It was not immediately clear whether Treasury officials were aware of the conditions granting information rights to large investors. The question of whether a review was warranted is fairly routine, and these preliminary reviews often do not end with a full investigation.
White House officials have also previously discussed the possibility of a national security review of the acquisition, according to another person. Additionally, FBI officials looked into the potential counterintelligence risks posed by the deal last spring, according to two people familiar with the investigation — though it’s unclear whether the matter has been investigated by anyone. senior officials in the office or whether these discussions are still active. All of the people spoke on condition of anonymity to discuss matters they were not authorized to disclose publicly.
The holding company of a Saudi prince and a subsidiary of the Qatari sovereign wealth fund are among the investors backing Musk’s purchase on Twitter, as is Binance, a cryptocurrency exchange founded in China but which has since moved its operations elsewhere . Tesla, where Musk is chief executive, also has strong ties to China.
Musk and his attorney, Alex Spiro, did not immediately respond to a request for comment.
The US government’s preliminary attempts to review the Twitter deal come as the billionaire introduces new changes to the structure of one of the world’s most powerful communications platforms.
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Treasury staff at the Committee on Foreign Investments in the United States (CFIUS) have not yet determined whether Musk’s purchase of the social media platform could trigger a national security review, according to a person familiar with the case. Musk is a US citizen and CFIUS notices are typically used to investigate investments by foreign nationals. It is therefore unclear whether they can launch such a review, and policy experts are divided on whether such a review would be warranted. Treasury staff regularly consider whether purchases warrant further investigation, often without conducting in-depth reviews.
A 2018 legislative update to CFIUS rules says the body can investigate not only foreign ownership, but also minority stakes in critical areas, including sensitive personal data held by companies.
Early work on a potential investigation has yet to reach CFIUS committee officials — whose members include Treasury Secretary Janet L. Yellen, Attorney General Merrick Garland and Secretary of Defense Lloyd Austin — and are in the process. in their early days. The person familiar with the matter pointed out that it is always possible that the CFIUS will conclude that it does not even have the authority to open an investigation and that the investigation stops there.
“CFIUS is committed to taking all necessary actions within its authority to safeguard the national security of the United States,” a Treasury spokesperson said. “Consistent with law and practice, CFIUS does not publicly comment on transactions that it may or may not review.”
FBI spokespersons declined to comment. A White House spokesperson pointed to comments by press secretary Karine Jean-Pierre last week that she was unaware of any discussion of a national security review of the deal.
The case could be heavy for the Biden administration. Biden aides have tried to counter Chinese influence but don’t want to be accused of weaponizing a national security process to attack Musk, who says he voted for Biden in 2020 but recently became a political enemy.
As Elon Musk expands his reach, Washington worries
Musk has strong ties to China through Tesla, the publicly traded electric vehicle company. Tesla’s “Gigafactory” in Shanghai has been its busiest production facility and serves as a vital export hub. Tesla also depends on China for its production needs — the country controls the world’s supply of lithium, the key component in electric vehicle batteries — thanks to its vast processing and refining apparatus.
Binance also has a stake in the new Twitter via a $500 million equity investment. As it left its original home in China, the company partnered with a Chinese government-owned company in a blockchain initiative. A spokesperson for Binance previously told The Post that the effort was lapsed, that it had no presence in China, and that it had never taken an investment from a Chinese government-controlled entity. .
Another world power, Saudi Arabia, is among the largest private investors in the new Twitter, after Musk. The country paid around $2 billion in the acquisition, transferring a previous stake in Twitter shares to the newly privatized company. US relations with the kingdom have broken down under Biden, with the Saudi Arabia-led group of oil producing nations known as OPEC recently announcing a cut in production in a direct rebuke to the House White. A subsidiary of the Qatari sovereign wealth fund is also backing the purchase.
The major investors in the deal have entered into confidential agreements that clearly spell out their potential roles and access to information, with priority given to those who have invested $250 million or more, according to people familiar with the process. arrangement who spoke with The Post. This threshold would give Binance, as well as Saudi and Qatari funds, access to information beyond what a lower-tier investor would receive. That is unless there are exceptions in their terms that expressly prohibit sharing information with them, something CFIUS would like to probe — and require if deemed necessary for national security.
The US government has previously indicated that Saudi officials are seeking information about Twitter users, and a former platform official was convicted in August of concealing payments to Saudi agents in exchange for access to confidential data. on users.
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A growing number of Biden allies have called in recent days for CFIUS to investigate how these nations might influence Musk. On Monday, Sen. Chris Murphy (D-Conn.) said on Twitter that the federal government should investigate national security concerns related to investments by Saudi entities in the social media platform. Last week, the American Economic Liberties Project, a left-wing group, also said in a statement that CFIUS and the Federal Communications Commission should investigate Musk’s takeover of Twitter given his “potential dependencies on vis-a-vis the Chinese government”.
“We should be concerned that the Saudis, who have a clear interest in suppressing political speech and impacting American politics, are now the second largest owner of a major social media platform,” Murphy said. . said on Twitter.
Bloomberg News first reported last month that Biden administration officials were assessing whether the United States could conduct national security reviews of Musk’s businesses on Twitter and SpaceX’s Starlink satellite network.
Andrew Grotto, a former senior director of cybersecurity policy in the Obama and Trump administrations who focused on CFIUS, said access to information could prove a vital security issue.
“This is an area where I think CFIUS has pretty strong authority to ensure that Americans’ personal data is not exploited in a nefarious way by a foreign government,” he said. “That comes to mind at least as a major vector for CFIUS to pursue an investigation.”
CFIUS remedies wouldn’t necessarily frustrate Musk’s acquisition of Twitter, Grotto said, but the government could impose restrictions on the kinds of information rights granted to foreign parties or seek to limit the powers they could. have on the new company.
“CFIUS would have the power to require mitigation, including possibly forcing parties to rewrite this,” he said, adding that the committee “could impose an amendment.”
Additionally, “when a senator sends a letter to CFIUS requesting a review, the committee will dig a little bit,” said Sarah Bauerle Danzman, an associate professor at Indiana University and a former CFIUS staffer per the through the State Department.
To trigger a review, the Saudi investment would have had to include special privileges – such as a seat on the board as an observer or access to company information – beyond those granted to a ordinary small investor in a public company. “If Saudis are granted additional rights that go beyond what one would normally expect, such as a seat on the board as an observer or access to non-public information,” that would give CFIUS jurisdiction, she said. The terms of the deal as described to The Post would. But even then, a review is unlikely to lead to the reversal of the takeover, Bauerle Danzman said.
Two former CFIUS advisers say Saudi Arabia’s investment is more likely to lay the groundwork for a review than any connection to China, even though China may have more leverage over Musk through its involvement in Tesla. “I think they have a hook if they want to take it on,” said a former adviser, speaking on condition of anonymity to discuss a politically sensitive issue.
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