In February 2006, a lobbyist met with members of Congress to inform them that a foreign company, partially owned by the government of Dubai, had won federal approval for a deal that could adversely affect national security. Soon members of both parties were criticizing the deal—and the federal regulators who approved it—through which DP World acquired stevedoring operations at six U.S. ports. As a result of the widespread criticism over a foreign-government-owned firm “running” U.S. port facilities, DP World cancelled that part of its deal, selling the port contracts to AIG Global Investment Group.

In March 2007, lobbyists met with members of Congress—including some who had vigorously objected to the DP World deal—to inform them that a foreign company, partially owned by the government of Dubai, sought federal approval for a deal that could adversely affect national security. In July 2007, lobbyists informed the chiefs of staff of Rep. Rahm Emanuel, D-Ill., and Rep. Peter King, R-NY., that federal regulators had signed off on Dubai Aerospace Enterprise’s acquisition of a pair of firms with operations at U.S. and Canadian airports, Landmark Aviation and Standard Aero Holdings. This time, members were silent. No objections to the deal were raised.

A little more than a year after DP World’s federally approved acquisition of Peninsular and Oriental Steam Navigation Company unraveled, Dubai Aerospace Enterprise (DAE) won approval for its acquisition of a pair of companies owned by the Carlyle Group. One key difference between the deals: While both firms mounted expensive lobbying campaigns, DP World didn’t hire its first lobbyist until Feb. 15, 2006—two days after Sen. Charles Schumer, D-NY, ignited a national controversy by charging that U.S. ports were being turned over to “a country that has been linked to terrorism.” By contrast, DAE launched an early and intensive campaign conducted by three top Washington lobbying shops, the Glover Park Group, Quinn Gillespie & Associates and MWW Group, to smooth its path through Congress.

By using disclosures required under the Foreign Agents Registration Act, which require firms lobbying for foreign political parties, governments and government owned organizations—including for-profit companies—to list their meetings with government officials, it is possible to trace part of the campaign to win approval for the deal. The Sunlight Foundation released a prototype database with records from lobbyists for 15 countries, which was used in this report.

FARA records show that Glover Park Group was active early. Lobbyists from the firm first met with House Speaker Nancy Pelosi’s national security adviser, then with staffers from the House Intelligence Committee. Lobbyists working on behalf of DAE also made early contacts with Rep. Peter King, R-NY. Both Pelosi and King had opposed the Dubai Ports deal.

At least another seven contacts were made during March with the offices of Rep. Rahm Emanuel, D-Ill., and Sen. Chris Dodd, D-Conn., both of whom questioned the DP World ports deal. In all, the Glover Park Group made contacts at least 18 times during the month of March.

Lobbyists for DAE began seeking the support of members of Congress in March 2007—before a formal deal to purchase the two aviation firms hammered out. The company was joined in its efforts by the Carlyle Group and trade groups including the U.S.-U.A.E. Business Council and the U.S. Chamber of Commerce. Overall, DAE spent $780,000 on lobbyists between February 2007 and August 2008.

Surviving CFIUS

In addition to winning congressional support, DAE’s lobbyists had another hurdle to clear: a review process conducted by the Committee on Foreign Investment in the United States (CFIUS), which approves all acquisitions of by international companies or foreign states acquiring U.S. businesses. CFIUS, an interagency group that includes representatives from Treasury, Homeland Security, Justice, Defense and Commerce, is chaired by the Secretary of Treasury.

The lawyers of the firms voluntarily file papers with the Treasury for the review and investigation process; none of the documents submitted by a company for review by CFIUS is ever made public. Documents generated by the evaluators are also not available to the public, even with a FOIA request. A spokesperson for the Treasury Department refused to even comment on any specific transaction, stating that each case involves highly sensitive corporate and financial information about the company.

After the DP World controversy, Congress re-evaluated the CFIUS process and passed legislation – the Foreign Investment and National Security Act of 2007, or FINSA – that increased the number of people scrutinizing each case and added more congressional oversight. According to lawyers who’ve followed the changes, the new rules expand the scope and the intensity of the CFIUS process.

“There are two levels of inquiry: the review and the investigation and in specific cases there is an additional 45 day investigation,” David Gallacher, an associate lawyer with Sheppard Mullin Richter & Hampton LLP said. Gallacher who has followed the CFIUS changes and written about the changes on his firm’s Web site, says that the 45-day investigations will take place if the company is foreign government owned and if there are national security concerns.

DAE’s purchase of the pair of companies that provided aircraft maintenance would seem to require additional screening on both grounds. In March 2007, when Schumer learned that talks were underway between DAE and Carlyle, he said of the potential acquisition, “because it deals with maintenance of aircraft it certainly raises security questions,” according the International Herald Tribune.

Yet DAE’s acquisition faced no additional scrutiny. Congress passed the final version of FINSA on July 11, 2007. A week later, on July 18, Congress formally submitted the bill to President Bush for his signature or veto. A day later, on July 19, 2007, lobbyists for DAE contacted the chiefs of staff of Rep. Rahm Emanuel, D-Ill., and Rep. Peter King, R-N.Y. to report that CFIUS had signed off on the company’s deal with the Carlyle Group.

Bush signed FINSA on July 26, and the bill took effect three months later, on October 24, long after DAE’s acquisition was a done deal.

CFIUS does have an evergreen provision that allows the U.S. government to suspend a deal at any time if federal agencies find that a company is violating terms under which the deal was approved. DAE divested parts of the companies it acquired and merged the rest as a business enterprise within its engineering arm; the final transaction with Carlyle was estimated at $1.9 billion.

Re-tracing the lobbying campaign

Though DAE didn’t formally announce its intent to purchase the two aviation services firms from the Carlyle Group until April 2, 2007, its agents in Washington were approaching members of Congress in March. In addition to contacting staffers from the offices of Pelosi, King, Emanuel and Dodd, lobbyists from Glover Park Group met with the chiefs of staff of Rep. Byron Dorgan, D-N.D., Sen. Sheldon Whitehouse, D-R.I., Majority Leader Steny Hoyer, D-Md., Sen. Jim Webb, D-Va., Rep. Barney Frank, D-Mass., and Rep. Eddie Johnson, D-Texas.

Glover Park Group lobbyists contributed to the campaigns of King, Webb, Dorgan and Whitehouse. Though the firm’s FARA disclosures do not reveal which lobbyist met with the lawmakers or their staffs, Kevin Fogarty, the chief of staff to King, said in a phone interview he met with Susan Brophy. FARA filings reveal that three days prior to her meeting with Fogarty, Brophy made a contribution of $500 to his boss’s campaign. King is the ranking member on the House Committee for Homeland Security.

Glover Park Group lobbyists contacted at least three people on the House Financial Services Committee, which had oversight over CFIUS, including its chairman, Rep. Barney Frank. In the wake of the DP World ports controversy, Frank pushed for additional oversight of the CFIUS process. On February 28, 2007, he said in a speech on the House floor, “So the people of Dubai should have been told, look, we mean you no ill, but we think it is a mistake for you to buy these ports. There are, I would have thought, many other investments I think they could have made.”

On March 13, 2007, lobbyists for DAE met with Frank; on March 27, two lobbyists for Glover Group each made $1,000 contributions to Frank’s campaign. Frank raised no public objections to the DAE deal.

Susan Brophy was one of the two contributors to Frank; she’s had a long standing alliance with a few members of Congress, including Dorgan, for whom she worked for as an aid. She has also worked in the Clinton White House as the Deputy Director of Legislative Affairs.

Between the first contact between Glover Park Group lobbyists on behalf of DAE on March 13, 2007 to the last, on July 19, Brophy wrote checks totaling $14,000 members of Congress, political action committees and party committees, including $1,000 checks to the presidential campaign of Dodd, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee.

According to David Christy, who practices international law with Miller and Chevalier, it’s not only campaign donations but about the various lengths that members will go for calling in the chips. “You’ve built a relationship over the years and they [lobbyists] build trust and members know they won’t lie to them and misrepresent the issue. And most lobbyists have some contacts and some issues,” he said.

A broader campaign

Foreign agents representing the United Arab Emirates, who also made contacts on behalf of DAE, also had longstanding relationships. David Hoppe, a lobbyist with Quinn Gillespie, was the chief of staff for Trent Lott between 1992 and 2002 when Lott was the Senate Republican Leader. Lobbyists from Quinn Gillespie met three times with Sen. Mitch McConnell, R-Ky., the top Republican in the Senate, and once with Rep. Roy Blunt, R-Mo., the Republican Whip.

“Campaign finance and contributions builds up over time and contributions that happened 10 yrs ago are still valid,” Christy said. “But more than single timely contributions, it’s more about the relationships lobbyists have with particular lawmakers,” he added.

But tracking how lobbyists use those relationships without the benefit of FARA filings is more difficult. This is especially true for DAE’s U.S. partners in the lobbying campaign, which disclose their activities under the Lobbying Disclosure Act which is administered by Congress. Unlike FARA filings, registrants under LDA are not required to specify their meetings with government officials.

Standard Aero hired the Spectrum Group and the Loeffler Group to lobby and Landmark aviation hired Akin Gump and lobbied on the DAE deal. The Carlyle Group, Standard Aero and Landmark Aviation spent more than $1.3 million on lobbyist, according to filings in the Senate Office of Public Records.

Dubai Aerospace Enterprise also hired one firm, MWW Group, which disclosed its activities under the Lobbying Disclosure Act. DAE hired the firm, which prides itself as a great PR company, to lobby Congress between April 2007 and February 2008.

The MWW Group lobbied on a pair of bills: FINSA and the Invest USA Act of 2007, which would have created a new organization within the Commerce Department called, the United States Direct Investment Administration. The legislation, introduced in March 2007, has languished in the Senate Finance Committee.