HOMELAND INSECURITY


China deal 'shark in a fish bowl'
Congressman warns of communist-tied firm's purchase of 3Com
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Posted: October 4, 2007
1:00 a.m. Eastern


By Jerome R. Corsi
© 2007 WorldNetDaily.com


Rep. Thaddeus McCotter, R-Mich.
The U.S. is risking its security by allowing a Chinese company to purchase the telecommunications pioneer 3Com, which develops defense-network computer technology for the Pentagon, a congressman told WND.

"We're dropping a shark in a fish bowl if we allow a communist Chinese company to buy 3Com," said Rep. Thaddeus McCotter, R-Mich., chairman of the House Republican Policy Committee.

"Given China's persistent attacks on Pentagon computers, we have got to quit hoping for the best and realize that communist China is our enemy." said McCotter, who warned colleagues in Congress about the deal in a letter this week.

(Story continues below)


As WND reported last week, Huawei Technologies, a Chinese company with close ties to the military, is buying a 16.5 percent share in 3Com Corp.




"America does not wish to face the reality that communist China is not a friendly nation to the United States," McCotter told WND.

"It's the immediate rush of what people believe to be prosperity resulting from trade with China," he continued. "But many of us in the Midwest have found out this so-called 'free trade' with China is nothing more than an attempt by China to destroy our manufacturing base."

The rest of the nation has to be made aware of what communist China is up to," McCotter stressed, "so they can then begin the hard work of planning to ensure that the United States sovereignty, liberty, and national security is perpetuated.

"This blindness to China is not just President Bush," McCotter argued. "I like to remind my Democratic friends that the guy who condemned Tiananmen Square as a candidate and signed the permanent normalization of trade relations with China was Bill Clinton.

"We now have a plurality of members of Congress on both sides of the aisle who either are willfully ignorant of the threat communist China poses, or have allowed themselves to believe trade with China is a wonderful thing," he explained, "despite our huge trade deficits and the massive amount of our debt China holds in their hands.

"There is a lot of money involved in this 3Com deal," McCotter emphasized, "and it shows you that money drives Republicans and Democrats alike when it comes to our trade relations with China. This is becoming a very dangerous situation for all Americans."

On Tuesday, McCotter circulated a letter to members of Congress objecting to the sale.

"In light of communist China's continued cyber warfare attacks, the acquisition of 3Com by communist China's Huawei Technologies is a direct threat to we free people," McCotter wrote.

"This is a sanity check for the Committee on Foreign Investments in the United States," McCotter told his House colleagues. "I call upon this body of sovereign Americans to do their duty and deny Huawei Technologies from purchasing any part of 3Com or any other company responsible for defending America."

On July 26, Bush signed into law the Foreign Investment and National Security Act of 2007, passed after last year's controversy over the effort made by Dubai Ports World to acquire London-based Peninsular & Oriental Steam Navigation, which would have given Arab emirate-controlled company a share in the operations of up to 22 U.S. ports.

The Foreign Investment and National Security Act of 2007 was passed to strengthen the examination requirements of the Committee on Foreign Investment in the United States, or CFIUS, a highly secretive bureaucratic panel constituted by the Treasury Department to pass verdict on the national security implications of foreign investments in the U.S.

"We must tell the communist Chinese that America's security is not for sale," McCotter wrote fellow House members.

As WND reported, China already has secretly planned a cyber-war attack – codenamed "Pearl Harbor II" by the Pentagon – that calls for a simultaneous assault on the U.S. aircraft carrier fleet in the Pacific and the disabling of communications at its headquarters at Pearl Harbor and with the Pentagon, leaving America's key allies in the Pacific – Japan and Taiwan – virtually defenseless.

The founder of Huawei Technologies, Ren Zhengfei, is a former officer in China's People's Liberation Army, as WND noted in 2002. He owns 1 percent of Huawei and the rest belongs to an unidentified "union," according to Forbes. Most of Huawei's customers are state-run businesses in China.

WND also reported nuclear arms-control expert Professor Gary Milhollin's 2001 testimony before a House international security subcommittee in which he singled out Huawei for using technology received from the U.S. to threaten the U.S. military.

According to the Associated Press, the deal involves a buyout by Bain Capital, a private equity firm proposing to take 3Com private for a 44 percent premium to the stock's Thursday of $3.68 per share.

In the deal, 3Com shareholders will receive $5.30 in cash for each share of 3Com they own.

According to Forbes, the announcement of the $2.2 billion buy-out offer by Bain made 3Com stock jump 34 percent in a single day.

Yesterday, 3Com closed at $4.87 a share.

At one point in 2000, 3Com shares traded at over $100 a share, when 3Com co-founder Robert Metcalf helped invent ethernet and the company acquired dial-up modem maker U.S. Robotics.

No longer leading the pace in Internet technology, 3Com still has 6,000 employees in over 40 countries, with annual revenue of $1.3 billion.

According to Forbes, Huawei Technologies and 3Com formed a joint venture in 2003 called H3C, but in November 2006, 3Com bought out Huawei's 49 percent stake in the joint venture for $822 million.

Given the reluctance of Huawei in 2006 to retain the 3Com joint venture, the acquisition bid last week surprised many on Wall Street.

With $1.3 trillion in foreign exchange reserves, 80 percent of which are held in U.S. dollar assets, China has begun encouraging investment in U.S. companies.

WND has reported China can be expected to reduce the percentage of foreign exchange reserves held in U.S. dollar assets as the dollar continues to depreciate in value against other major currencies, including the euro.





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