FBI REMINDS FOREIGN TELECOM INVESTORS TO ENSURE NETWORK ACCESS
Foreign investors seeking to acquire U.S. communications assets could hasten completion of such transactions if they consulted with FBI before filing formal applications with govt., an agency official told Federal Communications Bar Assn. (FCBA) Wed. Advance consultations make applicants aware of need for law enforcement and intelligence agencies to conduct electronic surveillance “in a way that there’s no legal or technical impedance,” FBI Asst. Gen. Counsel Allen McDonald said at an FCBA Transactional Practice Committee workshop at FCC hq.
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When investors understand law requires them to address such national security concerns, parties on both sides are better prepared to formulate tentative agreements, McDonald said. Those agreements, which might include proposed time frames for compliance, later can be “built into conditions of the transaction,” he said. Guaranteed access to service provider’s infrastructure and business records for court- authorized wiretaps or seizures of business records is critical to approval of mergers and acquisitions involving foreign investors, McDonald said. When primary service and data storage facilities exclusively are located outside U.S., “this could end in an immediate law enforcement shut-out,” he said. Under such circumstances, subpoenas for e-mails and other communications records could be ignored legally, he said.
Solution to addressing situations where bulk of an investor’s facilities are located outside U.S. is mandatory deployment of an “electronic surveillance vantage point” in U.S. territory, McDonald said. That is particularly important in transactions involving satellite telephony service providers, he said. He pointed out that separate transactions involving Iridium and Globalstar led to negotiations in which companies agreed to place at least one global earth station in U.S., thereby giving govt. access to communications and data when authorized.
Transactional negotiations also may include proposed measures to install network security tools to prevent unlawful wiretapping and access to corporate data, he said. Any time foreign carrier has access to U.S. networks, there’s heightened risk of illegal surveillance or economic espionage, McDonald said, so FBI will insist on use of “strong network security” technology. Such agreements are critical to protecting proprietary information and trade secrets of U.S. companies, he said.
Gay Sills, dir.-Office of International Development, Treasury Dept., agreed with McDonald that advance consultations helped to balance national security requirements with need to preserve nation’s open investment policy. Committee on Foreign Investment in the U.S. (CFIUS), Treasury-led interagency presidential advisory panel, prefers to begin network and national security reviews before application filing process begins, she said: “We like companies to talk with us early on.”
CFIUS has 30 days from time an application is filed to determine whether all national security concerns have been mitigated, she said. If CFIUS determines that an investigation is needed, it has 45 additional days for review and subsequent development of recommendations to President. President then has 15 days to decide whether to block foreign acquisition of U.S. corporation, she said. President can take such action under law, known as “Exon-Florio provision,” Sills said, if he finds: (1) There is “credible evidence” that foreign entity exercising control over company might take action that threatened national security. (2) U.S. law, other than International Emergency Economic Powers Act, doesn’t provide adequate and appropriate authority to protect the national security.