French Government Acquires Major US Government Security Contractor
France’s Safran completed a $1 billion purchase of U.S. face-recognition software maker L-1 Identity Solutions after hiring a top former U.S. intelligence official to allay security concerns. Safran received approval for its purchase from the Committee on Foreign Investment in the US (CFIUS).
The $1 billion cash deal gives the French state-owned company control of a Connecticut company which specializes in biometric recognition systems, passports and finger-printing as well as background checks for public and private clients.
Safran said on Tuesday it had agreed to set up a three-person proxy board to manage sensitive U.S. contracts that make up about 80 percent of L-1’s business.
The proposed proxy board would include Barbara McNamara, Deputy Director of the National Security Agency from October 1997 until June 2000, and William Schneider Jr, a former undersecretary of state under President Ronald Reagan. The presence of McNamara and Schneider is designed to ensure L-1 can keep open its lifeline of U.S. contracts while having the French government as its largest single shareholder.
The French aerospace and defense company said on Tuesday that L-1 would join Safran’s existing Morpho security business and would be renamed Morpho Trust.
Formed through the 2006 merger of Viisage, Identix, and Stamford, L-1 combines face and other biometric recognition technologies with credentialing and access control systems for protecting identity. Its main customers are U.S. government agencies, which use its products for improving homeland security and border security.
L-1’s secure credentialing solution has been used to produce more than two billion government-issued IDs to date. These include driver’s licenses, passports and Visas, the U.S. Passport Card and Border Crossing Card, international voter registration and national ID cards, as well as the production platform for the U.S. DOD Common Access Card (CAC).
The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee of the US Government that reviews transactions that could result in control of a U.S. business by a foreign person (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States.
CFIUS includes representatives from 16 US departments and agencies and is chaired by the Secretary of the Treasury. Established by Gerald Ford under Executive Order 11858 in 1975, the committee gained additional authority after Ronald Reagan delegated Presidential oversight to CFIUS under Executive Order 12661 in 1988.
In February 2006, Richard Perle related to CBS News his experience on the CFIUS panel, “The committee almost never met, and when it deliberated it was usually at a fairly low bureaucratic level.” He also added, “I think it’s a bit of a joke if we were serious about scrutinizing foreign ownership and foreign control, particularly since 9/11.“
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