Foreign takeover review office abolished in 2000

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The Clinton administration abolished in 2000 the Pentagon office that raised warnings about proposed foreign takeovers of U.S. assets, such as DP World's recent bid to run terminals at six major ports.

Michael Maloof, who ran the Technology Security Operations office until its dismantlement, said he would have demanded the intelligence community investigate any ties between officials in the United Arab Emirates (UAE) and the al Qaeda terror network.

Members of Congress have criticized the White House for not conducting such a 45-day probe before the U.S. Committee on Foreign Investment in the United States' (CFIUS) Jan. 17 approval of DP World's purchase of a British firm now running the terminals. The political firestorm prompted DP World, a Dubai-based ports operator,to call for the 45-day investigation, as provided for in federal law.

Mr. Maloof, who is retired after 29 years of government service, said the Bush administration should consider re-establishing the office in light of the war on terror.

It once operated within the Pentagon's Defense Technology Security Administration (DTSA). He said DTSA no longer has the ability to aggressively investigate foreign acquisitions and merely surveys various Pentagon offices to obtain input before making a recommendation to CFIUS.

It was DTSA that handled the DP World issue and endorsed the sale as the Defense Department's voting membership on the 12-member CFIUS. The issue never reached Defense Secretary Donald H. Rumsfeld or his top aides.

Mr. Maloof said DTSA should have objected and demanded an investigation based on publicly available information that certain unnamed leaders, or emirs, of the United Arab Emirates visited Afghanistan in the late 1990s and met with Osama bin Laden, according to the September 11 commission report.

"We would have immediately looked at who was involved in handling of the case and if it had to do with the royal family," Mr. Maloof said. "The UAE for years had been a nexis for contacts among al Qaeda with countries that are state sponsors of terrorism. They have been a funnel for illegal diversions of technology, particularly to Iran."

He said that elements in the United Arab Emirateshave been helpful, but "they are like anyplace else. You have elements who are supporters and elements who have relations with the bad guys."

The Bush administration, including the Pentagon, has vouched for the United Arab Emirates as a strong ally in the war on terror since al Qaeda's September 11 attacks on the United States. The country allows U.S. warplanes and ships to use its bases and has provided intelligence on the terror group.

Mr. Maloof's old office was in the news in the late 1990s. He objected to the Clinton administration allowing Loral Corp., whose chief executive officer was the single largest financial contributor to the Democratic Party, to sell rocket technology to China. President Clinton signed a waiver in 1998 to allow the sale, even though Loral was under criminal investigation on suspicion of illegally transferring technologies to China.

Mr. Maloof's office waged a bureaucratic battle to stop the sale. It argued that Loral's technology would aid China's ability to upgrade its long-range ballistic missiles.

Mr. Maloof testified before a House committee in 1999 that his bosses isolated him after news reports surfaced about the China-Loral deal. He said his objections caused the Clinton administration to do away with DTSA's investigative arm in 2000.

"All it [DTSA] did was become a repository for classified data because they took away our investigative activities," he said.