Foreign Investors Exploiting Security Gaps, U.S. Treasury Warns

by Dramelin 9:30 PM 0 comments

A statue of Albert Gallatin, a long-serving U.
secretary of the Treasury, stands in front of the U.
Treasury building in Washington, D.
Foreign investments in the U.
that pose national security risks are evading scrutiny because of gaps in American law that limit reviews, a senior Treasury Department official said.
Overseas investors are exploiting restrictions on what kind of deals American officials have jurisdiction over, and some may be structuring transactions to avoid review, Heath Tarbert, the assistant secretary for international markets and investment policy, said in U.
Senate testimony made public Wednesday.
“Military capabilities are rapidly building on top of commercial innovations,” Tarbert said in the testimony, written for a hearing scheduled for Thursday before the Senate Banking Committee.
“Additionally, the digital, data-driven economy has created national security vulnerabilities never before seen.
“Today, the acquisition of a Silicon Valley startup may raise just as serious concerns from a national security perspective as the acquisition of a defense or aerospace company,” he said.
Tarbert said the government continues “to be made aware of transactions we lack the jurisdiction to review but which pose similar national security concerns to those already before” American officials.
“These gaps are widening as more threat actors seek to exploit them,” he added.
Tarbert is set to testify in support of legislation that would expand the scope of reviews by the Committee on Foreign Investment in the U.
, a panel of officials that examine acquisitions of American businesses for possible national security risks.
The bill would broaden CFIUS reviews to include certain non-controlling investments and joint ventures.
The committee currently looks into deals that give foreign investors control of a company, although that can include minority investments in some circumstances.
White House Press Secretary Sarah Sanders said in a statement Wednesday that the legislation “would achieve the twin aims of protecting national security and preserving the longstanding United States open investment policy.
” Trade Tensions Tarbert’s comments come amid heightened trade tensions between the U.
 Several Chinese deals have fallen apart during the Trump administration after encountering objections from CFIUS.
On Wednesday, China’s Sinovel Wind Group Co.
, a wind turbine maker, was convicted of stealing trade secrets from American Superconductor Corp.
  Although Tarbert didn’t mention China in his statement, the other two witnesses scheduled to testify Thursday -- Richard Ashooh, an assistant secretary at the Commerce Department; and Eric Chewning, a deputy assistant secretary of the Defense Department -- both cite concerns over China’s deal-making in their prepared testimony, also made public on Wednesday.