20120930 Obama blocks Chinese wind farms in Oregon

Obama blocks Chinese wind farms in Oregon

SECURITY CONCERNS: The company building the farms is owned by two executives of the Sany Group, whose chairman is China’s fifth-richest man

Reuters, WASHINGTON

US President Barack Obama on Friday blocked a privately owned Chinese company from building wind turbines close to a Navy military site in Oregon due to national security concerns, and the company said it would challenge the action in court.

The rare presidential order to divest interests in the wind farms comes as Obama campaigns for a second term against Republican presidential rival Mitt Romney, who has accused him of being soft on China.

Ralls Corp, which had been installing wind turbine generators made in China by Sany Group, has four wind farm projects that are within or in the vicinity of restricted air space at a naval weapons systems training facility, according to the Obama administration.

“There is credible evidence that leads me to believe” that Ralls Corp, Sany Group and the two Sany Group executives who own Ralls “might take action that threatens to impair the national security of the United States,” Obama said in issuing his decision.

Ralls Corp had filed a lawsuit against the Committee on Foreign Investment in the US (CFIUS) for ordering it to stop all construction and operations at its projects while the government panel completed its investigation and finalized its recommendation to Obama.

After the decision was announced on Friday, the company said it was confident that the courts would vindicate Ralls Corp’s rights under the law and the Constitution.

Sany Group is the parent company of Shanghai-listed Sany Heavy Industry Co, China’s largest construction equipment maker and the seventh-biggest in the world.

Sany’s chairman and controlling shareholder, Liang Wengen (梁穩根), is China’s fifth-richest man, according to the latest ranking by Hurun Report, down from No. 1 last year.

Although CFIUS reviews dozens of foreign investment deals for potential national security concerns every year, the president is rarely called upon to issue a formal order as companies usually abandon their deals or divest assets when the panel takes issue with their transaction.

The last time a president formally blocked a deal on national security grounds was in 1990 when then US president George H.W. Bush stopped a Chinese aero-technology company from acquiring a US manufacturing firm.

“This is a big deal because it is the first time since 1990 that the president of the US has either blocked a transaction from occurring or divested a transaction that has occurred,” said Clay Lowery, a former assistant secretary at the US Treasury who oversaw the CFIUS process and now is with Rock Creek Global Advisors.

Ralls Corp had hired the George W. Bush administration’s top lawyer, Paul Clement, to help represent the company, as well as former US assistant attorney general Viet Dinh, who helped the Republican administration develop the Patriot Act.

Neither Sany Group’s headquarters nor the Chinese Ministry of Commerce could be reached for comment yesterday.