Trump pick for Pentagon No. 2 blocked Chinese takeover of Subic shipyard — testimony

MANILA, Philippines — United States President Donald Trump's pick for deputy Defense secretary played a crucial role in preventing the Chinese acquisition of the former Hanjin Shipyard in Subic Bay in the Philippines, according to testimony at his Senate confirmation hearing on Tuesday, February 25. 

Stephen Feinberg — the billionaire investor being eyed to fill the Pentagon's second-highest position — reportedly stepped in when Chinese firms attempted to acquire the bankrupt facility located near a former US naval base in 2019.

Feinberg is the co-founder of Cerberus Capital Management, the American investment firm that bought the shipyard for $300 million. The buyout, which took place under former President Rodrigo Duterte, was welcomed widely by Philippine government officials who cited its economic and strategic benefits. 

"Without this intervention, Beijing would now control a strategic deep-water port just 260 kilometers from Manila," said US Senator Bill Hagerty during Feinberg's confirmation hearing. 

What came before. The US senator said that when he served as the US' ambassador to Japan, he found that two Chinese firms were exploring the acquisition of the Hanjin Shipyard (now called the Agila Subic Multi-Use Facilities.) 

This came after the Hanjin shipyard ceased operations in 2019 following Korean shipbuilder HHIC Phils.'s filing for bankruptcy due to its oversized debt. The closure led to the layoff of more than 7,000 Filipino workers and left a strategic facility vulnerable to foreign acquisition.

According to Hagerty's testimony, the US International Development Finance Corporation and other government entities "were not in a position to engage and solve this problem."

"So I engaged with top officials in the Trump Administration, and the governments of Japan and the Philippines, as well as with top actors in the private sector—in specific, with Steve Feinberg and Cerberus," Hagerty said.

Their collaboration resulted in what Hagerty described as "an ad hoc public-private solution" that he said prevented the Chinese acquisition. 

Today, the facility operates as Agila Subic Shipyard and is owned by American investors. South Korean firm HD Hyundai builds and maintains vessels there, while US-based undersea cable company SubCom advances projects in the region from the site.

At the time,  when the deal was finalized, then-Foreign Affairs Secretary Teodoro Locsin Jr. called the agreement with Cerberus "the biggest public-private partnership in the 75-year history of Philippine-U.S. relations."

"If Steve and his team had not stepped up to solve this problem, the Chinese Communist Party today would likely possess a vital piece of strategic infrastructure in the South China Sea—and the threats to the security of the United States and our partners would be enormous," the senator added.

The potential Chinese acquisition had raised national security concerns among defense officials back in 2019. Former Philippine Navy chief Vice Admiral Alexander Pama warned then that the Hanjin shipyard issue was "not just about business, financial and other economic issues," but a "very significant national security issue."

Pama said that ownership of the Subic Bay facility would give any foreign entity "unlimited access to one of our most strategic geographic naval and maritime assets." He cautioned that despite being a commercial shipyard, nothing would prevent owners from converting it into "a de-facto naval base and a maritime facility for other security purposes."

US Defense Secretary Pete Hegseth earlier reaffirmed the US' "ironclad commitment" to the 1951 Mutual Defense Treaty — the agreement that compels the Philippines and the US to defend each other in the event of armed attacks. 

Hegseth told Defense Secretary Gilbert Teodoro in a phone call February 6 that he will remain in close coordination with him. Both officials also discussed the importance of "reestablishing deterrence in the South China Sea, including by working with allies and partners," according to a statement by the US Department of Defense.