Posted on 04/04/2002 7:11:14 PM PST by freespeech1
Pentagon seeks scrutiny of big foreign deals
By Peter Spiegel in Washington
Published: April 5 2002
The US Defense Department wants all large foreign acquisitions of American companies to be approved by a secretive national security committee, a move designed to restrict access to sensitive US technology.
According to draft legislation written by the Pentagon and obtained by the Financial Times, all deals with overseas buyers valued at more than $100m would have to gain approval from the Committee on Foreign Investment in the US, an obscure interagency panel chaired by the Treasury Department and charged with ensuring foreign acquisitions do not violate US national security.
The proposal, included in the Bush administration's draft of next year's defence authorisation bill, was circulated within the administration last week and has infuriated officials at departments outside the Pentagon - particularly the Commerce and Treasury Departments - who were apparently not consulted in the drafting of the measure.
"This is incredibly ironic, when this is the type of overly broad merger review that the US has criticised the EU for," said one person familiar with the dispute.
Currently, CFIUS depends on a system of voluntary reporting and reviews, on average, less than 10 per cent of foreign acquisitions each year. But in addition to requiring reviews of all deals of more than $100m, the legislation would mandate CFIUS approval on deals where the US company has had any Defense Department contracts valued at more than $1m over the past three years. It would also force reviews of any deals involving foreign firms owned or controlled by a national government.
There was no comment from the Pentagon, but according to insiders, the Defense Department attempt ed to slip similar language into post-September 11 legislation several months ago but was foiled at the eleventh hour.
The latest effort is seen as much more likely to succeed, as it is contained in a stand-alone bill for approval by Congress, which has been increasingly acquiescent to Pentagon requests.
A year ago, CFIUS caused an embarrassing rift between the US and the Netherlands after it held up Dutch group ASM Lithography's $1.2bn takeover of American technology company Silicon Valley Group. It led the Dutch foreign minister to warn of a "blemish" on US-Dutch relations, and ASM was forced to sell off SVG's highly prized optics division before completing the deal
BUMP
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.