Committee on Foreign Investment in the United States

Keywords: “foreign ownership”, “foreign investment” “Bain Capital”

The Committee on Foreign Investment in the United States (CFIUS) is part of the U.S. Department of Treasury. Normally, a CFIUS review runs for 30 days, but the interagency committee can take another 45 days

congressional uproar prevented the sale of Unocal, a U.S. energy company, to CNOOC, a Chinese company. In 1999, much uproar was caused when Hutchison Whampoa, another Chinese company, signed a lease giving them control of the shipping yards that line the Panama Canal.

Jan 2 2008

Probe of China's Role in a 3Com Takeover
The U.S. Committee on Foreign Investment this week is expected to extend by 45 days an already month-long investigation into the proposed $2.2 billion buyout of network-equipment maker 3Com by a consortium that includes a Chinese company, the Financial Times reports. The committee, an executive-branch agency with the power to block deals with sensitive security implications, wants to know what they might be for the 3Com takeover, which is being led by Bain Capital and would leave a good chunk of 3Com in the hands of Chinese telecommunications-equipment maker Huawei Technologies. "The deal has sparked political concerns in the U.S. because 3Com supplies intrusion prevention technology to the U.S. Defense Department," the FT notes. And "the Pentagon believes that hackers in China conducted a massive cyber-attack on its systems in 2007."

Extension of the 3Com investigation would come six months after the Bush administration quietly relaxed some export limits related to some politically delicate technologies on their way to China, the New York Times notes. The easing of restrictions was aimed at boosting sales of products that include advanced aircraft engine parts and navigation systems for U.S. companies, the Times adds. "But today the administration is facing questions from weapons experts about whether some equipment -- newly authorized for export to Chinese companies deemed trustworthy by Washington -- could instead end up helping China modernize its military," the paper says. "Equally worrisome, the weapons experts say, is the possibility that China could share the technology with Iran or Syria."

Bain would get an 83.5 percent stake in 3Com, and Chinese networking giant Huawei Technologies would get the remaining piece in the $2.2 billion deal. The Committee on Foreign Investment in the United States (CFIUS), part of the U.S. Department of Treasury, is investigating whether the investment by Huawei poses a risk to U.S. national security after Bain voluntarily submitted the deal for review in October.