Middle East Crisis Hits Home at South Bay Firm : Invasion: An international business meeting is cut short for the president of National City-based Western Lumber, which is owned by Kuwaitis.

Events in the Middle East have produced dramatic moments for Newell LaVoy, president of National City-based Western Lumber, a building supply store chain that is a subsidiary of Georgetown Industries, which is owned by the Kuwaiti government.

LaVoy was one of several managers from Georgetown Industries’ four U.S. subsidiaries who were at the Churchill Hotel in London on Aug. 1 to brief the company’s American and Kuwaiti board members on U.S. business operations.

On that Wednesday, the day before Iraq invaded Kuwait, Georgetown Industries’ three Kuwaiti board members expressed confidence that hostilities were unlikely, LaVoy said. Their decision to attend the Aug. 2 session prompted LaVoy to believe that they felt they wouldn’t be invaded.

But the situation took a dramatic turn the next morning. “I turned on CNN and, bang, there it was,” LaVoy said. “The next word I had was that the meetings scheduled for that day were canceled.”

“We were there on business, a regular business meeting,” said former U.S. Treasury Secretary G. William Miller, a U.S. board member for Georgetown Industries, which is based in Charlotte, N.C. “But we woke up on Thursday to find the invasion had occurred.”

But, although the Middle East remains tense, it is business as usual for Western, which operates four retail stores in San Diego County, and Georgetown Industries’ three other businesses, said Gerry Anderson, Georgetown’s chief financial officer.

Anderson said in a telephone interview that the company was authorized by the U.S. government to continue conducting business. “We have a specific license from the Department of Treasury that authorizes us to conduct business as usual.”

The license was granted just hours after President Bush issued an executive order that froze Kuwaiti assets in the United States, Anderson said.

“My impression is that the (Kuwaiti) expectation was similar to what everyone else expected, that there were going to be some difficult diplomatic issues to be resolved,” Miller said. He said he did not think the Kuwaiti board members expected “naked aggression.”

Although the Americans made plans to return home from the aborted meeting, the Kuwaiti directors focused on the fate of family members, friends and Kuwait’s top leaders.

The company’s three Kuwaiti board members “all got their families out of Kuwait,” Miller said during a telephone interview. “Two of them had their families out for summertime holidays, and the other family came out later,” Miller said.

Georgetown Industries promptly adjourned its board meeting upon learning of the developing crisis, Anderson said. “They obviously had on their minds the invasion of their homeland,” Anderson said. “We were very, very concerned for our friends.”

LaVoy returned from London in time to attend his 20-year high school reunion in Caldwell, Ida., a small town near Boise. LaVoy said he wouldn’t have believed it 20 years ago if someone had told him that he would be in the lumber business and so concerned about Middle Eastern affairs.

The order that froze Kuwait’s assets in the United States is different from past executive orders that authorized the seizure of foreign assets in America, a Treasury Department spokeswoman said. The Bush directive seeks to keep the government that Iraq has established in Kuwait from deriving financial benefits from Kuwaiti-controlled companies in the United States, the spokeswoman said.

Initial U.S. government estimates suggest that the Kuwaiti government has invested $80 billion in foreign countries, including up to $40 billion in the United States.

But those investments often have been made behind a veil of secrecy, according to Corey Wright, an international trade specialist with the Commerce Department’s Kuwaiti desk. The Kuwaitis usually “try to be as quiet as possible” with investments, Wright said.

Consequently, although U.S. officials believe that Kuwaiti nationals and the country’s government have made about $4.2 billion in direct investments in U.S. companies, the Treasury Department’s Office of Foreign Assets Control has identified only a handful of companies controlled by the Kuwaitis. “Direct investment” includes commercial real estate and an investment of 10% or more voting interest in a company, Wright said.

However, a relatively small amount of Kuwait’s private and government funds are tied up in direct investments, Wright said. The bulk of Kuwait’s money is invested in portfolios that include stocks, bonds and Treasury notes.

The Kuwaiti government’s majority stake in Georgetown Industries is held through its Ministry of Finance, Anderson said. The Kuwaitis, who hold about 90% of Georgetown Industries’ stock, acquired a partial interest in the company in 1976 and became the company’s majority shareholder in 1983.

Georgetown Industries, which reported about $600 million in revenue for the fiscal year ended Dec. 31, 1989, has four basic product lines: a steel operation, the Waccamaw specialty retailing chain, a steel wire rod company and Western Lumber.

Georgetown Industries acquired Western Lumber in 1987 in a deal valued at about $40 million, from a management group and McCown DeLeeuw & Co., a private venture capital firm with offices in Palo Alto and New York City. The company earlier had been spun off by Boise Cascade, which owned a string of retail stores in Southern California.

Anderson identified the company’s other U.S. board members as Georgetown Industries President Roger Regelbrugge and Arthur L. Kelly.