Defense Industrial Security: Issues in the Proposed Acquisition of LTV Corporation Missiles Division by Thomson-CSF

GAO discussed its work regarding foreign ownership, control, and influence over U.S. defense companies and the relationship between a defense firm and France. GAO noted that: (1) it could not reach conclusions about the level or extent of French influence or control over the firm; (2) the firm may operate as a purely commercial company, but the French government has certain legal power and influence over the strategic goals and direction of the company; (3) the Department of Defense has used voting trusts and proxy arrangements in an effort to mitigate the effects of foreign influence and control over U.S. companies performing classified contracts; and (4) questions remain as to whether these arrangements and the resources available to the U.S. government for dealing with foreign acquisitions of companies can effectively eliminate potential foreign government influence and guard against unauthorized disclosure of sensitive data and technology.