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Senators suspect railway dealings
June 5, 2008 By Mimi Hall, USA TODAY
Senators from both parties are calling for an investigation into a move by unknown foreign investors to gain more control of one of the nation’s largest railroads, which serves military bases and transports nuclear materials across the country.
The six members of the Senate Banking Committee expressed concern that The Children’s Investment Fund (TCI), a London-based group, could be setting the stage for the foreign investors to take control of the CSX rail line. The fund is trying to win five seats on CSX’s 12-member board.
The senators’ national security concerns hearken back to a 2006 controversy over the Bush administration’s approval of a deal allowing Dubai Ports World, a Middle Eastern company, to oversee terminals at six U.S. ports. The company pulled out amid congressional outcry.
In the latest controversy, the senators requested an investigation in a letter sent Tuesday to Treasury Secretary Henry Paulson.
“Very little is known about the investors in the TCI group or those investors’ agenda,” the senators wrote. “They are anonymous and invisible to government regulators” and could be fronts for foreign governments.
“We welcome investment in this country,” Sen. Evan Bayh, D-Ind., one of the letter’s authors, said in an interview. “But we have to make sure these are economic investments and not politically motivated.”
The investment fund refuses to divulge the names of its foreign investors. The senators’ letter cited a recent investigation by the Japanese government of the fund’s attempt to increase its stake in a Japanese utility company from 9.9% to 20%. The government rejected the fund’s effort based on national security concerns.
TCI claims to hold 8.7% of shares in CSX with a Brazil-based investment fund.
Snehal Amin, one of TCI’s founding partners, said the funds are not plotting a takeover. “We don’t want control of CSX,” he said.
He called the request for a Treasury Department investigation a “scare-mongering tactic.”
In a letter, TCI said it simply wants the board and company management to set “more ambitious financial goals” for CSX.
Treasury Department spokeswoman Brookly McLaughlin said Wednesday the department is reviewing the senators’ letter.
Pentagon spokesman Geoff Morrell said the Defense Department has begun an “internal assessment” of TCI’s efforts.
“Congress has been concerned about security on critical national infrastructure for many years,” CSX spokesman Gary Sease said Wednesday. “If a review is undertaken, CSX will cooperate fully.”