Array

WASHINGTON, May 18 (Reuters) Congress should not require the US government to do an extended investigation whenever a foreign state-owned company wants to buy American assets, a Bush administration official said on Wednesday.

''Requiring an extended investigation in which no national security concerns are present would divert resources, thereby diminishing the committee's ability to protect national security,'' Assistant Treasury Secretary Clay Lowery told a House Financial Services subcommittee hearing.

Legislation is pending in the U.S. Senate and House that would force the government to spend an extra 45 days -- beyond an already-standard 30-day review -- investigating proposed takeovers when a foreign purchaser is state-owned.

The bills resulted from a furor earlier this year when Dubai Ports World, owned by the United Arab Emirates, acquired operations at several major US ports.

Lowery said an automatic time extension would be counterproductive and could result in ''scores'' of extra investigations by the panel that does them.

The inter-agency Committee on Foreign Investment in the United States (CFIUS) already vets all foreign takeovers for 30 days. The panel moves to a 45-day probe if any national security concerns are raised, Lowery said.

In the Dubai Ports World case, lawmakers were outraged that an extra 45 days were not taken by the government to examine the deal, and that the Bush administration had not notified Congress of a deal involving a foreign state-owned company and critical US infrastructure.

Their protests pressured Dubai Ports World into announcing it would sell the US assets.

Lowery said the Treasury Department was now promptly notifying Congress of every CFIUS review upon its completion.

He also said the administration was preparing a report to Congress on possible foreign efforts to conduct economic espionage or acquire critical technologies in the United States. Such a report had not been done since 1994, Lowery said.

Under the Bush administration, 281 notices of foreign takeovers were filed with CFIUS, and nine of those deals were subject to 45-day investigations, Lowery said. Only two were sent to the president for a final determination.

Last month, Bush approved a $1.24 billion purchase by state-owned Dubai International Capital of British engineering company Doncasters Group, which operates U.S. plants making parts for defense contractors.

Earlier this month, CFIUS began reviewing a $5.4 billion agreement by Toshiba Corp to buy Westinghouse, the US power plant arm of British Nuclear Fuels. It is also expected to review the $14.1 billion acquisition by France's Alcatel of New Jersey-based Lucent Technologies Inc., a telecommunications equipment maker.

Reuters SK GC0619