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The Financial Times


Bantam lobby firm shifts the debate on sale of US assets to foreign investors

By Stephanie Kirchgaessner in Washington
May 10, 2006


In a town where lobbying firms spend millions of dollars urging lawmakers to see things their way, it is almost unheard of that a little-known organization with six employees could do much to change the course of a heated debate on how to balance US national security and foreign investment.

But the Organization for International Investment, which represents 140 US subsidiaries of foreign companies, has done just that, and nowhere will the fruits of the group's labor be more evident than today on Capitol Hill.

Just two months ago the intensity of the backlash against Dubai Ports World's acquisition of five US port terminals, and the rhetoric of legislators in Congress on both sides of the aisle, appeared to signal a retreat into protectionism in some quarters of the US capital. At the top of some lawmakers' wish list was a broad revamp of the way an executive branch committee, known as Cfius, reviewed foreign transactions on national security grounds.

Today, following a strategic lobbying campaign directed by Ofii and supported by other associations, leaders in the House will unveil a proposal that poses far fewer challenges to foreign businesses seeking to acquire US assets than had originally been considered.

Legislators have moderated their stance in part because Ofii helped change the conversation in Washington. Instead of centering the debate on whether the ownership of port operations by Dubai posed a threat to Americans, the group sought to make connections between lawmakers and the foreign companies that do business in their states.

"It's boiling down something that was big and slightly scary to something local, something you know and value," says Todd Malan, who heads the group. "It's about saying, 'It's great that you came to our plant last month. If you really change the law drastically, it is really going to affect us'."

Joseph Crowley, the leading House Democrat supporting today's bill, says Ofii has been a "critical resource".

The organization’s message - that Congress should not inadvertently pass legislation that would chill foreign investment - was shared by a broad coalition of powerful voices, from the Treasury Department to banks such as Goldman Sachs and Citigroup to individual chief executives.

The group has learned to leverage its expertise with the clout of more influential Washington organizations, such as the Chamber of Commerce and Business Roundtable, says David Marchick, an attorney and lobbyist with Covington & Burling.

Ofii also credits a change in attitude of its members. In the 1980s, when Japanese investments in the US first caused an uproar in Washington, Mr Malan says foreign companies were unwilling to "rock the boat" or get involved in the debate. Asian and European groups believed that lobbying legislators would backfire.

But the acceleration of foreign investment, led by Japanese carmakers, changed the equation as members of Congress began to credit foreign companies for creating jobs. The outsourcing debate reinforced that ­perception.

"Whether it is because they have more experience or more senior managers in the US, people finally said, 'we have to represent our interests'," Mr Malan says.

That influence has come at a high price, however. If foreign companies were considered their own industry, they would rank second out of 105 in terms of lobbying expenditures in the US, according to the Center for Public Integrity, a Washington-based lobbying watchdog. British companies alone spent $166m (£89m) from 1998 to 2004: more than companies from 35 of 50 states.