An official with Wilmington-based rail car manufacturer Vertex Railcar Corp. on Friday said a letter signed by more than 50 members of Congress calling for an investigation into the company’s ties with a Chinese firm is “misguided” and a result of lobbying efforts by Vertex’s competitors.

Signed by 55 bipartisan members of Congress, including Rep. Walter B. Jones, R-N.C., the letter asks that the Committee on Foreign Investment in the United States “thoroughly investigate the pending transfer of ownership in the Vertex Railcar Corporation involving the China Railroad Rolling Stock Corporation (CRRC) and Majestic Legend Holdings ('Majestic').”

At issue is the joint venture agreement entered into last year between Vertex and China Southern Railway, which merged last summer with China Northern Railway to form CRRC, and Majestic, a private equity firm.

The joint venture created a new partnership, with Vertex Rail Technologies owning 33 percent of Vertex Railcar Corp., China Southern Railway owning 22 percent and Majestic Legend Holdings Ltd. having a 45-percent stake, as reported in a Greater Wilmington Business Journal story last June. Majestic’s initial investment was $6 million, while China Southern Railway was contributing engineers and technical manufacturing know-how, Vertex officials and a copy of the joint venture agreement said at the time.

In exchange, China Southern Railway would eventually own half of Vertex Railcar Corp., said Foster Sayers III, general counsel, government liaison and public relations manager for Vertex, in an interview last year before CSR's merger to become CRRC. In his response to a question Friday about the quote from 2015, Sayers said in an email, "Due to competitive business purposes, Vertex is unable to provide comments at this time."  

The July 15 letter from the Congress members says CRRC “is able to access subsidized financing from the Chinese government, which has already enabled the company to underbid private competitors for railcar contracts in Boston and Chicago. In effect, American railcar manufacturers and its associated industries, such as steel, are now competing against the resources of the world’s second largest economy.”

The letter also says Majestic is associated with Legend Holdings, the parent company of computer manufacturer Lenovo, and mentions concerns "that critical rail infrastructure and the sensitive cargo that it carries will become increasingly vulnerable to hackers as the proliferation of Chinese state investment continues without adequate scrutiny."

The lawmakers involved, led by Reps. Peter DeFazio, D-Ore., Randy Forbes, R-Va., and Dan Lipinski, D-Ill., addressed the letter to Treasury Secretary Jacob Lew, who chairs the Committee on Foreign Investment in the United States (CFIUS).

Sayers said in an email Friday that the letter “is very misguided and we are obviously disappointed that instead of helping put people to work, Washington is at work trying to slow job growth. We believe this is a direct result of railcar lobbyists of our competitors attempting to manipulate the system to stifle competition.

"Both DeFazio and Forbes, the sponsors of the letters, represent competitors operating within their respective constituencies. Vertex is a fast growing US company that is trying to break into a highly competitive industry. It is our goal to create jobs and economic opportunity for Wilmington and the state of North Carolina.”

Sayers said Vertex has not been notified of any pending Treasury Department or CFIUS investigation.

“Vertex is proactively reaching out to the Treasury Department, among others, to provide an introduction to Vertex and address the inaccuracies contained in the letter,” Sayers said.

A spokesman for DeFazio’s office said the concerns about Vertex were brought to his attention because of his role as the ranking member of the House Committee on Transportation & Infrastructure as well as by people who work in the railcar industry. Forbes' office did not immediately respond to a request for a comment Friday. Jones, who represents North Carolina's Third Congressional District, also was not available for comment Friday, according to his office.

Regarding a potential investigation, a Department of Treasury spokesperson declined to comment, saying in an email, “By law, information filed with CFIUS may not be disclosed by CFIUS to the public. Accordingly, the Department does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review.”

The sole purpose of CFIUS, according to a page on the Treasury Department's website, is to review the potential national security effects of transactions in which a foreign company obtains control of a U.S. company. 

"CFIUS does not consider broader economic or policy concerns when reviewing foreign investments," the website said.

In a 2013 example of a case the panel considered, CFIUS investigated the potential purchase of U.S. hog and pork producer Smithfield Foods Inc. by Shuanghui International Holdings Ltd., eventually approving a deal that was considered, at the time, the largest purchase (more than $4 billion) of a U.S. company by a Chinese firm, according to a Bloomberg article.