Organization for International Investment

Financial Times


September 21, 2007

Moves may have to clear political hurdles

By Stephanie Kirchgaessner in Washington

Chuck Schumer, the influential Democratic senator from New York, yesterday expressed reservations about Borse Dubai's investment in Nasdaq, raising the possibility that the deal could face intense political scrutiny on Capitol Hill.

Mr Schumer, who last year was one of the leading critics of Dubai Ports World's failed bid to take over five US port terminals, said: "This deal raises serious questions that must be answered. Those questions will include - should we allow foreign governments to take over our financial exchanges and how much control and influence should those foreign governments have?"

The remarks were made as President George W. Bush yesterday said the proposed investment by state-controlled Borse Dubai in the US exchange would face a national security review and that he was "comfortable" with the vetting process.

The remarks underlined the challenges Borse Dubai and Nasdaq face in getting their transaction approved. The groups will require the approval of the inter-agency committee that examines foreign deals on national security grounds, known as Cfius. More challenging, the companies will also have to ensure the deal passes muster among politicians such as Mr Schumer, who has previously said the emirate of Dubai had a "nexus with terrorism".

The transaction will represent an important test for Cfius following the passage of legislation this year that was meant to instill more confidence in the vetting process following last year's Dubai Ports debacle.

It was unclear yesterday morning whether Mr Schumer's apparent concern for the transaction will be shared by his fellow senator from New York and presidential hopeful, Hillary Clinton. Mrs Clinton's husband, former president Bill Clinton, has been an important voice of support for Dubai, calling the United Arab Emirates a "good ally to America".

Lobbyists for the deal will seek to promote the investment as one that expands Nasdaq's role in the world.

Todd Malan, who heads the Organization for International Investment, a lobby group for foreign companies operating in the US, said: "I think Nasdaq and Borse Dubai are going to have to explain how this transaction makes Nasdaq a bigger global player, how it secures its global competitive position and how they will mitigate any potential security concerns that Cfius agencies have."