WASHINGTON (Reuters) - The investigative arm of Congress has agreed to examine whether a panel that oversees foreign investment in the United States has the legal powers it needs to keep up with efforts by state-owned firms in Russia and China to buy strategic U.S. companies.
The Government Accountability Office said in a letter to lawmakers released on Monday that it would begin the review in about four months once the staff with the needed expertise were cleared of other duties. The letter was dated Sept. 30.
The study is being initiated in response to a request on Sept. 15 by 16 members of Congress, who voiced concern that legislation governing the Committee on Foreign Investment in the United States (CFIUS) has not been updated enough to ensure the panel can do its job effectively.
"Now is an opportune time for GAO to review what has worked well, and where CFIUS authorities may need to be expanded, especially given the rise in state-owned enterprises and state-controlled enterprises from China and Russia, among other designated countries," the lawmakers said in their letter.
The letter from the lawmakers noted that foreign investment oversight began as an executive order from the president and was only codified by Congress in response to concerns about foreign ownership of defense industries and ports.
The letter said lawmakers were now concerned about recent investments in the telecommunications, media and agriculture sectors that raised questions about "the degree to which foreign ownership ... may pose a strategic rather than overt national security threat."
It noted that Chinese companies designated by Beijing as "state champions" often benefited from illegal subsidies in order to gain strategic access to markets like the United States.
The letter said Congress had raised concerns about China National Chemical Corp's (ChemChina) <CNNCC.UL> planned $43 billion acquisition of Swiss agricultural seed and pesticides provider Syngenta AG <SYNN.S> and to Dalian Wanda Group's bid for major American movie studios like Legendary Entertainment and Paramount Studios.
It said the media acquisitions were particularly concerning because of "China's efforts to censor topics and exert propaganda controls on American media."
"These examples raise serious security questions about what authority CFIUS currently has, or may need to be added, to address these concerns," the lawmakers said in their letter.
(Reporting by David Alexander; Editing by Diane Craft)