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A bipartisan group of U.S. senators on Thursday expressed concerns about the operation of a controversial panel that oversees takeovers of U.S. companies by foreign investors and scolded key agency officials who declined to participate in a congressional examination of the review process. “I am worried that we are letting business trump national security,” said Senate Banking Committee chairman Richard Shelby, R-Ala., at a hearing scheduled to discuss a Sept. 28 Government Accountability Office report highlighting disagreements within the interagency Committee on Foreign Investment in the United States, or CFIUS, about how the panel should conduct its investigations. “We have enough insight from anecdotal information emanating from press accounts of individual cases, GAO reports dating from 1992 and committee research to hold firm the belief that improvements to the current system are warranted,” Shelby said. CFIUS, a multi-agency panel with 12 members, including representatives from the Department of Homeland Security and the Commerce Department, examines national security issues raised by cross-border deals. Shelby and Sen. Paul Sarbanes, D-Md., expressed concern about how agency officials including Treasury Secretary John Snow, who chairs CFIUS, declined invitations to participate in the hearing. “This issue is not going to go away, and we’re not going to let it go away,” Shelby said to reporters after the hearing. “I believe the Treasury secretary and undersecretary of Treasury should be here, and I believe they will be here.” Lawmakers participating in the hearing expressed support for the recommendations of the GAO report, which suggested expanding the amount of time participating agencies have to analyze deals that raised national security concerns. In some cases, participating agencies have only three to 10 days to make recommendations, often not enough time to conduct a thorough investigation, the GAO wrote. Sen. Evan Bayh, D-Ind., one of the lawmakers that requested the GAO report, expressed alarm about how the existing process puts the onus on merging corporations to submit an application to the panel for review, rather than have government agencies initiate such examinations. “When it comes to making the final call on national security, it should be the government, not the private sector, that makes the final call,” Bayh said. Bayh also indicated he would support expanding the definition of what constitutes a national security risk to include energy security, citing recent controversy and general congressional outrage over a now-abandoned bid by Beijing-based CNOOC Ltd. to buy Unocal Corp. of El Segundo, Calif. Sarbanes said he generally supported the GAO report’s analysis of problems within CFIUS, noting in particular how it raised concerns that Justice, Homeland Security and Defense departments have often been “pushed aside” by stronger agencies on the committee, such as Treasury, that are more concerned about economic considerations than national security. “How do they resolve these disputes?” Sarbanes asked. Todd Malan, president of the Washington-based business lobby Organization for International Investment, told the senators that he was disappointed Treasury did not testify to defend the existing CFIUS review process, arguing that many of the GAO assertions needed to be rebutted. He noted that expanding the length of time CFIUS agencies have to review foreign acquisitions that raise national security concerns would have economic consequences. “Time is money,” Malan said in a brief interview after the hearing. Copyright �2005 TDD, LLC. All rights reserved.

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