Dubai firm buys defense plants

WASHINGTON — President Bush on Friday approved the takeover by a Dubai company of U.S. plants that make precision-engineered components for the Pentagon, and this time, the deal stirred little opposition in Congress.

The approval allows Dubai International Capital, which is owned by the Dubai government, to take control of nine plants in the United States, some of which supply the military with parts used in aircraft and tanks.

The plants are owned by a British firm, Doncasters Group, which is being purchased by the Dubai company for $1.2 billion. Doncasters' U.S. plants, which make precision components and assemblies for such companies as Boeing, Pratt & Whitney and General Electric, are the sole source of turbine blades for U.S. tanks and aircraft, a White House statement said.

The president said the sale presents no risk to U.S. security. "That question has been looked at very carefully," he said at a news conference. "I signed off on it this morning because I am convinced" it's a sale that should go through.

The move comes seven weeks after Dubai Ports World, another government-owned company, abandoned plans to take over some terminal operations at several U.S. seaports because of an uproar over the security implications of handing such facilities to an Arab-owned concern.

Dubai International's planned takeover of Doncasters and its U.S. plants came to light during the ports controversy and helped fuel congressional demands for tighter restrictions on foreign investment in U.S. businesses. Dubai is one of seven states that make up the United Arab Emirates.

Lawmakers said the Doncasters deal underwent a lengthier, full investigation by the Committee on Foreign Investment in the United States (CFIUS), a secretive interagency panel charged with screening foreign takeovers for national-security problems.

The committee, chaired by the Treasury Department, includes representatives from the Pentagon, the Homeland Security Department and a number of other agencies.

"This investigation was a significant improvement over what happened before," said Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee.

Sen. Charles Schumer, D-N.Y., who spearheaded opposition to the ports takeover, agreed, saying, "There are two differences between this deal and the Dubai Ports deal. First, this went through the process in a careful, thoughtful way; and second, this is a product, not a service, and the opportunity to infiltrate and sabotage is both more difficult and more detectable. Unless new information comes out, I will not oppose this deal."

Administration officials took care to put the Doncasters transaction through a longer series of formal hurdles, including a full 45-day review that requires submission of findings to the president for a decision. They also briefed congressional leaders in advance.

As is common in CFIUS reviews of foreign purchases, the committee demanded certain conditions for approval. Presidential spokesman Scott McClellan said the panel carefully considered that the plants owned by Doncasters are the Pentagon's sole source of supply for turbine-engine blades. "While the committee did not find credible evidence" to suggest the new Dubai owners might threaten national security, a subsidiary of the Dubai company "made contractual commitments ... to assure reliability of supply."

Doncasters has nine plants in the United States, including two each in Connecticut and Alabama and one each in Massachusetts, South Carolina, Georgia, California and Oregon.

At least one lawmaker dissented. Rep. John Barrow, a Democrat whose Georgia district includes one of the plants, said, "Remember, these are the same people who are still arguing that the Dubai ports deal would've actually made us more secure."

Material from Bloomberg News and The Associated Press is included in this report.