It was not immediately clear whether Treasury officials were aware of the terms that gave information rights to large investors. Exploring whether a review was warranted is fairly routine, and such preliminary examinations often do not result in a full investigation.
White House officials also previously discussed the possibility of a national security review of the purchase, according to another person. Additionally, officials at the FBI reviewed the potential counterintelligence risks posed by the deal last spring, according to two people familiar with the investigation — though it’s not clear whether the matter has been studied by senior officials at the bureau or whether those discussions are still ongoing. active. All the people spoke on condition of anonymity to discuss matters they were not authorized to disclose publicly.
A Saudi prince’s holding company and an arm of Qatar’s sovereign wealth fund are among investors backing Musk’s purchase of Twitter, as is Binance, a cryptocurrency exchange that was founded in China but has since moved operations to her somewhere else. Tesla, where Musk serves as chief executive, also has extensive ties to China.
Musk and his attorney, Alex Spiro, did not immediately respond to a request for comment.
The US government’s preliminary efforts to review the deal with Twitter come as the billionaire introduces new changes to the structure of one of the world’s most powerful communications platforms.
Treasury staff at the Committee on Foreign Investment 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 matter. Musk is a US citizen, and CFIUS reviews are typically used to investigate investments by foreign nationals. So it’s not clear whether they could initiate such a review, and policy experts are divided on whether one would be warranted. Treasury staff routinely review whether purchases merit further investigation, often without proceeding to full reviews.
A 2018 legislative update to CFIUS rules says the body can investigate not just foreign ownership but minority stakes in critical areas, including sensitive personal data held by businesses.
Early work on a possible investigation has not yet reached the directors of the CFIUS committee — whose members include Treasury Secretary Janet L. Yellen, Attorney General Merrick Garland and Defense Secretary Lloyd Austin — and is in its preliminary days. . The person familiar with the matter noted that it is still possible for CFIUS to conclude that it does not have the authority to even open an investigation and that the investigation ends there.
“CFIUS is committed to taking all actions necessary within its authority to protect US national security,” a Treasury spokesman said. “Consistent with law and practice, CFIUS does not comment publicly on transactions it may or may not review.”
FBI spokesmen declined to comment. A White House spokesman pointed to comments by press secretary Karine Jean-Pierre last week that she was unaware of any discussions about a national security review of the deal.
The issue could be fraught 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 has recently become a political foe.
Musk has extensive ties to China through Tesla, the public electric vehicle company. Tesla’s Gigafactory in Shanghai has been its busiest manufacturing plant and serves as a vital export hub. Tesla is also dependent on China for manufacturing needs – the country controls the global supply of lithium, the key component in electric vehicle batteries – through its extensive processing and refining apparatus.
Binance also has a stake in the fledgling Twitter through a $500 million equity investment. While moving away from its original home in China, the company has partnered with a Chinese government-owned firm on a blockchain initiative. A spokesperson for Binance previously told The Post that the effort was unsuccessful, that it had no presence in China and that it had never received any investment from an entity controlled by the Chinese government.
Another global power, Saudi Arabia, is among the biggest private investors in the fledgling Twitter, after Musk. The country poured about $2 billion into the acquisition, shifting a previous stake in Twitter stock to the newly privatized company. US relations with the kingdom have soured under Biden, with the Saudi-led group of oil-producing nations known as OPEC recently announcing a production cut in a direct rebuke to the White House. An arm of Qatar’s sovereign wealth fund is also backing the purchase.
Major investors in the deal have reached confidentiality agreements that clearly define their potential roles and access to information, with priority given to those who invested $250 million or more, according to people familiar with the deal who spoke to The Post. This threshold would give Binance, as well as the 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 want to investigate — and require if deemed necessary for national security.
The US government has previously revealed that Saudi officials sought information on Twitter users, and a former manager of the platform was convicted in August of concealing payments from Saudi agents in exchange for access to confidential user data.
A growing number of Biden allies have called in recent days for CFIUS to investigate how these countries could influence Musk. On Monday, Sen. Chris Murphy (D-Conn.) said on Twitter that the federal government should investigate national security concerns related to Saudi Arabian entities’ investments in the social media platform. Last week, the American Economic Freedom Project, a left-leaning group, also said in a statement that both CFIUS and the Federal Communications Commission should investigate Musk’s takeover of Twitter given its “potential dependence on government Chinese”.
“We should be concerned that the Saudis, who have a clear interest in suppressing political speech and influencing American politics, are now the second largest owner of a major social media platform,” Murphy. said on Twitter.
Bloomberg News first reported last month that Biden administration officials were weighing whether the United States could conduct national security reviews of Musk’s Twitter ventures and SpaceX’s Starlink satellite network.
Andrew Grotto, a former senior director for cybersecurity policy under the Obama and Trump administrations who has focused on CFIUS, said access to information could prove a vital security concern.
“This is one area where I think CFIUS has a pretty strong authority to ensure that Americans’ personal data is not misused by a foreign government,” he said. “That comes to mind at least as a primary vector for CFIUS to pursue an investigation.”
CFIUS remedies would not necessarily derail Musk’s acquisition of Twitter, Grotto said, but the government could impose restrictions on the types of information rights foreign parties are given or seek to limit the powers they can have over the company. young.
“CFIUS would have the authority to seek mitigation, including possibly forcing the parties to rewrite it,” he said, adding that the committee “could force a modification.”
Moreover, “when a senator sends a letter to CFIUS asking for a review, the committee is going to be a little confused,” said Sarah Bauerle Danzman, an associate professor at Indiana University and former CFIUS staffer through the State Department.
To trigger a review, the Saudi investment would have to have special privileges — such as a seat on the board as an observer, or access to company information — beyond those granted to an ordinary small investor in a public company. “If the Saudis are given some additional rights that go beyond what would normally be expected, such as a seat on board as an observer or access to non-public information,” she said. The terms of the deal as described in The Post would do just that. But even then, a review is unlikely to change the takeover, Bauerle Danzman said.
Two former CFIUS advisers said the Saudi investment was more likely to set the stage for a review than any connection to China, even though China may have more influence over Musk through his Tesla stake. “I would think they have a shot if they want to take this on,” said one former adviser, speaking on condition of anonymity to discuss a politically sensitive issue.
