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CNN: LOU DOBBS TONIGHT February 23, 2006

CFIUS Members May Have Broken U.S. Law

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DOBBS: CFIUS, the secretive U.S. government committee that approved the Dubai Ports deal, couldn't wait to rubberstamp this stunning national security giveaway. In their haste to approve this deal, CFIUS members may have broken U.S. law.

Christine Romans reports.

(BEGIN VIDEOTAPE) CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): The super- secret committee on foreign investment officially reviewed the Dubai port deal for 23 days, but in deals like this Congress intended a 30- day review and then another 45-day full investigation.

CLARK KENT ERVIN, FMR. DHS INSPECTOR GENERAL: Because this deal, if it goes forward, will result in a foreign power acquiring a key asset, an investigation was required to have been conducted and the president was to have been informed. That didn't happen in this instance.

ROMANS: Indeed, the law requires a 45-day investigation when "the acquirer is controlled by or acting on behalf of a foreign government," which is true in this case. And the acquisition "could result in control of a person engaged in interstate commerce in the U.S. that could affect the national security of the U.S."

Patrick Mulloy helped write that 1992 statute.

PATRICK MULLOY, U.S. CHINA ECON. & SEC. REVIEW COMM.: We put in a provision called mandatory investigation. It was a government-owned corporation, do the additional 45-day investigation. Now, in this case, it is a government-owned corporation. And they did not do the investigation.

ROMANS: That's because the Treasury Department interprets the law differently. If it finds no national security concerns in the first 30-day review, then Treasury says there's no need for a full investigation.

FRANCIS TOWNSEND, BUSH HOMELAND SECURITY ADVISER: There was no need for an additional 45 days for an investigation.

ROMANS: Senator Chris Dodd sharply disagrees, saying, "Both provisions of the law are clearly met. And either the administration doesn't think that our ports are a critical security issue, or it's content with continuing to outsource our national security."

Regardless of the legalese, the Government Accountability Office last fall found 30 days is too little time for a proper analysis anyway.

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ROMANS: Now, the people who crafted this 45-day mandatory investigation rule say this deal is precisely what they had in mind when they were writing that law. The Treasury Department is standing firm on its legal interpretation.

And Lou, voters (ph) are starting to point to maybe a crack in the Treasury Department position here. If there is nothing in this that could affect national security, then why did the Treasury Department and CFIUS, as it's called, have to get extra conditions from Dubai Ports World?

DOBBS: It's more than a crack. It's a chasm and it's an absolutely -- it would be illogical to come to any other conclusion that they understood the risk when they went ahead with this deal. And it would be illogical, in my judgment, to assume that there was any other reason than political and economic expediency, and in this case, at the heart of a national security review process mandated by Congress.

Christine Romans.

Thank you.


The uproar over the UAE ports sale demonstrates how the Bush White House appears determined to put commercial interests ahead of national interests. This sale is just the latest in what has been a series of deals where this administration has allowed foreigners to take over key U.S. assets despite major national security concerns.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice over): Secretary of State Condoleezza Rice defends the sale of British-run P&O port facilities to a government-owned company in Dubai, saying it's a good deal.

CONDOLEEZZA RICE, SECRETARY OF STATE: We believe this is a deal, a port deal that serves the interests of the United States, serves our security interests, and serves the commercial interests as well.

PILGRIM: But have U.S. commercial interests taken precedent over security concerns?

PETER MORICI, UNIVERSITY OF MARYLAND: We have erred on the side of commercial interests, and we have not given adequate weight to the legitimate security concerns of the American people. We need to limit foreign investment for strategic transportation assets that provide entree into the United States and can be the vehicles of access for terrorists.

PILGRIM: It's been widely reported that British-owned P&O will transfer operations of six ports in the United States. But buried in the fine print of DOD budgets is a $15 million contract for P&O to move military equipment going to Iraq from Texas ports of Beaumont and Corpus Christi. P&O stevedores load military equipment from both ports.

JAMES CARAFANO, HERITAGE FOUNDATION: So we need to do things that make us safer and keep the U.S. economy competitive, not trade off one for the other. But we need -- we need things that do both. And I think that's essential. We need things that make America safer and continue to make this an open and economically competitive country.

PILGRIM: About a third of U.S. ports are now under foreign control through leases to major overseas shipping companies. And the cargo industry has slipped from American control also for financial reasons.

JOHN PIKE, GLOBALSECURITY.ORG: There's something like 10,000 ocean-going cargo ships around the world. Only a couple of hundred of them are under American flag.

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PILGRIM: Now, the U.S. military command in Washington that handles port deployment confirmed today that P&O operations do load military equipment onto ships. Now, P&O, up until now, has used American workers to do that work -- Lou.

DOBBS: And so when members principally of this administration and those supporting this administration have said that there will be no issue of national security, even though this company has a defense contract to move U.S. military material, how could they possibly come up with such a conclusion?

PILGRIM: Well, we've called P&O to ask them if any military operations would be transferred and they basically said no comment, they referred all of those calls to Dubai Ports company -- Dubai Ports World.

DOBBS: Kitty, thank you very much.

Kitty Pilgrim.

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