U.S. trade group backs STT’s bid for Global Crossing

The U.S.-based Organization for International Investment (OFII) has told U.S. President George Bush that rejecting Singapore Technologies Telemedia’s (STT) bid to take over Global Crossing Holdings “would be a grave misstep with far-reaching implications.”

In an open letter to President Bush written last week, OFII Executive Director Todd Malan warned that a blanket ban on foreign companies investing in industries related to national security would send a strong message that the U.S. rejects investment from even its closest allies. This would be especially severe if a domestic U.S. competitor was able to profit from the rejection, OFII said.

“It would be a massive misuse of the Exon-Florio statute [on foreign investment implications for U.S. national security] for a domestic competitor and its major shareholder to use the national security review process to undo what they could not achieve in the broad and open competitive bidding process that was arranged by U.S. courts,” Malan wrote in the letter.

U.S. media have suggested that the deal hangs in the balance, with the Department of Commerce in favor and the Department of Defense against the deal, which would see a Singapore government-owned entity operating a 160,000-kilometer worldwide fiber-optic network which carries some U.S. military and government traffic.

“Blind rejection of foreign investment in telecom infrastructure will make it more difficult for U.S. companies to make strategic acquisitions in other countries and chill inward investment into the United States,” the group said in the letter.

Singapore’s Prime Minister Goh Chok Tong is also reported to have written a personal letter to President Bush regarding the STT/Global Crossing matter. The deal is being scrutinized by the Committee for Foreign Investment in the U.S. (CFIUS) which will make a decision within the next month.

U.S. subsidiaries overseas employ 6.4 million Americans, OFII states on its Web site.