TheChek News Flow

Government expresses concerns over an Emirati deal for second time in a day

The UK has said that a stake in Vodafone held by a United Arab Emirates group is a national security risk and ordered the companies to take steps to mitigate it, the second time in a day that the government has expressed concerns over Emirati investments in key UK assets.

In a statement published late on Wednesday, the cabinet office said the stake held by the state-controlled Emirates Telecommunications, which is also known as e&, posed risks given Vodafone’s importance to the UK’s telecommunications sector and its role as a supplier to government departments.

The statement came hours after the culture secretary, Lucy Frazer, ordered further regulatory scrutiny on public interest grounds of RedBird IMI’s £600mn bid for the Telegraph newspaper group. The proposed takeover of the right-leaning newspaper by an Abu Dhabi-backed investment group has attracted considerable opposition from members of the Conservative government.

The scrutiny comes as the British government is seeking to expand a “sovereign investment partnership” with the UAE, after the Gulf state exceeded the £10bn investment it pledged three years ago, according to two people familiar with the matter. In 2021, the UAE pledged to invest the sum in the UK, targeting sectors such as clean energy, technology and infrastructure.

e& began building a stake in Vodafone in 2022 and last year increased it to almost 15 per cent. It is Vodafone’s largest single shareholder. In May, the companies announced a strategic partnership that handed e& a seat on the FTSE 100 company’s board.

The cabinet office said this strategic relationship would “enable it materially to influence the policy of Vodafone”.

The government had not previously disclosed that it was reviewing the relationship. Under the National Security and Investment Act, which came into force in 2022, the government is able to review — and ultimately block — foreign takeovers of companies in industries that have ties to national security.

While stopping short of ordering a divestment, the cabinet office said Vodafone and e& had to meet certain requirements relating to any alteration or termination of their strategic relationship.

The companies would also have to establish a “national security committee” to oversee any work by Vodafone that “has an impact on or is in respect of the national security of the United Kingdom”.

In a statement, Vodafone said it was “pleased to have received clearance in our home market for our strategic relationship agreement with e&, and for e& to take a seat on our board”.

e& did not immediately respond to requests for comment. The cabinet office declined to comment beyond the statement.

To the UAE, the UK order “smells very bad and it is not something you would expect from a friendly country that values its historical relationship”, said Abdelkhaleq Abdalla, an Emirati analyst. “It’s not really very specific, saying that it carries a national security risk — on what grounds?”

“The UAE is a business-oriented country and it values the relationship with the UK, so it’s not going to do anything to weaken that,” he added.

The government decision comes as the six-member Gulf Cooperation Council, which includes the UAE, has been negotiating a free trade agreement with the UK, with a sixth round of negotiations expected to be held in the first quarter of this year.

Karen Egan, a senior telecoms analyst at Enders Analysis, said it was “inevitable that [the UK government] would be really sensitive about telecoms, which is more critical than ever to our lives in general and particularly in today’s geopolitical environment”.

She said risks included cyber attacks, interception and networks being shut down.

Egan added that the imposed requirements could be a template for the proposed domestic merger of Vodafone and Three UK, owned by CK Hutchison, if there are any national security concerns related to the Hong Kong-based company.

The government has previously used its powers to probe the national security implications of a shareholder in a UK-based telecoms group.

In 2022 it decided not to use the powers to block or unwind billionaire Patrick Drahi’s investment vehicle Altice’s 18 per cent holding in BT, according to the company.

Altice UK then increased its stake last year to 24.5 per cent.

The Florida House of Representatives approved on Wednesday a bill aimed at barring children aged 16 and younger from social media platforms, following similar action in several states to limit online risks to young teenagers.

Passed by a bipartisan vote of 106 to 13, the measure would require social media platforms to terminate the accounts of anyone under 17 years old and use a third-party verification system to screen out the underaged.

“We must address the harmful effects social media platforms have on the development and well-being of our kids,” said Florida House Speaker Paul Renner.

“Florida has a compelling state interest and duty to protect our children, their mental health, and their childhood.”

The bill would also require firms to permanently delete personal information collected from the terminated accounts and let parents bring civil suits against those failing to do so.

The legislation now goes to the Florida state Senate for consideration. Republicans control both chambers of the state legislature.

Sponsors said the measure was necessary to protect children from depression, anxiety and other mental health woes they say are linked to excessive use of social media, whose addictive aspects critics say make children especially vulnerable.

Opponents argued that the bill goes too far, with some urging less restrictive measures, such as letting parents opt in or out of allowing their children to use social media.

Meta, the parent company of Instagram and Facebook, opposed the legislation, usually referred to as HB 1, saying it would limit parental discretion and raise data privacy concerns.

“HB 1 would require each new social media user, from a 13-year-old in Miami to a 73-year-old from Boca Raton, to provide possibly sensitive identifying information, such as a driver’s license or birth certificate to a third-party organisation to verify their age,” Meta’s Caulder Childs told the House’s Judiciary Committee at a hearing on Jan. 17.

Meta says it supports federal legislation for online app stores to secure parents’ approval for downloads by teenagers younger than 16.

The Florida measure does not identify any internet companies by name.

Instead it defines a social media platform as an online forum that tracks account holders’ activity by letting them create user profiles, then upload content or view the content or activities of other users and interact with, or track, them.

Among the defining social media functions highlighted by the bill are “addictive, harmful or deceptive design features” or those that induce “an excessive or compulsive need to use or engage with” the platform.

But the measure exempts websites and applications whose predominant function is email, messaging or texting, as well as streaming services, news, sports and entertainment sites, along with online shopping, gaming and academic sites.

Utah became the first US state to adopt laws regulating children’s access to social media in March 2023, followed by others, such as Arkansas, Louisiana, Ohio and Texas, according to a legislative analysis prepared for the Florida bill.

It said numerous other states were also contemplating similar regulations.

In 2015 the European Union in 2015 passed a law requiring parental consent for a child to access social media, the analysis added.

Washington passed actionable intelligence to Tehran about the plot that killed 84 and wounded many more

WASHINGTON—The U.S. secretly warned Iran that Islamic State was preparing to carry out the terrorist attack early this month that killed more than 80 Iranians in a pair of coordinated suicide bombings, U.S. officials said.

The confidential alert came after the U.S. acquired intelligence that Islamic State’s affiliate in Afghanistan, ISIS-Khorasan, known as ISIS-K, was plotting to attack Iran, they said.

American officials said the information passed to Iran was specific enough about the location and sufficiently timely that it might have proved useful to Tehran in thwarting the attack on Jan. 3 or at least mitigating the casualty toll.

Iran, however, failed to prevent the suicide bombings in the southeastern town of Kerman, which targeted a crowd that was commemorating the anniversary of the death of Qassem Soleimani, the commander of the Islamic Revolutionary Guard Corps’ Quds force. Soleimani was killed in a January 2020 drone attack near the Baghdad airport ordered by then-President Donald Trump.

“Prior to ISIS’s terrorist attack on January 3, 2024, in Kerman, Iran, the U.S. government provided Iran with a private warning that there was a terrorist threat within Iranian borders,” a U.S. official said, using an acronym for Islamic State. “The U.S. government followed a longstanding ‘duty to warn’ policy that has been implemented across administrations to warn governments against potential lethal threats. We provide these warnings in part because we do not want to see innocent lives lost in terror attacks.”

Officials with Iran’s mission to the United Nations didn’t immediately respond to a request for comment.

Despite the American warning, some Iranian hard-liners have suggested that Islamic State perpetrators were linked to the U.S. and Israel. At a ceremony in Kerman honoring the victims, Maj. Gen. Hossein Salami, the most senior Revolutionary Guard commander said Islamic State “has disappeared nowadays,” arguing the jihadists “only act as mercenaries” for U.S. and Israeli interests.

U.S. officials declined to say what channels were used to warn Iran or divulge details of what was passed. Nor did they say if this was the first time Washington has passed such a warning to the Iranian regime.

Iranian officials didn’t respond to the U.S. about the warning, said one American official. It wasn’t clear why the Iranians failed to thwart or blunt the attack, several officials said.

The U.S. routinely shares warnings of potential terrorist activity with allies and partners. In some cases, it also warns potential adversaries. In December 2019, Russian President Russian President Vladimir Putin thanked President Trump for sharing intelligence that helped the Kremlin thwart a plot in St. Petersburg.

The bombings in Kerman, which killed 84 Iranians and wounded hundreds more, were the bloodiest terrorist attack inside Iran since the current government took over in the 1979 Iranian Revolution.

Islamic State claimed responsibility after the attack, saying that two of its operatives had detonated explosive belts. The ideology of Islamic State, a hard-line Sunni group, considers Shiite Muslims, a majority of Iran’s population, to be apostates. Islamic State and Iran have previously clashed.

ISIS-K first emerged in Afghanistan in 2015 after Islamic State militants declared a caliphate in Iraq and Syria. It was responsible for the bombing near the Kabul airport in August 2021 that killed 13 American troops and about 170 Afghan civilians as the U.S. military withdrew from Afghanistan.

The group has been a mortal enemy of the Taliban and had been greatly weakened during the American military presence in Afghanistan by attacks from U.S. and Afghan government forces and by the Taliban themselves.

With the departure of U.S. forces, ISIS-K has grown in strength. U.S. officials say it is one of the most dangerous groups in the region, eclipsing al Qaeda, with ambitions to strike targets in the West.

Biden administration officials confirmed soon after the Jan. 3 attack in Iran that they had information that ISIS-K was the culprit. But they didn’t reveal that the U.S. had advance intelligence about the attack or that they had tipped off the Iranians.

A U.S. intelligence community directive known as “duty to warn” requires spy agencies to warn intended victims, both U.S. citizens and non-Americans, if they are the target of a terrorist attack. There are exceptions, including if the intended victims are themselves terrorists or criminals, or if issuing a warning would endanger U.S. or allied government personnel, or intelligence or military operations.

In the case of Iran, Washington alerted an adversary that has armed multiple proxies, including Yemen’s Houthis as well as militias in Syria and Iraq that have carried out more than 150 attacks on American forces since mid-October.

One former U.S. official said there could be a number of reasons for Washington to warn Iran. In addition to protecting innocent civilians, such a warning might be intended to prevent Tehran from responding to the attack in a way that could create further instability in the region and potentially undermine U.S. interests.

Other former officials said that providing such a warning might also be a way to spur dialogue on foreign policy issues.

“With Iran, it gets gray,” said former CIA officer Douglas London, because the U.S. has designated Iran’s Revolutionary Guard as a foreign terrorist organization and yet most of the intended victims of the ISIS-K attack were civilians.

London, who worked on counterterrorism including duty-to-warn issues at the spy agency, said the decision to tip off Iran was likely made by senior officials at the White House and CIA. Passing the intelligence, he said, allowed the U.S. to take the moral high ground and could also be intended to encourage Iran to be receptive to dealing with Washington on some security matters.

Within the U.S. government, the warning to Iran has been a carefully guarded secret, a U.S. official said, suggesting that Washington was trying to minimize the risk that its contact with Tehran, even indirect, might be disclosed.

The ISIS-K bombings have posed a conundrum for Iran’s hard-liners, who have portrayed the U.S. and Israel as the regime’s enduring foes.

After ISIS-K took responsibility for the attack, Iran on Jan. 15 fired four Kheibar Shekan ballistic missiles at targets Tehran claimed were linked to Islamic State in Syria’s Idlib province. Fired from Iran’s Khuzestan Province, it was Iran’s longest missile strike, according to the IRGC Aerospace force commander.

An investigation by Iran’s Ministry of Intelligence, published on Jan. 10, reported that the attack was carried out by a team of Tajik operatives based in Afghanistan—where the local branch of Islamic State’s ISIS-Khorasan Province is based.

Alex Vatanka, director of the Iran program at the Middle East Institute, a Washington think tank, said that the ISIS-K attack was a humiliating setback for Tehran, whose strategy calls for training and equipping proxies across the Middle East so it doesn’t have to fight its foes at home.

“ISIS operatives were able to come in and attack in the birthplace of Soleimani,” Vatanka said. “The headlines wrote themselves: the Islamic Republic cannot protect the Iranian homeland.”

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Keel Holdings combines three companies, including investments from Arlington’s just-closed $3.8 billion fund, and aims to build a supply base for the military to speed up production

Arlington Capital Partners is launching a company that seeks to build a nuclear-powered vessel supply network for the military, and the private-equity firm is backing the deal from a newly raised $3.8 billion fund.

Keel Holdings will serve as a subcontractor on key defense programs, including helping build Columbia-class ballistic-missile submarines and Virginia-class attack submarines. Much like aerospace companies have done on the commercial side, the South Carolina-based company aims to speed up vessel delivery by building an integrated supply network as the U.S. ramps up defense production.

Bethesda, Md.-based Arlington formed Keel through the merger of Pegasus Steel, which the firm acquired last year, with more recently acquired Merrill Technologies Group, in Michigan, and Metal Trades, also in South Carolina.

The firm is forming Keel as the U.S. aggressively pushes to expand and modernize its submarine fleet in the face of potential threats from Russia and China.

“The Chinese now have a fleet that’s larger than ours,” said Ben Ramundo, an Arlington principal who led the Keel investment with Managing Partner Peter Manos. “The demand to right-size that ratio is putting a lot of pressure on the supply chain.”

Ramundo added that the production strain is most acute when it comes to building submarines.

Manos, a veteran of global private-markets firm Carlyle Group who joined Arlington in 2002, said Arlington started to dig into potential investments about five years ago to address a military production bottleneck. He added that the firm zeroed in on building a company whose work centered on working with major contractors, or original equipment manufacturers,” for nuclear-powered vessels, often referred to as the “Nuclear Navy.”

Manos said Arlington plans to invest more than $400 million of equity in Keel over the length of its holding. The investment will support acquisitions to expand the company geographically and access new labor pools, as well as to build a “soup to nuts” structure that can fully outfit the large modules that are then transported to vessels for final assembly. The Merrill acquisition, for example, allowed Keel to tap in to a new pool of key workers in Michigan, Manos said.

One of the oldest private-equity investors in defense and government services, Arlington has already spent about 40% of the $3.8 billion Arlington Capital Partners VI fund, which closed above target and is more than double a predecessor vehicle that closed in 2019 with $1.7 billion in commitments. Other investments from the new fund include defense and aerospace engine parts manufacturer Kinetic Engine Systems and government-focused software provider Avenu Insights & Analytics.

Arlington Managing Partner Matt Altman said the latest fund drew a group of new investors as well as significant support from previous fund investors. He added that prior investors increased their commitment sizes by a total of about 25%. Investors that have publicly disclosed commitments to Arlington’s new fund include the California Public Employees’ Retirement System, the New Mexico State Investment Council and the Wyoming State Loan and Investment Board. Arlington itself, including its operating executives and advisers, ranks among the largest inventors in the new fund, Altman said.

Founded around 1999, Arlington is run by managing partners Altman, Manos, Michael Lustbader and David Wodlinger. The firm typically takes control positions in U.S. midmarket companies and grows them through acquisitions. It focuses on regulated industries from aerospace and defense to government services and healthcare companies and emphasizes what Altman calls “purple initiatives,” investment areas with bipartisan support that are largely shielded from political dissension.

Keel’s focus puts the company squarely in that realm. The U.S. efforts to increase defense production have been beset by challenges with fewer suppliers, shipyards and workers able to meet the demand.

Eric Labs, a navy analyst for the Congressional Budget Office, previously told The Wall Street Journal that it would take the U.S. six years to build the same number of ships as China under current conditions.

The U.S. Navy has identified the Columbia-class submarine as its top priority program and plans to purchase 12 of the nuclear-powered, ballistic-missile submarines to replace the aging Ohio-class boats.

Ballistic-missile submarines are used to launch intercontinental missiles, while attack submarines are armed with cruise missiles designed to hit closer-range land and sea targets.

U.S. shipbuilder General Dynamics Electric Boat is the prime contractor for the design and construction of the Columbia-class submarines, according to government documents. Huntington Ingalls Industries’ Newport News Shipbuilding division is Electric Boat’s major subcontractor. Newport News also builds the Ford-class aircraft carrier.

Keel will subcontract with General Dynamics Electric Boat and HII’s Newport News Shipbuilding and predominantly focus on submarine production, Manos said. Arlington said the company has nine facilities in South Carolina and Michigan, including frontage to deep water to help with the transport to submarine and aircraft carrier customers for final assembly.

The combined company is led by Pegasus Steel Chief Executive Brian Carter, a one-time General Dynamics NASSCO executive who most recently worked for Canadian green-building startup Nexii Building Solutions.