Most experts do not think a Chinese company’s acquisition of Smithfield Foods will face any problems with the U.S. Foreign Investment Committee, but some members of Congress have become concerned.
Shuanghui International Holdings announced last month, its proposal to purchase Smithfield, based in Virginia for $4.7 billion. The acquisition drew controversy and could rest in the hands of a powerful and secretive government panel that is little known outside of Washington.
The government’s CFIUS or Committee on Foreign Investment in the U.S. has now been thrust into the spotlight. It has highlighted a growing concern over the acquisition of U.S. owned companies by foreign entities.
The only time the committee raises its head is during a controversy, however it operates continuously even when no one hears about it, said a leading lawyer in the industry.
In 1988, the CFIUS was given an authority to review what impact foreign entities purchasing American companies would have on the country’s national security.
The committee is chaired by the Secretary of the Treasury and includes members from Homeland Security, the Justice Department, the Energy Department and five other federal agencies.
The panel is well known for operating secretly and by law cannot talk about or make public comments on any of the transactions it reviews, largely due to the fact of sensitive information.
The most recent data on CFIUS is from 2011 of which it reviewed 111 cases, with 10 being from China. Deals are not rejected by the panel outright. Instead, the panel tells the companies it will recommend that the U.S. president block the deal, which for the most part causes the two companies to stop a proposed merger prior to the White House intervening.
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