Will BAE Takeover of U.S. Defense Contractor Be Allowed to Sneak Past Congressional Scrutiny?
June 18, 2007 (LPAC)--The timing couldn't be worse. Only a few weeks after the British aerospace company BAE Systems announced its plans to take over Armor Holdings, a major U.S. defense contractor, the BBC broke the story of BAE's bribes to Saudi officials, in what LPAC is calling "The Scandal of the Century." But indications are that BAE is hoping that the Armor Holdings takeover can slip past U.S. regulators, particularly the Committee on Foreign Investments in the U.S. (CFIUS), which is supposed to review foreign takeovers for national security threats.
Congressional sources tell LPAC that takeovers of U.S. companies by British firms are "never" subject to CFIUS review, on the grounds that Britain could not possibly pose any national security threat to the United States!
However, LPAC and other American patriots are determined to ensure that this BAE takeover does not sneak in under the radar.
Under the 1988 Exon-Florio law, the President, or his designee, can block an acquisition which threatens national security. The CFIUS committee, which operates under the auspices of the U.S. Treasury Department, includes representatives from 12 federal agencies, including the Departments of Treasury, Commerce, State, Defense, Justice, and Homeland Security.
Formal notification of a pending merger or acquisition to CFIUS is voluntary, and once a formal notice is received, this triggers a first-stage, 30-day review. This may be followed by a second-stage, 45-day review, if there are national security concerns which have not been resolved.
However, CFIUS encourages informal pre-filing consultations prior to the filing of the formal notice. Armor Holdings has not yet disclosed any formal or informal filing, and the Treasury Department and CFIUS will not comment, saying such filings and reviews are not public until a final decision is reached. Armor Holdings did file formal notifications with the Justice Department's Anti-Trust Division, and the Federal Trade Commission, on May 17.
When called by EIR, an Armor Holdings spokesperson would not acknowledge whether it has taken any action with respect to CFIUS, and had "no comment" regarding the reports that the DOJ has opened a criminal investigation of BAE for money-laundering and violation of the Foreign Corrupt Practices Act.
The Senate Banking Committee, and the House Financial Services Committee, have CFIUS oversight responsibility, and thus have a crucial role to play to ensure that the BAE deal does not sneak through.
The BAE/Armor Holdings merger also requires notification to, and approval by, the German Federal Cartel Office, the Bundeskartellamt.