Tuesday, January 25, 2005

Three House committee chairmen asked the Bush administration yesterday to review the proposed sale of IBM’s personal computer unit to a Chinese-owned company.

Republican Reps. Donald Manzullo, Henry J. Hyde and Duncan Hunter stated in a letter to Treasury Secretary John W. Snow that they are worried the proposed sale could undermine U.S. national security by transferring sensitive technology to Beijing.

“Given the relationship between so-called ‘private companies’ in communist states and their government, we believe that it is manifestly in the public interest to extend the time for review by those agencies in the federal government responsible for defense, foreign policy and intelligence in order to ensure that there are no adverse national security ramifications of the sale,” the lawmakers said yesterday.

IBM announced on Dec. 7 that it would sell its personal computing division to the Chinese computer maker Lenovo Group Ltd. for $1.75 billion. The division makes the company’s well-known Thinkpad laptop computer line.

Because the deal involves the transfer of technology to a foreign company, the federal government must approve it.

Mr. Manzullo is chairman of the House Small Business Committee, and Mr. Hyde heads the International Relations Committee. They both represent Illinois. Mr. Hunter, of California, is chairman of the House Armed Services Committee.

In addition to perhaps transferring advanced U.S. technology to the Chinese, the chairmen said, the deal could lead to U.S. government contracts with IBM “being fulfilled or participated in by the Chinese government.” The congressmen said the proposed sale was announced during the holiday season and during a congressional recess.

“Given the importance of this matter, and the limited ability of Congress, affected agencies, and other interested parties to evaluate this process and provide input, we believe the [review] process should remain open,” the congressmen said.

They requested a Treasury Department briefing on the national security, licensing and contracts that would be affected before the sale is approved.

Congressional aides said the proposed sale has raised concerns among national security officials because Lenovo’s parent company, Legend Holdings, is controlled by a Chinese state-owned enterprise.

IBM spokesman Edward Barbini declined to comment on the national security aspects.

Mr. Barbini said IBM has filed all the required legal notices with the Committee on Foreign Investments, the U.S. government panel that reviews foreign sales involving foreign technology.

“IBM is following all the normal, routine procedures in the review of this transaction,” he said.

The congressmen’s call for a review comes as the Bush administration is trying to stave off efforts by the European Union to lift an arms embargo on China imposed after the 1989 killing of democratic protesters in Beijing’s Tiananmen Square.

The European Union, under pressure from China, is considering lifting the embargo, perhaps as early as this year.

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