Second Dubai firm faces investigation

WASHINGTON – The Bush administration, stung by the public outcry over the Dubai port deal, has launched a national security investigation of another Dubai-owned company set to take over plants in Georgia and Connecticut that make precision components used in engines for military aircraft and tanks.

The administration notified congressional committees this week that its secretive Committee on Foreign Investment in the United States is investigating the security implications of Dubai International Capital’s $1.2 billion acquisition of London-based Doncasters Group Ltd., which has subsidiaries in the United States. It is also investigating an Israeli company’s plans to buy the Maryland software security firm Sourcefire, which does business with Defense Department agencies.

Administration officials are privately briefing leaders of half a dozen House and Senate committees this week about the two planned transactions, concerned that both deals could stir controversy in a political climate that remains supercharged over the Dubai port deal.

Republican and Democratic lawmakers angrily protested after learning late last month that the administration had approved a $6.8 billion deal to allow a maritime company based in the United Arab Emirates to take over significant operations at six U.S. ports without a thorough investigation and without consulting members of Congress. Last weekend, the Dubai maritime company agreed to a 45-day investigation to stem the protest and allay concerns of a possible breach of U.S. port security.

In the past, the foreign investment committee rarely told Congress of such inquiries. Wary of another misstep, administration officials decided to inform lawmakers of the two other pending transactions with national security implications for the United States.

There have been suggestions in the trade press that the publicly traded Israeli firm, Check Point Software Technologies, has been subjected to more scrutiny than Dubai Ports World, the state-owned Arab company that was initially cleared to take over operations at the six major U.S. ports with no security investigation. That inquiry was initiated only after an outcry about turning over port security to a country that has been cited for ties to terrorism.

Dubai International Capital’s acquisition of Doncasters could present the same political problems created by Dubai Ports World’s purchase of London-based Peninsular and Oriental Steam Navigation Co. Once again, a state-controlled Dubai company with deep pockets is purchasing a British firm with U.S. holdings. Doncasters has operations in nine U.S. locations and manufactures precision parts for defense contractors such as Boeing, Honeywell, Pratt & Whitney and General Electric.

Although many foreign companies manufacture parts used in U.S. military equipment, in this instance members of the foreign investment committee decided to look more carefully at the Doncasters transaction.