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Alcatel Purchase Of Lucent Aired In House Committee Hearing

By | November 20, 2006

      The decision by Alcatel [ALA] of France to purchase U.S.-based Lucent Technologies [LU] for $10.4 billion was the focus of a lengthy closed-door hearing before the House Armed Services Committee, where lawmakers grilled top brass of the companies, along with Deputy Secretary of Defense Gordon England.

      Some committee members were concerned there might not be sufficient safeguards of sensitive U.S. technology if Alcatel buys Lucent, the parent company of Bell Laboratories, a world-class research organization instrumental in work on lasers and other major developments.

      After the hearing, the merger of the two giant firms still appeared to be a go.

      However, Rep. Duncan Hunter (R-Calif.), the committee chairman, said after the hearing that there still were unanswered questions.

      “The process to evaluate the national security implications of the merger between Alcatel and Lucent is incomplete at this point,” Hunter said. “The House Armed Services Committee is going to work over the next couple of days to get more information.”

      Aside from England, witnesses at the closed hearing included Clay Lowery, assistant secretary of the Treasury for international affairs; Patricia Russo, CEO of Lucent Technologies; and Mike Quigley, CEO of Alcatel.

      Alcatel, headquartered in Paris, has business relationships around the globe, including in China.

      For example, Alcatel this month received contracts with China Mobile and China Unicom, for a total value of 88 million Euros (US$112.73 million).

      These contracts were won through Alcatel Shanghai Bell, Alcatel’s flagship Chinese company.

      Under terms of the contract, Alcatel will deliver its industry leading Alcatel 5020 wireless call server to the Chinese companies.

      Some HASC members are leery of China, seeing it as a potential rival to U.S. forces or a possible enemy in a future conflict, despite extensive economic ties with U.S. markets. Those lawmakers are questioning why China is embarked on an enormous military buildup. The Beijing government is buying or building cutting-edge military aircraft, submarines, destroyers and more.

      Further, China has vowed to invade Taiwan unless it submits to mainland rule soon, while the United States is committed to defend Taiwan from such an attack.

      In recent days, a Chinese submarine slipped undetected to within torpedo range of a U.S. aircraft carrier, startling U.S. Navy leaders just as a high-ranking Navy admiral was attempting to build better relations with Chinese military leaders.

      Chinese subs also have been seen in Japanese territorial waters.

      And China recently “painted” a U.S. military satellite with a laser beam.

      Earlier in this decade, a Chinese fighter aircraft slammed into a U.S. Navy intelligence aircraft in international airspace, badly damaging the American aircraft, which had to make an emergency landing on a Chinese island airport. Then the Chinese forces held the two dozen U.S. Navy men and women prisoner for more than a week until the United States said twice it was “very sorry” that the crippled aircraft landed on the Chinese airstrip.

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