Washington-- U.S. Senator Evan Bayh today called for greater oversight of foreign takeovers during a Banking Committee hearing on a Government Accountability Office (GAO) report he requested to explore concerns over foreign takeovers of American companies with national security implications. Bayh requested the study after a commission charged to oversee such takeovers failed to stop the foreign purchase of an Indiana company responsible for making 85 percent of the nation's smart bomb magnets.

"Foreign investment can be a good thing, but in order for that to be true, we must make sure that the parts of our economy that impact national security are protected," Senator Bayh said. "The committee responsible for providing this protection does not have a good track record, as I saw myself when it allowed an Indiana company that made smart bomb magnets to be purchased by a foreign business. When it comes to protecting our national security interests, we should be doing more, not less."

During the hearing, Bayh questioned officials from the GAO for their opinions regarding the current practice that allows the private industry to decide when and if to report takeovers with potential national security concerns.

"When we are talking about the national security interests of the country, someone ought to be in charge and be held accountable so that this doesn't fall through the cracks because people are busy with other things," Senator Bayh said at the hearing. "I'm not in favor of big, intrusive government, but when it comes to making the final call about national security matters, it probably ought to be the country rather than the private sector making those decisions."

The report Bayh requested takes a critical look at the Committee on Foreign Investment in the United States (CFIUS), which is responsible for reviewing the national security implications of foreign takeovers of domestic companies. In particular, the report argues that the way CFIUS interprets the legislation may limit its effectiveness. As an example, the report cites how the Treasury and some other departments that make up CFIUS use such a narrow definition of what constitutes a national security threat that as a result, they allow too many questionable purchases to take place without sufficient review.

Senator Bayh, along with Senators Shelby and Sarbanes, first requested the GAO report in 2003 after an Indiana company called Magnequench closed thanks to a 1995 decision by CFIUS to approve a Chinese consortium's takeover. At the time, Magnequench made 85 percent of the magnets used to guide U.S. smart bombs.

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