Broadcom-CA Deal Security Review Sought by Senator Rand Paul

(Bloomberg) -- Senator Rand Paul said he is asking the Trump administration to begin a national security review of Broadcom Inc.’s proposed purchase of CA Technologies, a move that could imperil the deal.

"We are going to advocate in a written form to all members of the Cfius committee that this should be reviewed,” Paul Wednesday said in an interview on Bloomberg Television.

The Kentucky Republican sent a letter to Treasury Secretary Steve Mnuchin, which was obtained by Axios, saying that the acquisition poses a national security risk because CA Technologies provides support services to critical U.S. infrastructure, including utility companies and financial institutions as well as network services to the military.

Paul wants the deal to be reviewed by the Treasury-led Committee on Foreign Investment in the U.S., or Cfius.

"Only a Cfius review of this proposed takeover can ensure that American national security is protected," he said in the letter, which was published by Axios. “Simply because Broadcom moves its domicile to United States does not mean it is no longer a Chinese-controlled company or that national security concerns previously expressed by Cfius no longer persist.”

Continuing Concerns

Paul’s statement underscores continuing concerns about Broadcom, a semiconductor manufacturer that has aggressively sought acquisitions in the U.S. technology sector. In March, President Donald Trump blocked Broadcom’s hostile $117 billion bid to buy Qualcomm Inc., citing risks to American national security and the nation’s development of next-generation wireless technology.

Broadcom has since moved its headquarters from Singapore to the U.S. and is now seeking to acquire CA, which makes network software used in the energy, financial and defense spheres, among others.

Trump’s order blocking the Qualcomm acquisition followed a Cfius review. At the time the deal was rejected, Broadcom’s relocation to the U.S. was seen by some national security proponents as an effort to work around the review process.

“Now Broadcom is about to complete the acquisition of CA Technologies, whose network systems are deeply embedded in many of our critical infrastructure facilities and national security agencies,” Paul said during a Senate Homeland Security Committee hearing earlier Wednesday, addressing Homeland Security Secretary Kirstjen Nielsen. “For example, 60 percent of U.S. electric customers are serviced by companies using CA systems. Similarly their systems are used in 29 US nuclear reactors."

Paul said that just because the company moved it’s headquarters doesn’t mean the deal shouldn’t be reviewed.

Broadcom responded to the Paul remarks by saying a fraudulent memo on the CA Technologies deal was circulating in the Senate. Paul’s office said that it was not basing its analysis on the memo.

In August, Congress gave the Treasury Department the authority to strengthen Cfius, which includes officials from the Defense, Justice and Homeland Security departments, by widening its scope to review investments related to real estate, joint ventures and from state-owned enterprises

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