WASHINGTON—Alcatel SA and Lucent Technologies Inc. have been forced to defend their proposed transatlantic merger after a key lawmaker raised security concerns about the deal in a letter to President Bush.
“I have several grave concerns about the potential merger of French-owned Alcatel and American-owned Lucent Technologies,” said House Armed Services Committee Chairman Duncan Hunter (R-Calif.) in a letter Friday to Bush. “These concerns arise in large part because Lucent Technologies and Bell Labs, a critical component of the parent company Lucent Technologies, conduct a significant amount of highly classified work for the United States government, including the Department of Defense. I am skeptical whether the current CFIUS [Committee on Foreign Investment in the United States] process could provide adequate, verifiable assurances that such sensitive work will be protected.”
Lucent and Alcatel swiftly responded.
“We appreciate Chairman Hunter’s concerns, and look forward to working with him and we believe we have put in place an approach that will protect sensitive U.S. technologies,” said Régine Coqueran, an Alcatel spokeswoman, in a statement over the weekend. “Both Lucent and Alcatel have already committed to form a separate, independent U.S. subsidiary to manage sensitive business with U.S. government agencies. This subsidiary will be separately managed by a board, composed of three distinguished U.S. citizens acceptable to the U.S. government. Former U.S. Defense Secretary Bill Perry, former Central Intelligence Agency director James Woolsey, and former National Security Agency Director Kenneth Minihan have agreed to serve on this board. There are substantial precedents for the approach we intend to pursue, and we are confident that we will be able through the ongoing review process to address the chairman’s concerns.”
Hunter is believed to be the first lawmaker to voice problems with Alcatel’s proposed $14.1 billion takeover of Lucent. Foreign acquisitions and the review process by CFIUS—a government group led by the Treasury Department—have become flashpoints ever since the now-defunct Dubai ports deal. As a result of that flare-up, some lawmakers want to reform CFIUS.
Hunter has offered a bill to require majority U.S. ownership of critical infrastructure deemed essential to national security and a five-year divestiture of foreign-owned infrastructure. T-Mobile USA Inc., the No. 4 mobile phone operator in the U.S., is owned by German-based telecom giant Deutsche Telekom AG.
