National Security Probes into Foreign Acquisitions of U.S. Firms Climb

December 8, 2011

Investigations into potential security risks posed by foreign takeovers of U.S. companies, including many information technology firms, have increased 23 percentage points in recent years, according to a new federal assessment.

The Committee on Foreign Investment in the United States this week reported to Congress that 35 international business transactions in 2010 raised red flags and nine deals were either restricted or scuttled to resolve security concerns. The affected companies were in the computer software, telecommunications and energy sectors, according to the committee's annual appraisal. It does not name the companies or countries involved, or specify the mitigating actions taken.

"More transactions are going to the investigation stage and getting a closer look," said Ben Powell, general counsel in the Office of the Director of National Intelligence during the George W. Bush administration. "I don't think it's illogical to assume that those in the sensitive sectors [such as IT and telecommunications] are those that are likely to go to the investigation stage." 

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