Barrow said the Treasury Department's reluctance to discuss the latest proposal with him suggested it had learned little from the congressional outcry over a now-abandoned deal that would have allowed another Dubai company to take over some US port operations.

''If I can't find out from my own government what is going on, it ain't congressional oversight,'' Barrow said in a telephone interview with Reuters yesterday.

''We (lawmakers) can't find out things ... We have no reason to believe they (the administration) are doing anything other than sleepwalking through the review process,'' he said.

The Doncasters deal has strong parallels to the ports saga. Both deals involve state-owned Dubai companies purchasing British companies with U.S. assets. In the ports case, Dubai Ports World bought a British company that operated US port terminals.

CFIUS, which vets foreign takeovers of US companies for national security concerns, initially approved the ports deal. But DP World said it would shed the U.S. assets after an outcry from Congress amid concerns about national security risks.

Amid the furor over the DP World contract, in early March, the Bush administration said it was launching a 45-day in-depth security review of the Doncasters acquisition.

Barrow said he had read media reports from Dubai that said the Doncasters purchase was expected to be approved by CFIUS tomorrow.

But the lawmaker said when he asked the assistant Treasury secretary for legislative affairs, Kevin Fromer, about these reports yesterday, Fromer told him he did not know whether or when a determination would be made by CFIUS.

''We can't even find out what (security) concerns may have been raised,'' he said. He has doubts that plants making US military hardware should be sold to a Dubai company.

Barrow named similar concerns raised over the ports purchase -- that two of the Sept. 11 hijackers came from the United Arab Emirates, of which Dubai is part, and al Qaeda funding passed through UAE banks.

The Bush administration was heavily criticized for failing to better inform Congress about the DP World deal and Barrow said Treasury's continued silence was troubling.

A Treasury spokesman declined comment to Reuters on the Doncasters' review.

Bush and other US officials argued in the ports case that the UAE should be treated as a valued ally in the war on terror.

Barrow has proposed legislation changing how the US government reviews foreign takeovers, including reports to key lawmakers on reviews. The Senate Banking Committee has approved reforms to CFIUS that include some congressional notification provisions.

REUTERS DH BD0628