Skip to comments.US sees a spy in China's Lenovo
Posted on 01/24/2005 8:24:34 PM PST by Dr. Marten
US sees a spy in China's Lenovo
WASHINGTON - In a potentially damaging move for Sino-US business relations, American regulators are reportedly blocking IBM's proposed $1.25 billion sale of its personal computer business to the Lenovo Group of China, on national security concerns.
Citing unnamed sources "familiar with the matter", Bloomberg reported on Sunday that members of the Committee on Foreign Investments in the United States (CFIUS) are concerned that Lenovo employees might be used to conduct industrial espionage. According to the report, these members are worried that Chinese operatives may use an IBM facility in North Carolina to launch industrial espionage to further China's military technology. The Chinese government has a majority share in Lenovo, formerly known as Legend. Incidentally, the US recently sanctioned eight Chinese companies for exporting technology to Iran for use in a missile program, according to a recent New York Times report.
CFIUS comprises 11 US agencies, including the Department of Justice and the Department of Homeland Security, and is chaired by the Treasury Department. The influential committee has the ability to veto the deal and could also launch an investigation into the implications of such a deal. IBM had earlier this month said that it had filed for CFIUS approval as part of the necessary regulatory approvals it was seeking to formalize the deal. The Lenovo sale got a US anti-trust clearance earlier this month.
Lenovo and IBM formally filed a notice seeking CFIUS clearance on December 29, according to the unnamed sources. US law stipulates that if the committee doesn't approve a foreign takeover in 30 days, it must open a formal investigation and finally take the matter the US president for a decision. "Because of national security concerns, we do not comment on matters that may be under review by the Committee on Foreign Investment," Treasury spokesman Tony Fratto was quoted as saying. The committee never reveals whether it's studying a certain transaction or the decisions it takes on them.
IBM and the government are negotiating the matter, the sources told Bloomberg. "IBM has filed a required notice with the Committee on Foreign Investments," Edward Barbini, a spokesman for IBM Corp of Armonk, New York, was quoted as saying. "IBM is fully cooperating with all government agencies in their review of this transaction." In a statement, Lenovo spokeswoman Alice Li said: "Lenovo continues to fully cooperate with relevant authorities." Treasury Department spokesman Rob Nichols declined to comment, so did Chinese government officials in Beijing.
CFIUS, which reviews takeovers of US firms by foreign entities to ensure that the deals do not endanger US national security, has previously blocked similar acquisitions by companies with links to China. In 2003, it scrapped the sale of Global Crossing to Hutchison Whampoa Ltd, the Hong Kong conglomerate controlled by billionaire Li Ka-shing, because of national security concerns raised by Chinese control of the company's global undersea cable communications network.
According to the terms of the IBM-Lenovo contract, touted as the most ambitious attempt by a Chinese company to penetrate the American market, IBM will would get $650 million in cash and $600 million in Lenovo stocks to hold a 18.9% stake in the Chinese state-controlled computer major. Lenovo would move its PC business headquarters to New York from Beijing, combining the 9,500 IBM personal-computing division employees with its own 10,000 workers. Lenovo's operations were to be jointly run from Research Triangle Park, North Carolina, where the design and marketing of IBM PCs is centered, and from Beijing, where Lenovo is headquartered.
IBM's PC division hasn't made money in over three years now. It posted a net loss of $139 million in the six months ended June 30 and its shares have fallen 3.9% since. During the past four years, IBM's PC operation has lost about $1 billion, according to a Securities and Exchange Commission regulatory filing. IBM has not been manufacturing its own PCs for many years now, getting most of its products made by partners largely in China. But despite operating at a loss, IBM was supposedly the third-largest vendor worldwide for PCs in 2004, with 5.5% market share. The combined Lenovo/IBM was expected to command a market share of about 8%, making it the third-largest PC supplier worldwide. Lenovo is 57% controlled by Legend Group, which was established in 1984 by the Chinese Academy of Sciences, a government institution.
Lenovo is now raising $1.2 billion to help it complete the deal. Lenovo, along with China Eastern Airlines Corp that's seeking $225 million to purchase planes, epitomizes the growing transnational ambition of Chinese companies. Chinese companies spent $4.1 billion buying overseas companies last year, up from $2 billion in 2003.
Reports of the US hurdle, surprisingly, pushed up shares of Hong Kong-traded Lenovo by 5%. Lenovo's shares have shed around 20% since it announced the deal last month as the market has generally viewed the deal negatively because of IBM's recent history of losses in its PC venture.
I was begining to wonder if the government was just going to let this slide by....let's hope not.
I don't think people are thinking. They're just letting the Communists take our technology which they will use against us and Taiwan. People need to think before they do these sales. Money isn't everything.
Well, at least somebody is awake at the switch. It's good to see one's tax dollars at work.
Put the boots to those commie SOB's!
COSCO partly owned by the Chinese Military, has established other facilities including the East Coast. They also have facilities in Cuba (the one vacated by the Russians at the missile crisis) and at either end of the Panama Canal.
One last thing - I am sure you heard about the 32 Chinese that were found in a container? The ship that carried the container is registered in Panama. Does that mean anything?
Homeland Security Agents Force Plane to Land in San Antonio WOAI ^ | 1/24/2005 | ElephantinTexas
Posted on 01/24/2005 10:12:18 PM PST by ElephantinTexas
This is my first post so I hope I got it right. This is breaking here in San Anonio. A single engine plane has been forced down at Stenson Field south of San Antonio. Homeland Security, DPS and SAPD are on the scene. They are waiting for a Chinese translator but they have Chinese illegals in custody and said that the pilot was someone Homeland Security has been looking for. I'll post more as it comes available.
Good. and since someone is awake, better take a look at Clinton's China-backed Accoona Search Engine launch.
Bump! It's about time.
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