Saturday, April 29, 2006

Bush approves Dubai buying defense supplier

By Caren Bohan and Susan Cornwell

- President Bush approved on Friday a Dubai-owned company's $1.24 billion takeover of Doncasters, a British engineering company with U.S. plants that supply the Pentagon.

Hoping to avert the sort of controversy that erupted over another Dubai state-owned company's plan to acquire operations at U.S. ports, Bush signed off on the deal after getting company assurances that the military supply chain would not be broken, the White House said.

Democratic Sen. Charles Schumer (news, bio, voting record) of New York, a leading opponent of the failed deal that would have given Dubai Ports World control of major U.S. port operations, said he would not oppose the purchase of Doncasters by Dubai International Capital. But another lawmaker, Democratic Rep. John Barrow of Georgia, said he wanted more details.

"Congressional oversight means accountability and accountability will help make sure that we don't sell off a piece of our military industrial complex today that we wish we had back tomorrow," Barrow said in a statement.

Doncasters is an international group that operates nine U.S. plants. It makes precision parts for the aerospace and specialist automotive markets, including parts for defense contractors for use in military tanks and aircraft.

Among the Doncasters' holdings is a plant in Barrow's district in Georgia that is the sole supplier of turbine fan parts for the U.S. Abrams main battle tank.

Doncasters also makes engine parts for one variant of the Joint Strike Fighter, a Pentagon spokeswoman said. The program, co-developed by the United States and eight other countries, is building a next-generation radar-evading jet fighter.

Dubai International Capital wanted its Doncasters takeover done in March, but had to wait for a 45-day U.S. review of national security concerns by the inter-agency Committee on Foreign Investments in the United States (CFIUS). It made its recommendation to Bush two weeks ago, and Bush said he approved the deal on Friday after it was "looked at very carefully."

"It's a sale that should go through," he told reporters.


The White House said CFIUS checked "issues ranging from counterterrorism to counterproliferation to counterintelligence, among others." It said the Dubai buyer "made contractual commitments to DOD ( Department of Defense) to assure reliability of supply."

U.S. Army Secretary Francis Harvey said the Army had recommended approval of the deal even though it normally preferred to have more than one source for the parts it buys.

"We have British firms, we have French firms, we have Japanese firms" as suppliers, he said. "I don't have concern."

In the ports dispute, Bush was at odds with members of his Republican party as well as Democrats who were angry they were not consulted about a deal with clear security implications.

This time, the administration briefed some lawmakers, and the White House also sent a classified report about its decision on the deal to House and Senate leaders on Friday.

Schumer said Friday that the Doncasters' deal was different from the ports saga because it was carefully considered and involved products -- not services possibly easier to sabotage.

But Barrow was not satisfied, saying Bush should provide a full report with specifics of any assurances in the deal.

House Armed Services Committee Duncan Hunter, a California Republican, said his own staff review indicated the Doncasters deal was okay. "Numerous American companies" could make the tank components that Doncasters makes, Hunter said.

Dubai International Capital's purchases include Britain's Tussauds Group, owner of Madame Tussauds waxworks, and a stake in car maker DaimlerChrysler. The company is one of several Gulf Arab government-linked investors looking to use record oil revenues to diversify holdings.

(Additional reporting by Jim Wolf)

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