Oct 19

By SARA FORDEN AND DAVID MCLAUGHLIN | Published: September 28, 2017

 

WASHINGTON — The top U.S. counterintelligence official said American firms need to be cognizant of the national security risks that could arise from selling to Chinese buyers or entering into joint ventures with them.

William Evanina, the director of the National Counterintelligence and Security Center, said it’s understandable that executives and owners of American companies want to do the most lucrative deals, but they don’t always understand the potential risks to national security.

Evanina’s comments come as the Trump administration and lawmakers in Washington move to toughen the framework for reviewing acquisitions by foreign investors, especially those from China.

“China is our No. 1 adversary with respect to economic espionage,” Evanina said in an interview at Bloomberg in Washington Thursday. “Their ability to steal proprietary information and trade secrets is proficient and it’s aggressive.”

Evanina’s comments show the extent of concern within the U.S. intelligence community about China’s push to acquire U.S. technology. A slew of proposed deals by Chinese investors have struggled to gain approval from a secretive panel that reviews takeovers by foreign buyers for national security threats.

Among the deals under review by the Committee on Foreign Investment in the U.S. are MoneyGram International Inc.’s proposed sale to Ant Financial, the financial-services company controlled by Chinese billionaire Jack Ma, and Genworth Financial Inc.’s $2.7 billion sale to China Oceanwide Holdings Group Co.

Several proposed takeovers by Chinese investors have fallen apart over opposition from CFIUS. The latest came Tuesday when Chinese investors, led by digital-map provider NavInfo Co., called off plans to buy a stake in counterpart HERE Technologies. Earlier this month, U.S. President Donald Trump blocked a China-backed takeover of Lattice Semiconductor Corp. on the recommendation of the panel.

Evanina outlined a scenario in which the sale of a defense-based technology company could harm the U.S.’ ability to ensure supplies for military equipment such as fighter jets and ships.

“That’s where we have to be really creative to explain that this is a national security threat,” he said. “It’s something we have to continue to drive, especially when it involves technology.”

Congress is planning to reshape the CFIUS framework as concerns about China’s deal-making have intensified in Washington. Republican Sen. John Cornyn of Texas, who has warned that Chinese investment has the potential to undermine U.S. military capabilities, says CFIUS should have broader scope to review foreign takeovers. The panel should examine joint ventures and minority stakes, not just acquisitions, he said at a June speech in Washington.

Evanina said he supported reforming how CFIUS works.

“The CFIUS process is old, antiquated and it’s being reformatted,” he said. “There are a lot of people in the government working very hard to make it a useful tool for what we want to do.”

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