“IBM’s self serving and irresponsible sale to Lenovo along with the aggressive acquisition of security related semi-conductor companies, which are a supply chain to DOD, by Chinese interests are among the pivotal stepping stones which paved the way for a more assertive CFIUS. Today, there are seven times more transactions stymied because CFIUS has more resources and a broader legal scope. Americans are clearly safer today with FIRRMA, but the very concerning TikTok acquisition and the history of CCP subterfuge confirms that CFIUS’ oversight remains very critical to our national security.”
– Former Congressman Robert Pittenger, Co-Author FIRRMA 2018
Beginning in 2017, CFIUS stepped up its efforts to protect American security from investors owned or affiliated with the Chinese government – becoming more rigorous in the number of investigations it undertakes and the number of transactions withdrawn. Then, in 2018, Congress significantly expanded CFIUS’ resources and scope by passing the Foreign Investment Risk Review Modernization Act (FIRRMA).
Because of CFIUS expansion, purchases of strategic American businesses by Chinese interests have been blocked, including MoneyGram, PatientsLikeMe, Grindr, and StayNTouch.
This paper explores two key recent transactions: the on-going review of ByteDance’s purchase of TikTok, and CFIUS’ approval of Lenovo’s acquisition of strategic IBM and Motorola assets, despite vehement opposition from Congress and defense and intelligence agencies. We argue that the Lenovo acquisitions catalyzed bi-partisan reform of CFIUS with FIRRMA in 2018. Indeed, with the new cybersecurity and personal information factors CFIUS must consider, the Lenovo acquisitions would not be approved today.
About Our Co-Author
From 2013-2018, Congressman Robert Pittenger represented the Charlotte, NC area. At the time, he served as Chairman of the Congressional Task Force on Terrorism and Unconventional Warfare, and as Vice Chairman of the House Financial Services Subcommittee on Terrorism and Illicit Finance. Congressman Pittenger was a lead author of the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA), which reformed the Committee on Foreign Investment in the United States (CFIUS) to crack down on malicious foreign investment targeting national security technology. Today he is Chairman of the Parliamentary Intelligence-Security Forum, which has brought together over 1500 Members of Parliament and other leaders from 106 countries in Europe, Africa, Asia, and South America to discuss counter-terror finance, cyber security, data sharing, cryptocurrencies, and predatory foreign investment.