http://www.washingtontimes.com/article/20080213/NATION/797439828/1002/NATION
By Bill Gertz
The Washinton Times
February 13, 2008
Companies involved in the proposed merger of 3Com and a Chinese
telecommunications company have offered to take steps to reduce the
national security risks from the deal in seeking to win the Bush
administration's approval.
Bain Capital, the international investment firm leading the $2.2 billion
bid by Huawei Technologies to buy 3Com, announced yesterday it has
offered "mitigation proposals" to the Treasury Department-led Committee
on Foreign Investment in the United States (CFIUS) as part of its
ongoing dialogue on the merger.
Disclosure of the risk-reduction offer followed the arrest Monday of
four persons on Chinese espionage-related charges, including a Pentagon
official accused of passing high-technology military command and control
systems to the Chinese.
"As part of that dialogue, we have put on the table robust mitigation
proposals that offer significant structural and security safeguards to
American national security interests," Bain Capital said last night. "At
this sensitive time for the U.S. and global economies, we think it is
critical that responsible cross-border investments like the 3Com
transaction be permitted to move forward on sound economic terms, while
fully protecting American national security."
Bain Capital spokesman Alex Stanton declined to comment on the details
of the proposals.
A person close to the deal said 3Com is proposing to sell its
TippingPoint division that makes high-technology computer intrusion
prevention equipment. "That is one division that does have advanced
technology," the source said.
TippingPoint has sold computer attack prevention systems to the Pentagon
and other U.S. government agencies and is a reason the 3Com sale to
Huawei has raised concerns among U.S. intelligence officials who say
China could learn important vulnerabilities of U.S. networks.
Chinese military hackers have engaged in widespread computer attacks on
Pentagon, U.S. government and private sector networks over the past
several months, as part of what officials think is a systematic effort
to prepare for electronic warfare during any future conflict.
A U.S. intelligence assessment of the 3Com deal determined that the
merger without restrictions would undermine U.S. national security,
administration officials said. The CFIUS is in a second phase, 45-day
review of the merger.
Bain Capital said one of CFIUS' missions is to protect U.S. national
security. The investment firm has said the deal will not jeopardize
national security.
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